Discovery, Sky Renew Carriage Agreement

Sky HQ - H 2016
Courtesy of Sky

Affected by a U.S.-style showdown that culminated in a last-minute deal were a dozen networks, including Discovery Channel, TLC, Eurosport, ID and Animal Planet in the U.K. and four in Germany.

Discovery Communications and pay TV giant Sky on Tuesday evening reached a new agreement after a U.S.-style carriage dispute, rarely seen in Europe, that had threatened to see Discovery take its channels off the Sky platform in Britain and Germany.

The companies held last-minute talks on Tuesday that led to a deal. Financial details weren’t disclosed, but both sides declared themselves winners. Sky said Discovery agreed to an offer Sky had made before Tuesday, while Discovery said the final deal marked an improvement over the previous arrangement and Sky's proposal.

Discovery, led by CEO David Zaslav, has had 12 pay TV channels carried by Sky in Britain, including Discovery Channel, TLC, Eurosport, Investigation Discovery and Animal Planet, among others, and four in Germany. Since acquiring European sports channel Eurosport, the firm has stepped up its efforts to get paid the types of carriage fees in Europe that it feels it deserves.

"A successful new deal has been agreed between Discovery and Sky which means Discovery’s portfolio of 12 channels will continue to be available on Sky, and Discovery Channel will continue to be available on [streaming-only service] Now TV in the U.K.," Discovery said in a statement. 

Added Susanna Dinnage, managing director, Discovery Networks U.K.: “We want to thank our millions of viewers and fans for their overwhelming support over the last few days. We have been humbled by the strength of the passion people feel for all our brands, including Discovery Channel, Eurosport, TLC, Animal Planet and Investigation Discovery. We have reached a new agreement that guarantees Sky’s customers access to Discovery’s wide range of channels and programs for years to come."

Stephen van Rooyen, Sky's CEO U.K. & Ireland, said: “We are pleased that we will continue to carry the Discovery and Eurosport channels on Sky. The deal has been concluded on the right terms after Discovery accepted the proposal we gave them over a week ago. This is a good outcome for all Sky customers."

Discovery in an updated comment later reacted to part of that statement, saying: "The deal we reached with Sky is meaningfully better than our former agreement and their proposal. Furthermore, our new arrangement enables us to control our destiny in more ways, with even more opportunities to invest and launch channels and consumer services."

Added Susanne Aigner-Drews, general manager, Discovery Networks Germany: “We have been in a business relationship with Sky for 20 years, and we are glad that will continue.”

Elke Walthelm, executive vp, programming for Sky Deutschland, said: "We are pleased that Discovery Channel, Eurosport 1 HD, Eurosport 2 HD and Eurosport 360 HD will continue to be available via Sky in Germany and Austria."

The companies had in recent days engaged in a war of words. "If an agreement is not reached, Discovery's much-loved channels and programs, which make up 50 percent of all viewing to the factual category on Sky, could disappear from Sky and [its streaming video service] Now TV households after January 31," Discovery had said late last Wednesday. "We believe Sky is using what we consider to be its dominant market position to further its own commercial interest over those of viewers and independent broadcasters." 

Sky, in which 21st Century Fox owns a 39 percent stake that the entertainment company is looking to take to full control in a recently agreed deal, previously said: "Despite our best efforts to reach a sensible agreement, we, like many other platforms and broadcasters across Europe, have found the price expectations for the Discovery portfolio to be completely unrealistic. Discovery’s portfolio of channels includes many which are linear-only where viewing is falling."

Discovery had also said: "Discovery is now paid less by Sky than it was 10 years ago, while Sky households are paying so much more than they did in 2007. This is despite Discovery having increased its share of viewing on the Sky platform by more than 20 percent. Discovery has also increased investment in original content by more than 30 percent since 2010, adding new channels to its portfolio, including Eurosport, TLC and [Investigation Discovery]." 

And it had added: "From Racing Extinction, Gold Rush, Say Yes to the Dress UK to Cake Boss and Warrior Apes, which is launching later this year, we create shows that make people's worlds bigger."

Sky CEO Jeremy Darroch on a conference call after the company's latest earnings report last week had said: "They are not hitting the sort of big shows that people expect and pay for. I can’t think of one Discovery show in our top 100 shows."

And Sky late last week added: "We have offered hundreds of millions of pounds to Discovery ... but that wasn’t enough. They asked the Sky group to pay close to £1 billion [$1.25 billion] for their portfolio of channels, many of which are in decline."

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