The “or else” is that Discovery will bust up the cable TV programming bundle by licensing its channels and shows online to pay TV competitors, or developing its own direct-to-consumer streaming service.
“The best thing for us would be full deployment of TV Everywhere” — streaming just to cable and satellite customers — CEO David Zaslav told investors today at Morgan Stanley’s Technology, Media & Telecom Conference. “From our perspective, that should have happened four years ago. It’s been talked about for the last five years.”
Since Discovery owns its shows, it would be “well positioned” to go over the top (OTT) — the industry term for streaming in competition with cable and satellite. “If you have niche content that has super fans, by definition it’s easier to reach those people because you have brand affiliation and content that they really love.” Zaslav says that his company has that with car fans who watch Velocity, crime buffs who watch ID, and Oprah Winfrey fans at the OWN joint venture.
“One of the things we’re looking at is science,” the CEO adds. “If we wanted to go over the top we could offer a science app… That’s a genre where there are real super fans, people who love science and can’t get enough of it and know to come to us.”
Can that be avoided? Zaslav expects the status quo to remain intact for about three years. But digital competition “will have some impact over the next 5 to 7 years.” To forestall that, distributors and programmers must come together this year to hammer out some of the nagging problems with TV Everywhere. “As an industry this is a moment for us.”
There’s still no common definition for the programming that pay TV services stream. “Is it the last season or the last 30 days of content? Consumers, when they go to TV Everywhere, have to have a sense of what they’re getting.”
The Discovery chief also wants distributors to pay up for TV Everywhere programming. New entrants including Sony’s planned PlayStation VUE, Dish Network’s Sling TV, Netflix and Amazon have been “very quick to write significant checks in order to get content.” But “it was a real battle for a period of time” to persuade cable and satellite companies to pay up.
Some of the antagonism goes back to the fights they had over payments to put TV shows on VOD. ” It would’ve been a very powerful weapon against satellite and probably would’ve had consumers asking, ‘Why do I need Netflix?'” Zaslav says.
On another matter, he says that his crystal ball on the advertising market remains cloudy after a Q4 when “the volume just wasn’t there….We were hanging out there with a lot of rating points that we couldn’t sell.” Ahead of the upfront sales season “there really is no visibility,” although there’ve been some improvements in Q1. Discovery’s financial projections don’t anticipate a big uptick in sales. “There’s no question in my mind that some of the money is moving to digital.” But “there are a lot of answers that we don’t have.”