Discovery CEO David Zaslav continued to stump for the company’s $14.4 billion purchase of Scripps Networks Interactive, telling attendees at Goldman Sachs’ Communacopia conference that the acquisition “has delivered more than we thought it would.”
The deal, which closed in March, added the Food Network, HGTV and other cable mainstays to the Discovery portfolio. “We’re starting to reposition ourselves as not a great cable company but as the second biggest TV company in America,” he said.
Wall Street lately seems to wholeheartedly endorse that sentiment. Discovery stock is up more than 7% today, at about $30.50, on news of a dramatically expanded distribution relationship with Hulu. The company also announced carriage today on Dish’s Sling TV, meaning the only major skinny-bundle service it isn’t yet on is YouTube TV. (“We’re working on it,” Zaslav said.)
After flirting with launching a direct-to-consumer offering, Discovery instead has emphasized presence on skinny-bundle services. “If you’re a cord-never or you say you can’t afford the $120 [a month for a cable subscription], why should your only choice be Netflix? That has been my point for two years now. It makes no sense. It’s been held up by retrans and sports, and my view is that there’s only so long that can happen.”
Speaking of sports, Zaslav had a lot to say on the topic. Having spent years at NBC prior to his Discovery tenure, he recalled some “lessons” there as well as the “mixed results” on recent deals at Discovery. Bottom line, he said: “the short-term rental of sports is dangerous” for a company like Discovery, which owns its content around the world.
While the company did embark on a new sports push by taking a controlling stake in Eurosport, the ESPN of Europe, Zaslav displayed no appetite to enter the U.S. fray in a big way. He said he prefers to have Discovery remain focused on its unscripted programming and international reach than make a play for domestic sports. (He didn’t specifically mention the 21st Century Fox regional sports networks, but the comments didn’t augur a Discovery bid.)
“In the U.S., we’re late and the U.S. is really hyper-extended,” he said. Unlike other parts of the world, sports is a high-cost driver of retransmission consent revenue. “What happens to a broadcast network if it doesn’t have the NFL?”