Discovery CEO: Streaming Services "Only Exist Because of Our Content"

David Zaslav, speaking at the UBS Global Media and Communications Conference, touted the company's newly launched TV Everywhere app.

A week after the launch of Discovery's TV Everywhere app, CEO David Zaslav took the stage on Monday at the UBS Global Media and Communications Conference in New York to tout the move into authenticated streaming and offer a word of caution about licensing content to standalone over-the-top platforms. 

"We're unique in that we own all of our content," said Zaslav. "The best model is that we own it, and we own the relationship with the cable operator or direct-to-consumers. That doesn't stop us from doing deals with other players, but you should expect that we'll be rational."

He added that he does not view all SVOD models as rational deals for Discovery's business. "They only exist because of our content," said Zaslav, noting that without licensed content many over-the-top platforms "are dumb pipes." He continued: "We as an industry are supporting economic models that don’t make sense." 

Discovery has been slow to adopt the TV Everywhere business in the U.S., but with the launch of Discovery Go on Dec. 1, it has wrapped nine of its networks — Discovery, TLC, Animal Planet, Science and others — into one app that allows cable customers (Cablevision and Cox, with Time Warner on the way) to watch live streams and on-demand TV episodes. "We think TV Everywhere creates the most value and supports the ecosystem for the viewer and for us as content owners," said Zaslav, noting that at launch CPMs are double the CPMs on linear television. 

Discovery also is investing in digital platforms like YouTube, with more than 90 channels on the Google-owned streaming service and 300 million streams. "We think it's important to invest some, but I think we're pretty disciplined about it until we can figure out how to find the secret sauce,"  noted Zaslav. "We're close to as big as Vice, and we've haven't done a good enough job on monetizing." 

He also touched on several other topics during his 45-minute talk, including documentary Racing Extinction, which had its broadcast premiere Dec. 2 on Discovery ("It's an important documentary"), and new Discovery president Rich Ross ("One of the best creative executives that I've ever worked with"). 

On the topic of TLC, which has seen a decline in ratings resulting from the cancellation of 19 Kids and Counting following Josh Duggar's sexual-molestation admission, Zaslav admitted that the network has suffered. "We got a little unlucky with TLC, and we probably need to work a little bit harder at getting it right," he acknowledged, noting that he believes the network's strategy is right. "TLC is middle America. Forget New York or Los Angeles. We don't want anybody writing great reviews in the New York Times or L.A. Times."

Zaslav also is bullish about Discovery's Olympic-sized opportunity internationally. The company and its pan-European sports network Eurosport won a $1.45 billion deal for all TV and multi-platform rights in Europe to the Olympic Games from 2018 to 2024. "There's nothing better than the Olympics," he said. "If we get lucky, the Olympics, together with Eurosport and our 12 channels, we can find a way to grow our international business in a way that we haven't already." 

And what of Discovery's recent move to acquire a 3.4 percent stake in Lionsgate? Zaslav explained that the purchase has Discovery well positioned should it want to make a big push into the scripted content game. "We made a small investment, but we're really aligned commercially with Lionsgate," he noted. "To the extent that we want scripted content or other creative content, one, we're on the board, and two, we'll be able to see everything that they're doing."