US TV Networks Seek to Grow By Expanding Internationally

Reach is integral to their bottom lines

On the eve of network TV executives’ annual pilgrimage this week to Cannes, France, for the global programming bazaar known as Mipcom, Viacom announced last Wednesday it will launch men’s channel Spike in the U.K. this spring—with plans for a wider international rollout.

Viacom already has a global foothold for a number of its brands. The group, including MTV, Comedy Central and Nickelodeon, is distributed to 200 countries in 37 languages and has grown steadily. Overseas operations have experienced revenue percentage growth in the mid to high teens annually over the last five years, reports Bob Bakish, president, CEO of Viacom International Media Networks. That growth looks even more impressive, given that Viacom overall will experience a 0.4 percent revenue dip in fiscal 2014, to about $13.7 billion, reports S&P Capital IQ.

“The growth opportunities are greater in other parts of the world because the U.S. market is more mature,” explained John Sanders, a principal of the media valuation and consulting firm Bond & Pecaro. “Anyone who would ignore that would do so at their own peril.” And Mipcom is where content buying and selling achieves critical mass.

Of course, deals are struck year-round. One of the biggest jet-setters is Discovery Communications president, CEO David Zaslav, who says he spends half his time outside the U.S. Which only make sense, as he presides over a company that derives over half its revenue from overseas business. That’s one hefty chunk of pesos, euros and assorted other currencies, given Discovery is projected to earn about $6.5 billion in overall revenue in 2014, reports Zacks Investment Research.

Leading the charge at Mipcom for Discovery is Jean-Briac Perrette, president of Discovery Networks International. He says the company has been on a “steady march” to increase overseas revenue ever since it launched an international business 25 years ago. Today, it distributes a long list of brands, such as Discovery Channel, Animal Planet and TLC, in more than 220 countries and territories, from Norway to Australia

Other large U.S.-based media companies can’t boast the same proportion of international revenue as Discovery. For most of them, international “is a nice incremental contribution to growth,” said Brian Wieser, senior research analyst at Pivotal Research Group.

Regardless, Disney Media Networks’ international revenue from channels and syndication is not insignificant, growing seven-fold since 2003, said Ben Pyne, president of global distribution at Disney Media Networks. The company’s global portfolio of channels and syndicated series is sprayed out across more than 230 territories, from the Czech Republic to Argentina, with over 100 channels and feeds, including the granddaddy Disney Channel, as well as others like Disney Cinemagic and boy-targeted Disney XD.

A+E Networks’ international business has grown dramatically in the last five or six years as well. “It’s probably tripled in size,” noted Sean Cohan, A+E Networks’ evp of international. “Two-thirds of our international channels are 5 years old or less.” International currently makes up about 10 percent of A+E’s revenue, say industry analysts. The growth has come from not only big channel kahunas like History, now in over 180 territories, but also History spinoff H2, Lifetime and Crime + Investigation.

A low penetration rate in some areas like Europe can become a real problem. Some of the channel groups have gotten around that by acquiring broadcast properties, and technology is helping just about everyone with options like over-the-top services.

Netflix did not exist outside the U.S. until maybe four years ago,” explained Disney’s Pyne. “We have a relationship with them, so that’s a new platform for us.” Desperate Housewives and Criminal Minds are two ABC Studios titles that are transmitted via Netflix internationally.