Discovery CEO David Zaslav said mounting consumer angst over ever-rising cable and streaming bills is “good news” for the company, given the trove of unscripted content it owns and the options it has for offering it directly to consumers.
During a conference call with Wall Street analysts after Discovery reported its second-quarter results, Zaslav declined to offer a firm prediction for a stand-alone, Discovery-branded OTT service in the U.S. That stance repeated the outlook he shared during TCA summer press tour two weeks ago.
Even before it plants its own flag in the direct-to-consumer sand, Zaslav said the company is positioning itself for a media landscape defined by these new services. “We’re not syndicating our content like we used to, we’re not selling it,” he said. “We want to be able to hold on to as much as we can because we think we have something really special.”
Programmers are navigating a historic shift as the traditional cable bundle gets a thorough re-examination. Historically, the fees they have gotten from distributors had been a crucial source of revenue. In recent years, total subscriber numbers have declined as more customers cut or shave the cord and look to cheaper, internet-delivered options. Programmers are placing bets that they can wring as much revenue from services they market to consumers as they did from being part of a TV bundle.
Overseas, Discovery has a Eurosport DTC business and plans a parallel one under a $2 billion deal with the PGA Tour. But in the U.S. to date, the strategy instead has largely been to secure carriage on virtual MVPD services and even skinnier bundles like AT&T’s new Watch service, where Discovery has eight of the 30 channels offered.
Demand for skinny bundles like Watch favors Discovery’s stable of unscripted networks, Zaslav said, who will still want that programming even if they shave their cords. “The good news is, consumers are saying, ‘Enough!’ There’s enough quality content out there. … And unlike any other media company, we have full optionality” in reacting to that consumer sentiment.
The rise of streaming platforms on the scripted side is leading to clutter, Zaslav maintained. “To a consumer, they’re starting to look a lot alike,” he said. “We’re looking at that and saying, ‘We have this very differentiated basket that’s really compelling and global. And so we’re carefully looking at it. Should we align with some of the existing players? Should we go it ourselves? Should we align with a direct-to-consumer platform? Should we align with a global player? We’re having a lot of discussions and we feel very good about the fact that we have something quite different.”