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Discovery Communications CEO Touts OWN, ID, International Growth

David M. Zaslav | Discovery Communications
Stephen Lovekin/Getty Images

David Zaslav also answers questions about potential channel deals in Europe and says his company is growing in Europe despite economic challenges.

NEW YORK - Discovery Communications CEO David Zaslav on Tuesday reiterated his confidence in the continued growth of Oprah Winfrey joint venture network OWN and ID and said the cable channels company is growing in Western Europe despite economic problems there.

Speaking here at the 40th annual UBS Global Media and Communications Conference, he also said that the U.S. advertising market looks good right now and explained the company's rationale for pursuing a deal with French broadcaster TF1.

With Discovery not having a big presence in France beyond two channels, a deal provides "a potential opportunity to have a bigger pay TV play in France and sell more content we own in France," Zaslav said. Plus, TF1 owns sports network Eurosport, which is available in 59 countries, which gives it "a unique opportunity to reach a pan-European audience," he added. A deal would give both partners "more scale together," he said.

Zaslav declined to comment on the auction for German TV giant ProSiebenSat.1's Nordic networks business, which is currently in the final phase. But Zaslav reiterated past comments that his company would only do deals that allow it to grow faster. "We're the best international media company," making more money abroad than others, he argued.

Discussing Discovery's international business trends, he said it was hurt more by the Summer Olympics in Western Europe and elsewhere than thought. But growth has since picked up, with Discovery seeing a "very good quarter internationally," Zaslav said.

Things look "quite good" in Latin America, and Asia feels "quite good," he said. Western Europe is "slow," but Discovery is doing well. "We are actually seeing growth in Western Europe," and when economic and ad growth returns there, the company will get "a lot of growth," Zaslav predicted.

Asked about the U.S. ad market, Zaslav said it "feels quite good for the moment," even though "a lot could change with the fiscal cliff."

At OWN, the recent ratings growth has been "fantastic," making the channel one of the top three growing networks. "Oprah has been more involved since January, and she is energized," Zaslav said.

He reiterated a recently reaffirmed forecast that OWN will break even in the second half of next year. Asked if that forecast was dependend on OWN expanding its household reach from 80 million to 85 million homes, he said no.

"The cherry on top is we got Tyler Perry," Zaslav said. Two Perry show launches are set for spring, with more to come. Zaslav highlighted that on Saturday nights, OWN is typically the number two network for African American women, who are a key demo for it.

Zaslav once again also highlighted ID as a key growth asset. Over the next two years, the company will spend additional time and energy on ID to raise consumer awareness. Only 30 percent of consumers who have the network know they have it, compared with 90 percent for longer-established networks like Discovery, he explained. Ad rates and carriage fees will also rise over the coming years thanks to ID's growth, he added.

As one key goal, he cited bringing ID into 90 million homes, up from 82 million currently. "Those are guaranteed economics for us," Zaslav highlighted.

The Discovery CEO on Tuesday also reiterated that there are digital growth opportunities in the future, particularly subscription VOD and TV Everywhere content deals with existing pay TV distributors. Describing them as "another bite at the apple" for networks operators, Zaslav was also asked about key hurdles for these new opportunities. TV Everywhere deals are unlikely in the near future, he signaled, saying "
until it is measured and until we get fair value from our distributors, we'll stay back."

Email: Georg.Szalai@thr.com
Twitter: @georgszalai