Zaslav’s Vision For Growth

New Discovery chief looks to bolster brands, cut costs
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In laying out his plans to revitalize Discovery Communications Inc., new President/CEO David Zaslav last week asserted a vision that rolled right over his predecessors’ priorities—and in some respects, rolled the company back to a prior management structure.

Behind the public bloodletting outlined in Zaslav’s multipage decree, “Positioning Discovery for Growth”—including the departure of Discovery Networks U.S. President Billy Campbell—is a plan for strengthening core brands, reducing inefficiencies and defining a digital strategy across the $12 billion media conglomerate.

“Philosophically, what we’re looking to do to grow is invest more money in our programming, in our brands and marketing, in new media and in businesses that are core to our brands,” Zazlav says. “If we do those four things, we’re going to grow. That’s on the right side of the page.”

On the left, he says, are unnecessary costs, something he plans to give “a good hard look.” To that end, Zaslav has already eliminated Campbell’s position. General managers of five new brand groups, each assisted by a new chief operating officer, will oversee U.S. production and marketing—much as they did prior to Campbell’s tenure.

Zaslav also hopes to build on the ratings growth at key networks Discovery Channel and TLC—respectively, 22% and 18% year-to-year in January—by reinforcing their proven brand identities.

Continuing under President/General Manager Jane Root, Discovery Channel will return to core programming genres currently covered by the smaller networks, such as science, health and wildlife. TLC, meanwhile, will continue targeting women—though without General Manager David Abraham, who is leaving for another job in Britain. All of which should be good news to advertisers, who have been pleased at the networks’ resurgence.

“It really did feel like Discovery and TLC were experiencing a resurgence and the programming was much more on-brand,” says Zenith Media Senior VP/Account Manager Kris Magel.

To keep the smaller cable channels, like the Military Channel, from getting “lost in the clutter,” says Zaslav, he will group them in a new “emerging-networks” cluster to foster their growth into larger businesses in the next few years.

Two likely targets for realigning are education and international programming operations, which should please analysts who complain that Discovery spends too much in these areas.

The company cut 80 people in the education department in December. Now Zaslav is folding the division back into Discovery’s main infrastructure; Education President Steve Sidel will report to affiliate-sales chief Bill Goodwyn, whose duties have been expanded.

But analysts says they are less concerned with restructuring than with achieving long-term growth through cuts. “Some of these money-consuming initiatives could be reversed or eliminated by someone at the CEO level,” says Bryan Goldberg, a cable and entertainment analyst at Bear Stearns.

Education was a pet cause of Zaslav’s predecessor, Judith McHale, and Zaslav has praised the company’s in-school offerings. But he criticized its direct-to-consumer business Cosmeo, a subscription homework helper introduced last year.

“It’s a great idea but a little bit before its time,” he says, “and it’s not clear yet that there’s a big customer demand for it.”

International Effort

International business is expected to account for about a third of Discovery’s $2.9 billion revenue this year. The company currently houses several autonomous regional operations, from London to Latin America, which program its channels in 170 countries. Some of their duties could be jointly managed with U.S. personnel.

MTV International veteran Greg Ricca has joined as president/CEO, Discovery Networks International. He and Mark Hollinger, a one-time CEO contender who was named president of Global Businesses/Operations, are tasked with running the division more efficiently.

“We have a big home in the U.S. producing content, and we have a big home internationally,” Zaslav says. “Should we make that a two-family home? We have significant cost structures in the U.S. and international, with meaningful overlap.”

Digital Ventures

By enlisting respected media analyst Tom Wolzien, Zaslav signaled his determination to clarify Discovery’s digital strategy, which has been undefined since McHale loyalist and digital chief Don Baer left the company in November.

In addition to funneling money into new digital ventures, Zaslav intends to push Discovery content to networks outside the company by bringing in former Paramount syndication executive Joel Berman to exploit Discovery’s ownership of its library and current programming.

Having overseen syndication at NBC, where broadcast programs sometimes run on cable, and vice versa, Zaslav is convinced that multiple plays only add value. “I’m very aware of the strong economics we can get from monetizing our library,” he says. “Is there an opportunity to do something with cable networks or—more importantly—with broadcast networks?”

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