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Discovery looks to legacy distributors as partners in streaming arena


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Discovery looks to legacy distributors as partners in streaming arena

As it evaluates more direct-to-consumer streaming opportunities, Discovery Inc. is looking to work with legacy distributors in delivering such content via their broadband pipes.

The nonfiction-based content provider has steered an aggressive digital path with genre-specific offerings. Its TV Everywhere platform for its cable networks has been performing well, while it has already launched streaming subscription services, including Golf TV, Motor Trend and Food Network Kitchen. A streaming channel tied to Chip and Joanna Gaines — the home renovation couple and stars of HGTV (US) hit series "Fixer Upper" — as well as an international and natural history service are in the pipeline for this year. Then late in 2019, Discovery executives began discussing the possibility of rolling out a broader-based DTC service.

Discovery President and CEO David Zaslav, speaking at an industry conference on Jan. 8, was less definitive about the aspects of any new broad content offering and whether it would bow in 2020. Zaslav did note that since Discovery owns almost all of its intellectual property, it has the "ability to do anything" it wants with its content.

"But having said that, we're in some pretty meaningful discussions with our existing distributors because our view is we should figure out how to make them partners," he told investors.

At the event, Zaslav lauded Charter Communications Inc. and Comcast Corp. as well-run companies with large broadband bases. He also pointed to the affiliate deal the latter struck today with ViacomCBS Inc., which includes offering CBS All Access on its Xfinity X1 linear and Flex streaming platforms later this year, as "a very positive step forward."

He also extolled the success The Walt Disney Co. is enjoying relative to customer adoption of its streaming service Disney+ through its promotional program with Verizon Communications Inc. The gambit has helped provide the telco with a hedge against churn and a means to attract new customers to its enhanced service offerings, Zaslav said. Verizon unlimited wireless customers and new Fios internet and 5G home internet subscribers can receive Disney+ free for one year.

He said that is something Discovery is looking at with cable and satellite distributors, and "those are discussions we're having with mobile players in the U.S. and everywhere in the world."

To that end, he said Discovery is well positioned because in many markets, there are two or three major phone competitors. "If you're a mobile player in Asia, we have all the golf [through Golf TV]. In the U.S., we have great natural history and female content."

Zaslav said while the company has been performing well in terms of free cash flow and advertising, among other metrics, Discovery cannot continue as a growth business by remaining only on legacy platforms. He noted that linear business is declining in the U.S. while growing abroad at 1% to 1.5% clip

"That spillage is people that know our brands, love our brands, and we need to reach everyone eventually, everyone in the U.S. and everyone outside the U.S. that has any device," he said. "We need to be on those devices long-term."