Discovery just bought Scripps Networks. Now what? Global expansion, a possible new streaming service, and an eye on future deals.
Discovery CEO David Zaslav describes the newly-merged company as “the leader in real-life entertainment around the world.” His cable channels specialize in unscripted shows, which typically cost a lot less than scripted dramas and comedies.
With Scripps, Discovery is gaining HGTV, the Food Network and several other channels.
But those channels face the same challenges as Discovery’s existing brands like TLC and Animal Planet: Cable subscription declines, on-demand viewing behavior and constantly increasing competition for eyeballs.
So companies like Discovery are getting more creative — managing their existing subscription and advertising businesses while looking for new ways to grow.
The Scripps deal closed on Tuesday. Zaslav spent Wednesday morning at the Food Network’s test kitchen in Manhattan’s Chelsea Market. After a live-streamed town hall for new and old employees, he sat down with CNN for an interview.
Zaslav confirmed that Discovery is “thinking about” creating a Netflix-style streaming service as a home for some of its programming. Disney is actively pursuing this route, Viacom is considering it, and so are other major media companies.
“We’re thinking about it because we have a lot of great content,” Zaslav said.
But he also talked up the importance of the programmer-distributor relationship, since subscriber fees from distributors are the core of Discovery’s business. He suggested that Discovery could work with those distributors on a streaming service business model.
He’s definitely not counting TV out. “We think we could still grow our traditional business around the world,” he said.
Listen to the whole podcast here:
In the next few months, Discovery will take some TV shows from Scripps’ library in the United States and try them out on channels in other countries.
Discovery also sees digital opportunities relating to the Scripps takeover.
Food Network and its sibling Cooking Channel are both well-known brands. “Between Food and Cooking, you know, why can’t we own the kitchen?” Zaslav said. “We could own it with Amazon with Alexa. We could own it with a manufacturer like Samsung. We could own it with Google. But when someone comes into the kitchen, nobody has more recipes than us” or “more short-form content” about cooking.
So is Discovery talking with those tech companies? “We’re open for business,” Zaslav said.
Other highlights from the interview:
Zaslav on competition on the “field” of TV:
“The right side of the field in the media business is scripted movies and scripted series. And on that side you have Disney buying 21st Century Fox — a big moment. You know, why is Rupert selling 21st Century? Because that’s a tough side of the field.” Amazon is said to be spending $6 billion on programming. Netflix, $8 billion.
“If the media business was a soccer field, everyone else is going after that ball,” Zaslav said. “And we own most of the rest of the field globally.”
Zaslav on TV’s “new real estate”:
“The old world was getting real estate on basic cable around the world. The new real estate is, they have to pull you.” In other words, cable was pushed to you through a set top box and a TV guide. Consumers now have more power to “pull” whatever they want to watch by searching or clicking on an app.
“When people open up that screen they’ve got to say ‘I want to see Food. I want to see HGTV. I want to see Discovery. I want to see Oprah Winfrey.'”
Zaslav on “superfans:”
“When people love the Olympics, they’ll pay for it. They’ll pay to get it all. People love Food. People love Oprah. People love Discovery. They love cars. They love science. We’re still going to have our traditional channels. But if we can get those ‘superfans’ to pull us down on their phones, either together with distributors or together with the big companies like an Amazon or an Apple or a Google — if any of that happens, we’re going to be one of the very big winners.”
