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Upfront and Center

Discovery ad chief Joe Abruzzese prepares to go to the mat, and takes Adweek along for an insider's view

Photos by Ben Shaul

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Two well-dressed men enter a room, each carrying a sheaf of documents tucked under one arm. They take a seat across from each other at a small round table. Spring light creeps in through the venetian blinds. Over the sounds of the Third Avenue traffic, they speak the language of money.

It’s April 2, three days before Discovery Communications will host its New York upfront presentation, and Joe Abruzzese is trying to get a bead on what he wants out of the marketplace and how he’ll go about getting it. Resplendent in a midnight-blue suit, a pink polka-dot tie knotted at his throat, the 63-year-old ad sales president is carefully attending to the first step in a monthlong process, hammering out what he calls “the game plan” for 2012-13.

On the other side of the table, Abruzzese’s lieutenant Bobby Voltaggio is eyeing a spreadsheet that serves as a master key to decrypting Discovery’s upfront strategy. Beginning with the flagship Discovery Channel, the two men trade assessments of the company’s domestic networks, deciding which property will place an emphasis on locking in higher CPMs and which will focus on moving weight.

While Abruzzese works out where he’ll push pricing and where he’ll go for bulk, he also tinkers with the idea of restricting availability on one or two networks. Naturally, this should spike demand, allowing him to command a higher CPM. (Adweek has agreed to not disclose financial figures floating about the room.)

The conversation is conducted at peak efficiency, designed to convey the maximum amount of information in the fewest possible words. Numbers susurrate from one side of the table to the other in a sort of call-and-response cadence. After 20 minutes of quietly comparing notes, the men stand and nod at one another, secure that their plans for raking in $1 billion are theoretically sound.

“The easy part is laying it out,” Abruzzese says, rapping the table three times. “The hard part is actually modeling it and seeing what the whole thing looks like.”

The battle plan offers a perfect-world assessment of how each network will perform in the upfront. After Voltaggio layers in pricing targets for each individual client, Abruzzese will gather the heads of Discovery’s portals, a clutch of senior sales executives that includes svps John Barry, Sharon O’Sullivan, Scott Felenstein and Harold Morgenstern. Over the course of two days in the first week of May, the sales team’s marching orders for the spring bazaar will be finalized.

“Strategically, we’re also looking beyond the upfront because if we lay out what we want, we’ll have a great jumping off point to grow money in scatter,” Abruzzese says. “And that’s the big difference between broadcast and cable. As a broadcaster, when you move into scatter from the upfront, you’re jumping into a pool of 15 percent, whereas with cable, we’re jumping into a pool of 45 percent. And that’s where we make a lot of money.”

In a sense, all of this advance work seems to belie the notion that the upfront is a pitiless grind, a skull-thwacking collision between irresistible force and immovable object. “So much of our business is preparation that the negotiation is actually kind of easy,” Abruz-zese says. “Every time we write a deal, we make an adjustment in advance of the next deal. You keep adjusting until you finish. So basically, when we’ve laid out this whole thing, we’ve won. We haven’t sold one unit, but we’ve won because we’ve laid it all out.”

Discovery’s U.S. networks in 2011 took in $1.34 billion in ad revenue, up 9 percent versus the previous year and an improvement of 25 percent versus 2009. Rolling up sales at the company’s international channels, Discovery’s total ad haul is north of $1.85 billion.

As reassuring as those numbers are to investors, David Zaslav seems more impressed by what went down when the fur was flying. “One of his greatest accomplishments was during the recession,” Zaslav, president and CEO of Discovery Communications, says of Abruzzese. “Joe said, ‘We’re going to fight like hell and stay positive.’ He set a month-to-month goal to increase pricing. No other media company did it. He could have given the team a pass that year, he could have blamed the recession—but he didn’t.”

A cheery but implacable exponent of the work hard/play hard school, Abruzzese’s leadership in the midst of economic catastrophe had the desired effect. In 2008, while rival conglomerates were taking on water, Discovery booked $1.06 billion in advertising business, for a net gain of 4 percent.

“No other media company in the U.S. had ad revenue growth in ’08 except for Discovery,” Zaslav points out. “The plan changed a little bit because the world has changed, but Joe has always beaten the competition.”

Abruzzese’s virtuosity is such that at least one analyst has ascribed Discovery’s success to the dark arts. During the company’s fourth-quarter earnings call in February, Barclays Capital analyst Anthony DiClemente asked Zaslav what “magic” Abruzzese brought, noting, “There’s really a multiquarter outperformance story here.” Zaslav responded at length before capping off his answer thus: “Joe Abruzzese is the master of managing inventory and at motivating a great sales team.”

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