Joanna, Chip Gaines Channel Venture With Discovery Will Include Direct-to-Consumer Offer

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Discovery CEO David Zaslav

The partnership with the former 'Fixer Upper' hosts will "take a network that is doing OK and take it to the next level," says Discovery CEO David Zaslav.

Joanna and Chip Gaines, the former hosts of HGTV hit show Fixer Upper, are hard at work on creating a linear network built around them, which will also have a direct-to-consumer offering, Discovery CEO David Zaslav said on the company's quarterly earnings conference call Tuesday.

The couple late last year announced plans for a lifestyle network inspired by their home and lifestyle company Magnolia in Waco, Texas. Back then, it was understood that they would own a minority stake in the network, which would be one of Discovery's weaker channels in terms of ratings.  

Zaslav said Tuesday that Discovery has focused on growing its eight core networks, which account for 85 percent of the firm's carriage fees. HGTV became part of Discovery in its $14.6 billion acquisition of Scripps Networks Interactive last year. And he reiterated past comments that "over time, you will see fewer channels" in the pay TV industry as weaker networks may be shuttered amid ratings pressures and digital competition. 

But the Discovery boss said the company still sees opportunities for channels with strong offerings built around popular brands and personalities. "We also have Chip and Joanna who are hard at work, and we have been down to Waco," Zaslav said on the call. "We think that is a very unique opportunity to enhance a channel and grow a channel. No other media company in the last couple of years has been able to go on offense and grow as many channels, in fact most media companies haven't launched any new channels. And we have ID that didn't exist, the number 1 cable channel for women in total day, we have the Oprah Winfrey Network, number 1 for African-American women, we launched Velocity." 

Continued Zaslav: "We now have an opportunity, with Chip and Jo, to take a network that is doing OK and take it to the next level, but...we also have a real vision for that in terms of going direct to consumer."

He didn't provide further details or which network they will rebrand. Observers have in the past suggested that the Gaines venture could use the DIY channel, Destination America or Great American Country.

Earlier during the earnings call, Zaslav had emphasized several times that Discovery is looking to build a business around attracting consumers looking to "watch and do," mentioning how fans of the Food Network also look up recipes or golf fans can watch the company's GolfTV streaming service, which it has been developing with the PGA Tour, and also buy golf equipment and watch Tiger Woods for instruction. The Gaines partnership fits that "watch and do" mantra. "We have an opportunity in this watch and do" space, Zaslav said, highlighting that it differentiates the company from the watch-only focus of scripted content on the likes of Netflix, Amazon Prime, HBO and Showtime.

The Gaines run Magnolia on their own, "but we think there is a lot we can do together," Zaslav said.

At a December investor conference, Zaslav had expressed his disappointment about the exit of the Fixer Upper stars, saying it "sucked all of the air out of my lungs" because "I couldn’t take my eyes off the two."