Discovery CFO Welcomes AT&T Bundling Own Content in DirecTV Packages

Courtesy of Discovery Communications

"I actually welcome some experiments," Gunnar Wiedenfels said of recently acquired HBO and Turner content replacing Discovery fare in new digital packages.

Discovery Communications CFO Gunnar Wiedenfels on Tuesday insisted he's not worried by AT&T's DirecTV choosing to bundle HBO and Turner content in new digital packages that have no Discovery programming.

The U.S. cable networks group in 2016 first signed a deal with AT&T to get its content on the DirecTV Now national streaming service as it launched. But AT&T has just unveiled two new virtual pay TV packages that have no content from Discovery, AMC Networks, A+E Networks and Viacom, instead offering content from recently acquired WarnerMedia networks.

Existing DirecTV Now subscribers will see their monthly pricing increase by $10 starting with the billing cycle in April. In addition, DirecTV Now will only offer two packages to new customers, while existing users have five tiers available. The new packages are called DirecTV Now Plus, which costs $50 a month for 40-plus channels, and DirecTV Now Max, which costs $70 a month for 50-plus channels. Both include HBO, which is part of AT&T's WarnerMedia arm.

Wiedenfels told the Deutsche Bank 2019 Media, Internet & Telecom Conference during a session that was webcast that DirecTV was not abandoning Discovery content, as its lifestyle and reality TV fare will still be carried on its satellite TV, other existing DirecTV Now packages and the AT&T Watch product.

"I actually welcome some experiments and trying out different structures, more flexible pricing structures, some packages that are more sports-focused, others that are more entertainment focused," Wiedenfels said. He argued AT&T offering its own content in new streaming packages made sense as, echoing Discovery CEO David Zaslav, Wiedenfels argued U.S. pay TV's reliance on full carriage of pricey sport channels was unsustainable and more skinny bundles could help reverse an industry decline.

"We need some more flexibility and in the end that will be a better outcome for the industry," he said. Discovery in 2017 paid $14.6 billion to acquire Scripps Networks Interactive, a deal that brought together the two cable networks firms known for nonscripted and lifestyle content. That combination now includes popular cable channels like HGTV, Travel Channel and Food Network with Discovery networks like the Discovery Channel, Animal Planet, TLC and OWN.

Wiedenfels told investors Discovery now has a treasure trove of content it owns and can exploit across streaming platforms worldwide. "Our content has so much utility as we're able to create a 360, fully immersive experience for our viewers," he explained.

Wiedenfels talked about offering viewers of instructional cooking shows the convenience of having food ingredients delivered to their homes, or viewers of the upcoming GolfTV streaming service — which is backed by an exclusive multiyear global content partnership with Tiger Woods and the PGA Tour — being able to book tee times at golf courses.

The Discovery CFO argued it was crucial to tap into genre programming that appealed to "super fans," like cooking, golf and more recently cycling via a majority stake acquired in U.K.-based digital cycling brand Play Sports Group.