David Zaslav has long been known as one of the cable industry’s biggest boosters.
But the president-CEO of Discovery Inc. is looking at a future where the worldwide linear channel business that built Discovery over the past 30 years is slowly fading in importance compared to its larger focus of amassing IP with global appeal. In the latest episode of Variety’s “Strictly Business” podcast, Zaslav discusses the philosophical shift that started with a simple question posed by media mogul (and major Discovery shareholder) John Malone half a decade ago.
Listen to this week’s episode of “Strictly Business” below:
“How well would we do if people could watch anything?” Zaslav recalls Malone asking him in a meeting about five years ago. Zaslav took a hard look at Discovery’s suite of lifestyle, documentary and how-to channels and realized that a lot of the content on was “second choice.” Malone’s question forced him to come to grips with the competitive impact of on-demand streaming, which gives viewers an array of choices, new and old, at any given hour of the day.
“That day five years ago we changed ourselves from a traditional media company to a global IP company. We changed the way we looked at our brands,” he said. “As we looked at them we asked ourselves, ‘Is this content that people would pay for before the pay for dinner?”
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Today, Zaslav and his team are looking to pounce on opportunities to corner the market on high-end content designed for “super fans” in key programming genres such as food, travel, automobiles, home design, niche sports, and how-to instruction. Discovery is focused as much on creating direct-to-consumer subscription products built around those verticals on streaming and linear platforms. That strategy drove the company’s $14 billion acquisition of Scripps Networks Interactive earlier this year. Discovery wants to own the foodie and cooking enthusiast arena with an online destination that compliments the long-form programming on Food Network and Cooking Channel.
Zaslav admits he was surprised that Wall Street initially took a dim view of the Scripps transaction. But this year Discovery shares are up 44% after taking a beating in 2017.
Zaslav aims to use Discovery’s sold foundation of nearly $3 billion in free cash flow generated by its 200-plus domestic and international channels to invest in the growth areas of the business, which are clearly digital and streaming.
In the wide-ranging conversation, Zaslav also offers some insight into how the Scripps deal came together (the fourth time was the charm with the Scripps family trustees as they paid more attention to the gyrations in the pay TV marketplace), and he talks up Discovery’s recent deals with the PGA for golf rights outside the U.S. and its investment in Olympics rights for its EuroSport linear and streaming sports services. And he addresses the likelihood that Discovery will be involved in M&A, one way or another, in the not-so-distant future.
“Media right now is a street fight,” Zaslav said. “I’m a fighter. I love it, and I love the business.”
“Strictly Business” is Variety‘s weekly podcast featuring conversations with industry leaders about the business of entertainment. Listen to the podcast below for the full interview, or check out previous episodes featuring FX’s John Landgraf, AMC Networks CEO Josh Sapan, Showtime’s David Nevins, Spotify’s Dawn Ostroff, Bankable Productions’ Tyra Banks, HBO’s Richard Plepler, and Entertainment Studios’ Byron Allen. A new episode debuts every Tuesday and can be downloaded on iTunes, Google Play, Stitcher, and SoundCloud.
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