Discovery Hopes the Money Flows to Emerging Networks

Abruzzese pushing to raise rates on fast-growing ID

By Jon Lafayette -- Broadcasting & Cable, 4/2/2012 12:01:00 AM

The Discovery Communications upfront presentation is usually a long one. The company has a long list of networks it wants media buyers to spend money on.

And this year, selling Discovery’s emerging networks represents a challenge for inimitable ad sales chief Joe Abruzzese. Naturally, Abruzzese says some of those networks represent an opportunity for sponsors.

While big networks Discovery Channel, TLC and Animal Planet still garner the bulk of Discovery’s ad revenue, the contributions of networks such as Science, Investigation Discovery, Velocity, Military Channel and even Oprah Winfrey’s struggling OWN have been growing.

“When I started in the company in 2002, the emerging nets were 2% of our business,” says Abruzzese, who hosts Discovery’s upfront bash in New York April 5. “Now they’re like 35% of our business. That’s a big play for us, and the advertisers bene! t because the emerging nets are usually less expensive than TLC and Discovery. So we have a pretty good value-play, even with volume, depending on where the money goes.”

Steering the money to the right networks will be a priority in the upfront, even more than pushing prices, says Abruzzese, who raked in an industryleading 17% increase in ad sales in the fourth quarter. He says he expects stronger spending from automakers to contribute to a good upfront market.

While it’s still early, Abruzzese says he’s not hearing any negative buzz in the market: “It’s been kind of quiet, which is probably good news. If money was way down, you’d get these negatives toward the upfront.”

Abruzzese says he expects Discovery Channel and TLC to do fine in the upfront. But he faces a bigger challenge monetizing ID’s skyrocketing ratings. The increase in the supply of ratings points on ID has made it hard to raise prices to where management and Wall Street think they should be, given the network’s current status as No. 2 in daytime and No. 6 among women in primetime.

“We have our work cut out for us,” Abruzzese says. “Clients are starting to recognize it, and we’ve made great leaps. But it’s not where it should be. It will be in a year. It’s a fun thing to sell because it’s pretty efficient, the engagement is terrific, and now we just need to get the advertiser base bigger. I think we’ll correct a lot of that in this upfront.”

Ever the salesman, Abruzzese also sees opportunities with OWN, which has cost Discovery more than $200 million so far. Even though its ratings haven't approached expectations, Abruzzese says that of 12 launch partners, only Johnson & Johnson and Chase bailed. “I think people have great faith in her, and they’re willing to give her another year,” he says.

“They’re looking at Oprah as a female version of ESPN,” he adds. “If you could have bought ESPN a year and a half into their launch, you probably would have done that. If she can continue her brand on this network and her presence for the next five or 10 years, you’ve got something.”

Discovery Channel will be seeking sponsors for its special North America. TLC’s lineup will have more programming about fashion, food and families, which will make it “a lot easier to sell,” Abruzzese says. Animal Planet will be pushing Monster Week, its version of Discovery’s Shark Week.

“It’s fun for advertisers because they can put their arms around it,” Abruzzese says.

E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette