Discovery CEO Says Regional Sports Nets May Get "Puked Out" of Skinny TV Bundles

David Zaslav - Getty - H 2019
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David Zaslav also tells a Goldman Sachs investor conference that within two to three years "our biggest cable network in the U.S. is going to be this Go platform" of on-demand content apps.

Discovery CEO David Zaslav told an investor conference Tuesday that regional sports networks may end up getting "puked out" of "skinny" pay TV bundles and commented on industry consolidation and Netflix's "enormous" streaming rights deal for Seinfeld.

While U.S. consumers seem to like the idea of such offerings, he said that "the real issue that we have is that there is too much stuff that is being leveraged into this so-called skinny bundle." Speaking at the Goldman Sachs Communacopia Conference in New York in a session that was webcast, he added: "There is no such thing as a skinny bundle with a regional sports network that costs $10.… Unfortunately, some of the bigger players have enough leverage to force those in."

Zaslav argued that he has heard from skinny bundle distributors that they don’t want to pay for and carry such networks. "Regional sports may get puked out, because it is very expensive, viewership is low, and it may have tipped over," he said. "If that would happen, that would be a good thing for the ecosystem."

Calling it "depressing to see the numbers of what people are watching on some of these skinny bundles and see where the economics are driven," Zaslav argued: "We’re hurting our own business."

The Discovery CEO suggested that it was "amazing" that pay TV subscribers weren't down more amid cord cutting given the rising cost. While the basic cable bundle is "great," he once again predicted that "it’s probably going to break." After all, "consumers are going to say what the...," he explained. 

Zaslav on Tuesday lauded Discovery's collection of authenticated Go apps, which allow pay TV subscribers to watch full episodes and live TV from its networks on demand, saying its users are "so delighted" and "watching it all day long," allowing the company to monetize their on-demand consumption. "It's only a smaller group, but it's a group of teenagers and 25-year-olds. They are not going to buy a $50 bundle."

And Go usage is growing. "Unlike any other media company, we have aggregated these Go apps, and we think in the next two to three years our biggest cable network in the U.S. is going to be this Go platform," Zaslav said.

Discovery last year closed its $14.6 billion acquisition of Scripps Networks Interactive, further boosting its strength in lifestyle and non-scripted content. Zaslav recently said about further possible mergers and acquisitions: "We're always looking opportunistically, but we don't see anything significant at this point."

Asked Tuesday whether he expects more consolidation, he said, "I do think there will be meaningful additional consolidation" in the industry more broadly.

Zaslav has touted that Discovery dominates the part of the global TV business not focused on scripted fare, such as dramas. "There's only one company playing at our level in the other half of the content pie," he recently said of Discovery.

He picked up that theme again Tuesday, telling the Goldman conference: "What we saw yesterday where every player bid on Seinfeld [with Netflix winning the streaming rights] — I don't know what the number was, but it was enormous," proving that the scripted space is "competitive," and companies on that side of the business will want to serve a broad audience and will look for consolidation.

Discovery, on the other hand, is "not trying to please everybody...50 percent of what people watch is still the stuff that we have.... We have almost the whole pie in our affinity group.”