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Discovery adds 500,000 streaming subscribers during Olympics

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Discovery adds 500,000 streaming subscribers during Olympics

As the company considers launching an over-the-top streaming service in the U.S. as it nears the end of its pending acquisition of Scripps Networks Interactive Inc., Discovery Communications Inc. President and CEO David Zaslav drew encouragement from the performance of the company's direct-to-consumer sports initiatives in Europe during the recently completed Pyeongchang Olympics.

Zaslav, speaking on the company's Feb. 27 earnings call with analysts, said Discovery surpassed the 1 million subscriber mark with the Eurosport Player, its digital sports app, which he called "our sports Netflix product," and its DPlay OTT service.

During the Pyeongchang Games, Discovery's first Olympics under a deal with the International Olympic Committee, Zaslav said the company added almost 500,000 Eurosport and DPlay subscribers. "While some of these subscribers will likely churn off in the weeks and months ahead, we feel great about the added brand awareness and engagement we have achieved," said Zaslav.

He said the platform delivered almost 3,000 hours of long-form content, as well as almost 700 short-form pieces executed daily in multiple languages. "It was a great accomplishment for our team and our company and it builds our confidence as we look to take our IP to every platform and every device around the world," he said.

Discovery CFO Gunnar Wiedenfels, reiterating previous guidance, said Pyeongchang "will be around break-even for full year and is expected to be cash flow positive over the life of the rights through 2024."

Wiedenfels said that $240 million in total costs for the games from South Korea — $140 million in rights and $100 million in production costs and other expenses — would largely be recognized during the first quarter, when the Olympics happened. He said only a portion of the revenues, fees from sublicensing deals and advertising, the smaller piece of the games' pie, will be recognized in the quarter.

He said the effect of linear and digital affiliate revenues will be spread throughout the year. "As we have stated before, the games has helped us secure higher rates for our linear distribution deals across our entire portfolio and depending on when these deals were negotiated," have had a positive impact before or after the Pyeongchang coverage.

In a release detailing Olympic viewing, the company said 15 million people used the integrated Eurosport app and Eurosport.com during the course of the Pyeongchang Games. The Eurosport Player had its best month ever in February, with daily video views up 166% from January and average daily unique viewers ahead 147% compared to February 2017.

Whereas past Olympics rights have been offered on a country-by-country basis, Discovery reached a $1.4 billion multiplatform rights pact across Europe with the IOC. In turn, the company, worked with advertising and public relations agency Publicis Media's Sport and Entertainment division on Total Video, a new measurement methodology aggregating data across Discovery’s free-to-air, cable TV, online and social properties, as well as those of its partners platforms. Total Video is akin in many ways to the Total Audience Delivery currency NBCUniversal Media LLC deployed for its coverage of the 2018 Olympics. Discovery presented the games in 48 markets and 22 languages across Europe.

According to Total Video, the Pyeongchang Games reached 386 million cumulative viewers, generated 4.5 billion views for each individual program or video watched, and scored 1.7 billion hours of video viewed overall. The company said 76 million people viewed the games online, including on social platforms and through the Eurosport app. There were 8.1 million interactions across all of Discovery’s digital and social media properties, including likes, shares and comments.

In Discovery’s top 10 markets across Europe, 58% of the population watched the Winter Olympics on the company’s free-to-air and pay TV platforms, or on its partners' platforms. Interest was especially keen in Sweden and Norway, which collected a Winter Games' record 39 medals, capturing an over 90% share of TV viewing.