Discovery Communications Eyes International Growth Opportunities

Joint venture networks OWN and The Hub are among networks that could expand into foreign markets as CEO David Zaslav says he is spending up to 40% of his time abroad.

NEW YORK -- Discovery Communications is focusing on further growth opportunities outside the more mature U.S. market, including possible international distribution for its joint venture networks OWN and The Hub.

At a press event here Friday, Discovery Communications president and CEO David Zaslav said that within several years, he expects international to account for a majority of the company's financial performance. He didn't mention a specific time frame for that, but international currently contributes about a third of the company's operating cash flow, up from 10 percent just a few years ago.

Zaslav also told reporters, including reporters from various countries who had been flown in to attend Thursday's Discovery Communications upfront presentation and Friday's press event, that he has been spending an increasing amount of time outside the U.S. and expects to spend about 35 to 40 percent of his time on international trips.

"It's really where we have a great opportunity for growth," he explained. "These are markets that feel like the U.S. 10 years ago," Zaslav added, pointing to cable's subscriber, carriage fee, viewership and advertising gains back then. But he emphasized that despite the Friday event's focus on international opportunities, tthe U.S. market will continue to be central for Discovery Communications in terms of creative operations, business and financials. 

The cable networks company has already held some initial talks with TV distributors in international markets about possible carriage deals for OWN, a joint venture network operated with Oprah Winfrey that is already available in Canada, and could also explore international expansion
opportunities for kids channel The Hub, in which toy giant Hasbro is Discovery's partner.

Discussing OWN, Mark Hollinger, president and CEO of Discovery Networks International, said the focus is on establishing the network in the U.S. first, but he signaled that discussions for a push abroad could come into focus later this year. "We are confident there are markets it will do well in," he said without disclosing potential foreign markets for OWN.

Zaslav said OWN is about living your best life, a notion that Discovery feels will resonate in other countries. "We are looking [at it] with Oprah either as a network or in other ways," he said without providing more specifics. "Over the next year we'll be talking to distributors around the world."

Zaslav also said that Discovery has had talks with Hasbro about their U.S. venture The Hub and potential international strategies. He didn't go into details.

Discussing 3net, a 3D joint venture channel with Imax and Sony, executives said it could also be in for international expansion own the line with the U.K. and Japan possible first markets. If demand for a full channel isn't strong enough, which he predicted would be the case in many markets over the near-term, a VOD offering could make sense in foreign markets, Hollinger said.

Discovery Communications is also increasingly approaching content and business with a global mindset and international opportunities in mind. The company on Friday unveiled the launch of a virtual global unit that will be part of Discovery Studios and focus on developing content franchises for its global channels. As part of that, the firm has signed global program development deals with international producers Shine Group, All3Media and WTFN.

Discovery management also said that the company this year launched a global programming committee to evaluate content for its potential to travel into other territories, including to and from the U.S.

For example, the plans to launch Velocity, a channel for upscale males, in the U.S. were made based on lessons from overseas where Discovery has had success in a number of markets with similar networks using the brand Turbo, said Zaslav.

Non-fiction content tends to travel better than fiction, giving Discovery an advantage over other media companies, executives said. And in company programming decisions, a program about an expedition to Everest may these days win out over a show about a trip to the Grand Canyon because of more focus on global appeal. Said Zaslav: "We're more cognizant that these are global brands."