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Sky CEO: Discovery is becoming less relevant


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Sky CEO: Discovery is becoming less relevant

? Darroch slams Discovery's poor linear and on-demand performance

? Premier League football costs lower operating profit

? Sky's original dramas to have "biggest year yet"

Sky plc CEO Jeremy Darroch launched a rare attack on Discovery Communications Inc. during the Jan. 26 presentation of Sky's half-year earnings, as the public dispute between the two companies heats up.

"[Discovery is] becoming less relevant. I can't think of a Discovery show in our top 100," Darroch said during the conference call.

"If they leave, we will invest elsewhere," he added.

On Jan. 25, Discovery Communications' U.K. unit said negotiations with Sky, over the cost of carrying its channels, had reached a deadlock. After months of fraught discussion, the group threatened to withdraw all 12 of its TV channels from Sky and NOW TV after Jan. 31.

However, Darroch argued that Discovery's poor on-demand performance had been unable to make up for dramatically lower linear viewing on Discovery's main channel.

In a "world of so much choice," Darroch explained, customers are simply "voting with their remotes."

The U.S. media giant, which is behind channels such as Animal Planet, said the changes would affect more than 5.5 million viewers. Shows on the chopping block include TLC's "Cake Boss" and "Say Yes to the Dress," Discovery's "Gold Rush" and "Idris Elba: Fighter," as well as the US Open on Eurosport.

Darroch's statements come a day after a representative for the pay TV company described Discovery's price expectations as "completely unrealistic."

"Discovery's portfolio of channels includes many which are linear-only where viewing is falling," a Sky spokesperson said Jan. 25, stressing that "we have been overpaying Discovery for years and are not going to anymore."

During the earnings call, Sky announced 500,000 new customers and a 12% increase in revenue to £6.4 billion for the six months ended Dec. 31, 2016. The Christmas week, which saw 145 million OTT streams, was a particularly strong one for the pan-European pay TV giant. The group said it had its best ever Christmas Day viewings.

However, operating profit was down 9%, to £679 million, after taking on £314 million in Premier League football costs.

Darroch admitted global economic pressures would lead to a "somewhat uncertain" consumer environment in the year ahead, but he said Sky would focus on churning out more original dramas and transforming itself into a dominant force among European studios.

Sky's original content pipeline consists of 11 major dramas set to air this year. This includes its new original 10-part drama, "Britannia," in co-production with Inc.

"Our content investments are working," Darroch stressed, adding that "Britannia" is Sky's most "ambitious" project to date.

"Our own original dramas will have the biggest year yet," he concluded.