Discovery CEO David Zaslav on Oprah's OWN Struggle: 'Everybody Should Relax' (Q&A)
With 14 networks and a $19 billion empire, the Discovery Communications CEO opens up to THR about OWN's struggles, whether Sarah Palin's TLC reality series may return and his (subpar) golf game.
This story first appeared in the May 25 issue of The Hollywood Reporter magazine.
David Zaslav shouldn't be on the defensive. After all, the Discovery Communications chief's 14 cable networks, including red-hot Discovery, ID and TLC, collectively have grown their primetime market share 8 percent this year; his company has a $19 billion market cap and reported revenue up 16 percent to $1.1 billion for the first quarter; and his 2011 compensation hit a cool $52.4 million.
But because of his high-profile partnership with Oprah Winfrey, the Brooklyn-born former lawyer -- who splits his time among New York, Maryland and overseas travel -- has spent most of the past year defending his $300 million-plus investment in the low-rated OWN network.
Zaslav, 52, who was intricately involved in the launch of CNBC and MSNBC during his nearly two-decade tenure at NBCUniversal, is assuring investors that the fledgling net will be cash-flow-positive by the end of 2013.
Zaslav, a married father of three who often is lauded for transforming Discovery into an international powerhouse (generating $4.24 billion in 2011 revenue) since he joined in early 2007, sat down with The Hollywood Reporter in late April to discuss TLC's about-face, Sarah Palin's appeal and why -- by his measure -- he thinks OWN is a success.
The Hollywood Reporter: When you assess your portfolio, what's the one thing you'd like to add?
David Zaslav: TLC has been a huge help to us, and we'd like that network to continue to grow internationally. Five-and-a-half years ago, it was the No. 25 network in America; now, it's a top-five network for women. It was particularly helpful during the recession, when our more male networks got hit hard with financial, auto and beer advertising going away. Eighteen months after we launched internationally, TLC is the No. 1 most-distributed female TV brand outside the U.S. We're in 130 million homes, and we're making money.
THR: TLC did an about-face a few years ago. What happened?
Zaslav: We decided we wanted to make TLC hipper and cooler. We moved it out to L.A. [in 2007], hired a bunch of young creative leaders and tried to give it more Hollywood appeal. We launched a bunch of shows, and within six months, the network was down 30 percent. The best decision I made in the 5½ years I've been at Discovery was going back to the board and saying: "The strategy was wrong. I was wrong." We're lucky in this business because we see ratings, which tells you every day how much people like you. We brought in [Discovery and TLC group president] Eileen O'Neill, and she spent a couple of months trying to figure out what we did wrong. The audience told us: We weren't Bravo or E! We were serving Middle America and Middle American values. We were the Anti-Hollywood Channel.
THR: Will we see Sarah Palin's Alaska back on TLC?
Zaslav: Maybe. She's a fascinating character, and she fits the brand of TLC because she is an authentic character who has a lot to say and creates her own path. The show really worked for us, and it's up to Eileen O'Neill and [TLC GM] Amy Winter whether there's more story to tell that would be interesting for Sarah and our audience.
THR: Oprah Winfrey recently said if she had known launching a cable network would be this difficult, she might have done something else. How did it feel to hear her say that?
Zaslav: Well, I talk to Oprah several times a week, and I see the side of Oprah that's having the time of her life. What she's getting to do with OWN is build a team to create a brand from nothing. I was lucky enough to be involved with the launch of CNBC, MSNBC and Bravo, and these things take time. Oprah is incredibly engaged, and we're having a great time. By my measure, we're having a lot of success.
THR: Define your measure.
Zaslav: I measure this channel against all the channels that I've been involved with during their launch and the channels in our industry that I've watched launch. Channels take two to three to four years -- it's hard. People only watch six to eight to 10 channels, so if you want to be one of those channels, then you have to create content so strong that people have to come not once, not twice but enough that, behaviorally, they start to feel like, "That's my channel."
THR: But in this case, the expectations were sky-high.
Zaslav: We believe this is a great idea, and in addition, when we decided to do this, Discovery Health had over 80 million homes but no subscriber fee. Today, we just did a deal with Comcast, and we now have deals with almost every distributor to support OWN. [Fees reportedly are in the 20-cent range.]
THR: Would you like to see Oprah do more on-air?
Zaslav: She does a lot, though; she does. When she did the Whitney Houston family show, we were the No. 1 network in America on a Sunday night. And so all of those things mean that everybody should relax.
