Discovery CEO: News Channels' Election Coverage Hurting Other Cable Nets' Ratings

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David Zaslav

David Zaslav also tells the Goldman Sachs Communacopia Conference in New York about TLC's turnaround efforts and why Eurosport is like ESPN in 1995.

Discovery Communications and other cable networks in the U.S. have seen ratings affected this year by news channels' gains thanks to the latter's election coverage, CEO David Zaslav on Thursday told an investor conference in New York.

The exec said the "huge audience" for all news networks this election year, with growth of around 100 percent, is having a temporary impact on cable ratings.

He also discussed other factors affecting the company's performance this year. The Olympics and Brexit were expected to drag down Discovery's growth around the world by 3 to 4 percentage points, Zaslav said, but they ended up being a 5 to 6 percentage point drag. Still, he reiterated the company's full-year 2016 financial guidance.

Speaking at the Goldman Sachs Communacopia Conference in a session that was webcast, Zaslav also discussed recent ratings challenges at TLC.

"We love the niche, middle America," he said, but the company is looking to get more programming choices right. When that happens, TLC draws big audiences, said Zaslav. “We are in this process right now," he concluded. “With a little luck, we get that thing turned.”

Zaslav also said Thursday that the company's pan-European sports channel Eurosport is "like ESPN in 1995." Since then, "all the money went to sports" in the U.S., he explained. “In Europe, that hasn’t happened yet.”

The exec emphasized that Eurosport makes money, although it has lower margins than the rest of his company's channel portfolio so far. But it is strengthening the broader company's carriage fee revenue.

Calling Netflix a “terrific business," Zaslav also said that with Discovery's Eurosport Player, "in Europe, we have a sports Netflix." The company has said it has a couple of hundred thousand subscribers to the player already and is targeting 1 million next. Special sport events are one opportunity to charge people, Zaslav said Thursday. With Discovery having bought the rights to future Olympics in Europe, he said the company could charge for niche events. "If you want to watch judo, you pay for it," he explained.

Zaslav also told the Goldman event that Eurosport would start featuring the Olympic rings as of Jan. 1.

Pay TV trends and the Brexit also were topics of debate. "We have been a major player" anywhere in the world where companies have launched "skinny" pay TV bundles, meaning such bundles in the U.S. also will need to include Discovery's channels or face consumer criticism, Zaslav argued. And he said Discovery overall has monetization upside in the U.S., highlighting it has 13 percent-plus viewership, but only gets 6 percent-7 percent of revenue.

"Brexit was not good for us," Zaslav acknowledged in discussing the U.K. decision to leave the European Union, saying it created a "stall" in advertising. “We’re seeing a bit of a turn, but we haven’t seen a full recovery,” the Discovery CEO added.

Highlighting a key benefit of and upside opportunity for the company, Zaslav said Discovery owns its intellectual property and is focused on further monetizing its content by getting it on every device.

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