After Buying Scripps in March, Discovery, Inc. Mulls Going Direct-to-Consumer

Discovery Communications became Discovery, Inc. when it closed its merger with Scripps Networks Interactive in March, bulking up to 17 networks in the process. As he finishes combining the two companies, president and CEO David Zaslav said he is eyeing a direct-to-consumer offering that would give subscribers access to his company’s entire portfolio. During Discovery’s exec session today at the Television Critics Association’s summer press tour in L.A., Zaslav said he’s mulling a direct-to-consumer model with all of Discovery’s networks—“These great global brands with characters and shows and a fantastic library,” he said—that he could sell domestically or globally at a price of $5 to $8 per month. There is no timetable yet for a potential OTT product. Zaslav said he’s encouraged by the recent sports-free skinny bundle live TV offerings from Philo, which launched last November, and AT&T, which last month rolled out WatchTV, which is free to subscribers of AT&T’s two new unlimited wireless plans and will also be available as a stand-alone service for $15 a month. (Discovery has eight of the 30 networks on WatchTV, Zaslav noted.) Ultimately, Discovery could choose to go direct-to-consumer on its own or team up with another company. The company could also focus its efforts regionally, as it already does with its Eurosport OTT product in Europe, which has 1.5 million subscribers. “We have a lot to learn, but we’ve been at it for four years,” Zaslav said. “It’s going to be a journey.” In the meantime, Zaslav said the Discovery-Scripps merger, which was completed four months ago, has been a success. “We’re growing into our new set of assets but we’re working together really well,” Zaslav said. “Things are going better than we expected, and we’re having a great time.” Zaslav noted that Discovery, Inc now has four of the top five cable networks for women 25-54—ID, HGTV, Food Network and TLC—and commands 22-25 percent of the female audience in America on any given night. Today was the first time the combined leadership team spoke at press tour, though the execs had previously met with Adweek in April, prior to the New York upfront. As a combined team, we “look across the landscape at the incredible audience we command, and how can we work together to coalesce that audience,” said Kathleen Finch, chief lifestyle brands officer. “There’s so many things we can do now that we’re in the same family.” Most recently, Food Network ran Shark Week-themed specials as a walkup to Discovery’s annual shark franchise, which is airing this week. The combined company’s key to success, said Finch: “We figure out what that brand lens is, and we never veer from it. … We are very, very brand specific.” Added Zaslav, “We’re focused on superfans, content that people love that they would pay for before they would pay for dinner” like Eurosport’s sports content. While some in the industry have questioned whether Discovery will need to merge with yet another company to keep pace with other mergers like Disney and Fox, Zaslav said he’s happy with the company’s current size. “We have a lot of scale, a lot of strength,” he said. “We feel good about where we are right now.” Zaslav said he may eventually transition to a management structure like Animal Planet, where a single exec, Susanna Dinnage, now oversees the brand worldwide as global president of Animal Planet. Nancy Daniels, chief brand officer, Discovery and Factual, who now oversees Discovery, confirmed that her network is officially out of the scripted series business. While its scripted shows, including last year’s Manhunt: Unabomber limited series—which last year the network expected would launch a new franchise—were “well-received,” Daniels said, “at the end of the day, we decided let’s do what we do best and focus on the nonfiction programming. There’s a lot of scripted programming out there, it’s hard to break through.” Zaslav said he now sees two sides to the media business: “One side is scripted series and movies, and we’ve moved away from that,” he said. “We see what we have as everything else. We have all this great quality content. We own all of it globally.” The company restructured its ad sales team last week, with “significant” layoffs, after wrapping upfront talks. Under the new organization, ad sales chief Jon Steinlauf will focus on 12 key networks. The other five networks—Destination America, Great American Country, American Heroes Channel, Discovery Life and Discovery Family—won’t be priorities for the sales team.