Discovery CEO on Lifestyle Programming Amid the Pandemic: "We Are the New Sports"

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Discovery CEO David Zaslav

David Zaslav says the firm's channels are a big draw amid stay-at-home orders and sees potential M&A opportunities: "There will be some companies that have great IP or great assets that are facing some difficulty."

With sports around the world put on ice amid the novel coronavirus pandemic, Discovery's lifestyle brands — HGTV, DIY, the Cooking Channel and Food Network — are the new hot properties, CEO David Zaslav argued on the company's Wednesday earnings conference call.

"We are the new sports," he said. "Our channels are the new sports. The numbers are huge" with audiences looking for real-life content and authentic personalities. "The engagement with our characters and our talent is enormous. We are the real-time player right now on television, whether it is Mike Rowe on his couch or Guy Fieri or Ina Garten or Ree Drummond. We are 350 hours of live content."

Added Zaslav: "When you look at what is going on in the U.S., you have news networks and then you have TLC and HGTV as the big networks."

Discovery, which in 2018 closed its $14.6 billion acquisition of Scripps Networks Interactive, is seeing "talent enthusiastically creating new content" despite stay-at-home orders, taking people into their homes, garages and the like, with their families at times helping to shoot programming.

Zaslav shared that "many global distribution partners" have asked "to include a number of our channels in their free previews for broader availability" to their viewers amid the pandemic and agreed to it. "While this incremental distribution will mostly be temporary, viewership across networks like DIY are up over 100 percent, and many of our networks are reaching all-time highs," he said. "Some of these viewers who have reengaged with or discovered our networks for the first time will continue to make us a part of their everyday viewing even after this moment passes."

He later touted the potential for Discovery to boost its audience share across markets, saying: "People are spending a lot more time with our channels."

Zaslav once again argued that Discovery had "strategic advantages" with its differentiated content doesn't compete with scripted peak TV fare and is cheaper to produce in shorter cycles. He mentioned that the company has, for example, seen the creation of more than 50 self-shot shows, such as TLC's 90 Day Fiancé: Self-Quarantined, that were turned around within weeks, sometimes even days.

Zaslav on Wednesday also said Discovery is looking forward to the postponed launch of Magnolia, the network and streaming service joint venture with Chip and Joanna Gaines, saying, "There is a huge and special appetite for Chip and Jo," giving his team confidence for a launch to a "very large audience" on TV and online.

Asked about potential M&A opportunities created by the virus crisis, Zaslav said, "It took us a very short time to absorb Scripps," showing the company knows how to integrate acquisitions that add intellectual property and "great characters."

He said, "There is some good stuff out there," and "we are looking at everything," with one potential opportunity being "great companies" in weaker financial positions. "Depending on how this goes over in the next several months, there will be some companies that have great IP or great assets that are facing some difficulty." Some of them "have already come to us and said, 'Hey, we look a lot better with you,'" Zaslav said. "We are going to be very careful and deliberate. … This is really a unique moment. … If you see us do something, it will be because we think it's going to help us grow faster in this new and changing world."