Cable executives making bold moves to stay ahead of the curve
EmptyIn a world where emerging technologies are changing business models at breakneck speed, there's no greater mark of a leader than an executive who can take risks and anticipate change before it happens.
The realm of cable television, which is used to fighting for audience share amid the clutter, has three executives in particular -- Kenneth Lowe of Scripps Networks, David Zaslav of Discovery Communications and Lauren Zalaznick of Bravo-- who are moving their companies into the digital future adeptly, making bold acquisitions and repositioning their networks in the marketplace. As content moves from television to computer screens and back -- pushed by consumers who expect to get their entertainment on-demand -- each of these leaders recognizes the value of owning both content and distribution platforms, as well as having organizations flexible enough to move with the currents.
Take Lowe, an executive who is used to stepping forward without fear of embarrassment. "People looked at me funny when I pitched a network (HGTV) about grass growing and paint drying," he says.
Today, Lowe focuses much of the company's attention at leveraging its relationship with viewers into new business opportunities. Recently, Scripps has gone on a buying spree, adding user-generated content sites like Recipezaar.com to a staple of e-commerce platforms, including Shopzilla.com. The acquisitions help buttress a strategy of making personal connections with consumers that Lowe created for the company when he got Scripps on board to invest $50 million in HGTV in 1997 and purchase the Food Network later that year.
Now, thanks to Lowe's early decision to have the network produce its own content and embrace interactivity, Lowe says the company can "move content from TV to broadband to mobile with the ease of signing just one paper" and sell advertisers on the fact that "we take your viewers straight to the checkout line."
The company has launched broadband vertical sites like HGTV.com and DIYnetwork.com on the back of more than 27,000 hours of archived content. Online revenue for these sites have increased 26% to nearly $20 million, and the company is able to charge advertisers some of the highest rates in the online business.
In October, E.W. Scripps announced it would separate its businesses into two publicly traded companies -- one centered on its national lifestyle cable networks and interactive platforms, and the other on local media franchises. Wall Street responded positively to the news, sending shares of the company up 8% on the day of the announcement.
The hearty reception reflects well on Lowe, who will continue as president and CEO of Scripps Networks Interactive.
"When Lowe started out, cable was mostly a place that replayed
other programming like old movies and TV series," says former PBS head and current Paley Center for Media CEO Pat Mitchell. "He was producing 24-hour original programming. ... He told me that this was going to be important when everything was distributed digitally, and of course, he was right."
David Zaslav also knows the value of owning your own content. Since coming aboard Discovery Communications nearly a year ago, the new CEO has been pushing his company to focus on what its best known for -- original, educational programming -- and expanding Discovery online so as to take advantage of its library of content.
Zaslav came aboard just as ratings at the company's more than 100 cable channels worldwide had just recovered from a prolonged slump. The flagship station had found some hits in shows on crime and hot rod bikes, particularly "American Chopper," but Zaslav recognized this direction wasn't the right one for the company.
"My primary focus was to get back to basics," he says. "Discovery was the No. 1 brand on cable in 171 countries, and yet it didn't have the same strength and clarity in the marketplace that it did when I was growing up on cable."
Zaslav immediately set up meetings with 200 of the company's employees at all levels. Soon, the new chief had his crew thinking about Discovery's core values. As a result, many of the shows that had led to a ratings rebound were off the air or on different channels. "We exposed a lot of money with advertisers," says Zaslav, noting that later-year ratings reports soon justified his approach.
Zaslav also scaled back some divisions of the company and engineered a new "lean" hierarchy at the company. He put more power in the hands of fewer executives, who would manage all the aspects at each unit as if they were individual businesses.
"Sometimes reorganization is code for taking money out of a business," says Zaslav. "One of the missions here is not to stop spending money. If we saved $200 million, we weren't going to leave it on the table. We'd redeploy it to get a stronger audience, a stronger brand."
With the savings, Zaslav aggressively targeted online distribution outlets, acquiring Treehugger.com, a one-stop shop for green news and product information, and HowStuffWorks.com, a leading online resource for curiosity seekers.
At a moment in the media landscape when user-generated content is all the rage, Zaslav thinks there's potential in "expert-driven content" like the programming on Discovery and the content on HowStuffWorks. The sites allow Discovery's sales team to cross-sell to advertisers, as well as repackage Discovery shows, content owned by the company.
Zaslav says the company is in "real adolescence in figuring out how to create mutual value" with its cable and online properties, but that his experience in the cable business, which lost billions of dollars before seeing consistent revenue returns, has taught him to look first at the big-picture questions, later worrying about the details of making the financials work. "Sometimes you got to hold your breath and say, 'Make it work,'" he says.
"Make it work" is a mantra at Bravo's offices at 30 Rockefeller Plaza in New York. Not just a catchphrase on the network's biggest hit, "Project Runway," but also a phrase that popped up frequently when Lauren Zalaznick took her team on a corporate retreat earlier this year to discuss Bravo's future plans.
For the past three years at Bravo, Zalaznick has been creating a strong brand around shows with a consistent aesthetic feel, and promotions around new shows that run frequently. It's a formula that's been her hallmark since remaking VH1 from what she says was a "bastard stepsibling of MTV to full identity on its own," to her time at NBC Universal, where she launched Trio Network and built Bravo's success on the back of its first major hit, "Queer Eye for the Straight Guy."
Through the years, Zalaznick has devoted a lot of care and attention to Bravo's digital efforts.
"We launched our first blog in 2004," says Jason Klarman, executive vp marketing and digital at the network. "And in 2005, the idea of simultaneously streaming a show was unheard of. Lauren's view was that the Web was the ultimate platform that would drive TV."
In January, she took Klarman and others off-site to discuss the company's future. "We really challenged ourselves to reinvent the business of Bravo right then and there," she says.
The teams split into four groups, two tasked with "Bravo analog" and two with "Bravo digital." Everyone plotted development ideas on a matrix, ranging from easy-to-hard execution and unknown-to-known outcome.
"The two areas we focused most of our attention were unknown outcome and not that hard -- maybe we want to try it; and known outcome and hard to execute -- maybe we can't turn away from it."
The results of the four-day off-site, which were soon pitched during spring budget meetings with higher-ups at NBC Universal, became the genesis of the new Bravo Media, a reorganization that will center the company around various multimedia efforts and offline activities such as a talent-management alliance, publishing and merchandising.
"We've worked really hard to never let Bravo become linear," says Zalaznick. "That's how Bravo Media was born. We launched this notion for ourselves of 4-D. We're surrounding consumers with content and all the extensions and ways to get back and forth with our product."
The forward-thinking Zalaznick is already projecting what will happen after the television business goes away.
"We have long-range projects that basically keep us in the TV business relative to majority income for a decade or more," she says. "To be organized, to better anticipate and capitalize on emerging industry and market trends -- that's the goal in pushing out our little amoeba feed to catch what's coming off the table."