Discovery CEO: Scripted TV Market Is "Crowded," Netflix Deals Were "Not Rational"

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David Zaslav also says he is not worried about "skinny" pay TV bundles despite some people's concerns.

Scripted TV has become a crowded space amid cable networks' hopes of finding the next hit original, Discovery Communications CEO David Zaslav said Tuesday, chiming in on the debate about the rise in the number of original series.

Asked about Discovery's acquisition, together with Liberty Global, of U.K. production firm All3Media, he told the first-ever Discovery investor day in New York that the company was doing well with scripted shows, but acknowledged: "It’s become a very crowded marketplace." Highlighting that the marketing costs for scripted fare were "much higher," he said the company would not build a huge scripted production business via acquisitions.

"We're not going to try and build a big scripted factory," he said in comments that were webcast, saying like in a a high-school soccer game, all players tend to run towards the same ball in the industry. "It’s quite crowded, it's pretty expensive, and it’s looking more and more like the movie business," Zaslav said. Three to four years ago, scripted looked really attractive when there wasn't much on TV, but now most networks have made various commitments to scripted shows.

But he did laud the All3Media business for doing well and diversifying the company's business, and allowing it to participate in the rush to scripted originals.

FX Networks CEO John Landgraf recently suggested that there was too much TV, saying there was a content bubble. In comparison, Viacom CEO Philippe Dauman said "there is never enough good original content,"

Zaslav during the investor day's Q&A session also was asked about the appeal of Netflix outside the U.S., saying the industry was starting to realize that  "If you look at what happened here in the U.S., it’s not rational," he said in reiterating past criticism of the broader industry. "It’s just not rational that all of us in the content business sold our content to a distributor and have allowed that distributor to gain so much share and offer it without our brands ... Ultimately, content is what sells every platform."

He added: "I think the industry will get more rational about selling their content ... and I think a lot of the players are starting to recognize that."

In comparison, he said in foreign markets, subscription VOD services work in markets where many people speak English and like American entertainment, while the appeal is weaker elsewhere, such as in France or Italy, after "good early results." Zaslav explained "you really need to localize that content" in those markets.

Zaslav was also asked about so-called "skinny" pay TV bundles. He said in Discovery's deals with pay TV companies, the latter have "very limited opportunity" to reduce the carriage of Discovery's networks. "We are protected." In the long-term, skinny bundles will probably happen, but Discovery would be a beneficiary given the popularity of its content, he argued.

Concluded Zaslav: "There isn’t going to be a wholesale change ... We’re well-suited when skinny bundles happen."

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