Discovery Sees Some Digital Nets Going DTC

Zaslav said company can still build new channels
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While bullish about Discovery’s ability to create new channels around big personalities, CEO David Zaslav said the company might have fewer channels in the future and some current digital network could go direct-to-consumer.

David Zaslav, president and CEO, Discovery Communications speaks at the OnScreen Media Summit on Dec. 1 at the Sentry Center Midtown East in New York. Credit: Andrea Sperling

David Zaslav

On Discovery’s fourth-quarter earnings call with analysts and investors Tuesday morning, Zaslav was asked how many channels the company should have given falling subscriber numbers and smaller bundles being offered to consumers.

Zaslav noted that Discovery was one of the few media companies to launch new channels, pointing to the success of rebranded network such as Investigation Discovery and OWN: the Oprah Winfrey Network. He also noted that Discovery was working with Chip and Joanna Gaines of Fixer Upper on starting a new network, as has been previously announced.

“But to your point, we also have a real vision for [what to do with smaller digital channels] in terms of going direct-to-consumer,” Zaslav said. “Net-net I think over time you’ll see fewer channels, but we think we have at least one or two more that we can build strong here in the U.S.

Chip and Joanna Gaines appear on "The Tonight Show Starring Jimmy Fallon"

Chip and Joanna Gaines announced plans for a new network on the Tonight Show.

He did not elaborate on which networks might go direct-to-consumer, but in the fourth quarter, Discovery advertising sales got a boost from digital ad sales on its Go apps, even as ratings of its linear channels declined.

Taking channels off of traditional pay TV wouldn’t have a big impact on the company financially because about 85% of Discovery’s subscriber revenue comes from its top six or eight channels, Zaslav said. He said the company is focused on growing those channels and has been able to get more of them on some of the smaller bundles offered by virtual MVPDs including Hulu and Sling TV.

.But the company was also working on new channels centered around big personalities and where other non-TV businesses could be built, he said.

“We now have an opportunity with Chip and Jo to take a network that is doing OK and take it to the next level,” Zaslav said.

He said the Gaines’ were a good example of “watch and do,” something that was a selling point of the networks Discovery acquired when it bought Scripps Networks Interactive last year. Viewers not only watched Food Network, but they search the network online for recipes, buy ingredients and kitchen gadgets that advertise on the channel, and cook meals for themselves and families.

“There’s probably no better example of ‘watch and do’ than Chip and Jo,” Zaslav said. “They’ve created a great show called Fixer Upper. And they they’ve created a multi-billion business called Magnolia based on the quality of their ability to design and build product.”

Similarly, Discovery is looking to attract golf fans with its Golf TV offering and car enthusiasts with Motor Trend.

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