THR: Winfrey said if she were writing a book on the experience, she'd call it 101 Mistakes. If you go back 15 months, what would you do differently?
Zaslav: I don't do that because we can play that game with CNBC, too. Here's what we would do differently with CNBC after 15 months: everything. We were the consumer news and business channel, and we had a reporter in the grocery store teaching you how to pick a melon.
THR: What's the biggest opportunity for Discovery?
Zaslav: We own all of our content; we have a 20-year library. There are now a number of other opportunities, whether it be Netflix, Amazon or TV Everywhere. It's our job to create the right economic model behind that, but it's exciting in that there's more bites at the apple.
THR: International has been a big priority …
Zaslav: Yes. We're now in over 210 countries, and some of those markets remind me so much of the U.S. in the mid- to late-'90s. We're lucky in that channels like Science, Animal Planet and Discovery are essentially universal in terms of their appeal. If you wake up in Moscow and put on the Science channel, it doesn't feel like an American channel, it feels like their channel. In fact, Discovery is Vladimir Putin's favorite channel. [The president of Russia said so in a recent media interview.]
THR: You've made a habit of rebranding channels, from OWN to Planet Green to ID. What's the strategy?
Zaslav: We [rebrand] -- some successfully, some not successfully. But our strategy as a company is to embrace risk, so we're going to take a lot of swings, and they're not all going to work. We tried with Planet Green; it didn't work. And we have a no-rearview-mirror philosophy here.
THR: One of the biggest successes is ID. Why?
Zaslav: We went into it thinking there's no one in this niche of investigation and crime. If you look at the heritage of the cable business, if you can own a niche, you have a good chance of succeeding. What surprised us was how compelling the interest and growth has been. When you look at the great success Les Moonves has had with CBS, the No. 1 network, a lot of it has to do with his creative talents -- but if you look at the output, a lot of it is fictional crime and investigation. We're trying to piggyback on the appetite in America for that content with nonfiction. From a standing start four years ago, it's the No. 4 network in America for women during the day.
THR: As a viewer, what do you watch?
Zaslav: On Sunday mornings, my wife, Pam, and I catch up on movies and Mad Men. I'm a bit of a news junkie, too. To this day, I'm a slave to CNBC.
THR: I know you're a big tennis player. Any other hobbies that help you unwind?
Zaslav: This past weekend, I played golf with Jeff Zucker, [Univision's] Randy Falco and Jim Citrin, and I had to sit at the first tee box and listen to a 10-minute debate as to who was going to get stuck with me. Poor Randy ended up with me, and of course Zuck set the stakes. He isn't working that hard these days, so he shows up with this tan, loving the idea that he's going to kick my ass. And he did that day.
IN THE OFFICE
Family Man: Zaslav's offices in Maryland and Manhattan are decorated with many pictures of his wife and their three college-age children, with whom he talks and texts regularly.
Mementos: He keeps MythBusters bobbleheads in his office, along with a photo of President Obama, a fan of the science show and former guest star, posing with Zaslav and hosts Adam Savage and Jamie Hyneman.
TV Overload: He keeps an eye on his channels by having some grouping of his 14 cable networks on at all times.
Newsman: The self-described news junkie often is glued to CNBC, which he helped launch during his tenure at NBCUniversal. "We went from business reporting to consumer reporting on how to tie a bow tie," he says of the net's early offerings.
MY BUSY DAY: An example of the ways Zaslav has filled his calendar this spring.
- 4:45 AM: Wake up; check BlackBerry; treadmill with CNBC, WSJ, New York Post, New York Times and trades online
- 6:30 AM: Call with Warsaw office; breakfast with Hasbro's Brian Goldner
- 8:30 AM: Corporate exec team twice-weekly call; kick off Joe Abruzzese's weekly ad-sales meeting
- 9:45 AM: Weekly channel meeting with O'Neill and Discovery's Nancy Daniels
- 10:00 AM: Business development team meeting re: Revision3; Discovery Kids Asia rollout plan
- 12:00 PM: Lunch with DirecTV chief executive Mike White; Q1 financial results review
- 2:30 PM: Texting with my kids; ID international launch update
- 4:00 PM: Prep for board meeting; floor walk to visit Animal Planet and ID production teams
- 5:00 PM: Videoconference with TLC's L.A.-based team; review TLC's summer marketing campaign
- 5:30 PM: Review tomorrow's schedule; watch rough cut of Animal Planet's Mermaids at home with Pam