Discovery CEO Touts International Growth, Outlook
David Zaslav sees more upside for the company abroad, including in China, as new international head JB Perrette says his business will for the first time contribute a majority of total company revenue this year.
NEW YORK – Discovery Communications will this year for the first time bring in a majority of its revenue from international operations as it continues to see upside in its foreign operations, CEO David Zaslav and his team said here Thursday.
Speaking to international journalists at a breakfast event ahead of the company's upfront presentation later in the day, Zaslav said the international business has gone from "an important initiative" to "a huge strategic advantage for us" and made more than $1 billion in revenue last year.
Also at the international media day, new Discovery Networks International president JB Perrette said he was "excited" about the outlook for the company's international business, which is celebrating its 25th anniversary this year. He said the acquisition of the majority stake in Eurosport International will drive international to contributing more than 50 percent of total company revenue for the first time in 2014. For 2013, international revenue amounted to $2.74 billion, with U.S. revenue hitting $2.95 billion.
Discovery is the most global major TV networks company, and "we are just getting started," Zaslav said. "We feel we are really in rhythm."
Zaslav and Perrette said the company doesn't feel like a U.S. company doing international business, but a global and local company. They also said that new network launches and continued investment in international content are going to be key drivers of growth abroad ahead.
Perrette also said new launches in new markets and existing markets also provides upside. For example, he cited China as a market providing opportunities for growth for Discovery ahead following a recent agreement to provide programming for a pay TV channel operated by WASU Digital TV Media Group.
"It's a market that we have so much excitement about because of its scale," but it has been difficult to find the right way to build a presence there, Zaslav said about China.
Perrette cited the launches of TLC networks over the past year in the U.K. and the Netherlands, with Germany getting TLC later this month. He called it a "new flagship brand" for Discovery globally with a female audience focus just like in the U.S. TLC is now available in more than 165 countries.
He called ID the next network getting a big push internationally.
Discovery's TV market share is growing faster internationally than in the U.S., and management sees more upside, Zaslav said in concluding. "This is a great time for Discovery," he said. "I spend more than half of my time outside of the U.S...We have a real strategic advantage."
Zaslav didn't immediately comment on possible additional acquisitions amid the auction of U.K. broadcaster Channel 5, but he said "Western Europe is bigger than the U.S." in highlighting the company's continued interest in Europe.
Discussing a past acquisition in Scandinavia that could serve as a model for Channel 5, he said "SBS is going very well for us. It brought us more squarely into the broadcast area. SBS has been a great test for us."
Discovery is among the companies that have made bids for U.K. broadcaster Channel 5, which entrepreneur Richard Desmond is looking to sell for $1.1 billion-plus. Viacom and Scripps Networks have also been involved in the process.
Final bids are expected mid-month. A Channel 5 spokeswoman couldn't be reached for comment.
Zaslav was also asked again about his team's Eurosport content strategy and interest in bidding for more expensive premium sports.
He said the initial focus is on not selling Eurosport on a pan-European basis from France anymore. "Our first strategy is to localize the infrastructure in all 55 countries" the network is in, he said.
Discussing content bids, he said "we have the ability to go for anything. It's more likely that we'll be disciplined." Key sports, such as tennis, winter sports and cycling, are locked in for several years by Eurosport. The company is evaluating possibly driving "more aggressively into premiere sports" in select markets or broadly, with joint bidding the most likely approach in those cases, Zaslav said. "We could put in a little and offer some content."
And Luis Silberwasser, chief content officer for Discovery Networks International, touted that Discovery now invests $1.6 billion in programming worldwide, up from $500 million a few years ago. "We want to invest in global content. The more we do that, the more we optimize" things, he said.
Asked if his team could look at sports-related factual content given the planned Eurosport deal, Silberwasser told THR: "We're starting to think about that area. The area of cars will be interesting area of collaboration opportunities" given that Discovery has the Velocity network in the U.S. and similar Turbo network in international markets and Velocity already has a block of Eurosport content.
Silberwasser also touted live events as a key priority for his team, including the upcoming live coverage of a Mount Everest special event. "All Discovery networks around the world will show this guy in a wingsuit flying off the Everest mountain," he said. "It is one of the most difficult and complex production jobs I've ever seen. We'll do more and more of this "watch with the world" content and bring the power of all our networks to the table for a global event."