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Upfront and Personal: Discovery may increase sales above historic levels

As the newly established Discovery Inc. prepares to embark on a series of presentations, the head of U.S. ad sales is contemplating selling more inventory in the upfront than the predecessor companies have in the past.

Before Discovery Communications Inc. received approval for its purchase of Scripps Networks Interactive Inc. on March 6, personnel from the two content companies were prohibited from speaking with one another. "We were independent and long-time competitors," said Jon Steinlauf, the veteran Scripps Networks president of national ad sales and marketing, who now serves as chief U.S. advertising sales officer at the combined company. "When approval came, we were faced with trying to put things together quickly for our seven-city sales ad sales tour and the upfront season."

The first roadshow is slated for Detroit on March 20. Presentations will highlight the value of "real-life entertainment." Steinlauf said in an interview that they will differ from a typical upfront because there will also be a focus on introducing the combined company to the media buyers and planners.

Whereas Discovery and Scripps have historically sold around 50% of their inventory during past upfronts, Steinlauf said during meetings with major media agencies over the past 18 months that conversations have turned to increased upfront volume.

The continued high price of scatter (ad time purchased during the season as opposed to the upfronts), up double-digits from upfront levels, has more clients looking toward "safer pricing in the upfront."

Not having clear guidance about when the deal would close — Steinlauf said signs pointed to late March or even early April — left the advertising sales executives in a tricky situation.

"We didn’t know if approval would come after we presented [as Scripps] in Boston [on March 22] and before we went to Atlanta [on March 27]," he said. "We might have had to change the whole thing [to reflect the combined company]."

Instead, with the March 6 closing, more than two dozen employees went right to work during a seven-hour sit down about how to structure the road shows. Steinlauf said the discussions centered on pace, the talent that would appear, executive speakers and slides.

With 13 networks from the Discovery portfolio and six from the Scripps camp, there won’t be time for all. He said eight or nine will get the "sizzle-reel treatment," while others will receive quicker mentions over the course of the presentation.

Steinlauf said the "goal is to present a unified company to the marketplace when we start the seven-city tour in Detroit." The upfront hits Manhattan April 10.

The new company's portfolio encompasses 19 networks, including Discovery Channel (US), TLC (US), Animal Planet (US), OWN: Oprah Winfrey Network (US), HGTV (US), Food Network (US) and Travel Channel (US), and a growing digital business driven by Group Nine Media and Scripps Lifestyle Studios.

Steinlauf believes the expanded roster is well-positioned in a TV world that has some 500 original scripted series, half of which are on streaming services like Netflix Inc. or Amazon.com Inc. or ad-free premium TV services. Moreover, much of broadcast and basic cable entertainment fare is watched on a delayed basis or with viewers skipping the messaging.

Facing a scarcity of impressions for quality audiences, Discovery approaches the market with an audience that watches most of its programming live: Steinlauf said 97% of the company's C3 viewing is done on a commercial same-day basis. Live impressions, he said, carry more value for many advertisers.

Regarding live programming, such as sports and news, the executive said pricing for sports tends to be high, noting that CPMs (cost per thousand) for the NCAA March Madness basketball tourney, which tipped off in earnest March 15, are in the $100 range. While MSNBC is enjoying a renaissance, news programming appeals to older viewers, he said.

Combining content across the broadened portfolio yields a 5 to 6 rating against adults 25 to 54, versus 1.0 demo marks for the broadcast networks, according to Steinlauf. The combined company proffers particular appeal among affluent women of that age, he said. For their part, Discovery Channel and automotive service Velocity (US) connect with men.