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Despite a weak economy, the ruble crisis, a ban on pay TV advertising for foreign networks and new restrictions on foreign ownership, Discovery Communications is committed to operating in Russia.
CEO David Zaslav on Thursday told the cable networks company’s fourth-quarter earnings call that “we have conviction in Russia.” He added: “We have a big business there, we have great brands. There are some challenges in terms of the politics … by the end of year we need to restructure where we only own 20 percent of the entity. But there has been a lot of interest in our brands, in our content, in getting us value for that.”
Zaslav added that “there have also been some green shoots” around president Vladimir Putin “looking again at pay TV.” Zaslav has said that the Discovery Channel is Putin’s favorite TV network.
Concluded the Discovery CEO: “For us, we think Russia is a long-term growth market. There is certainly a lot of turbulence there. But our cost of content is very low. We have a huge amount of content in the Russian language that is already there and relationships. While others are saying ‘let’s invest less internationally and let’s walk away from Russia,’ we are staying in Russia, and we are continuing to push very hard on international.”
Discovery CFO Andy Warren said on the call that the Russian pay TV ad ban and other issues had a “significant” impact on the company’s 2015 financial guidance. “The difficult geopolitical situation in Russia” affects the company’s 2015 revenue guidance range by approximately $50 million, “driven by the cable ad sales ban as well as [the need to] renegotiate several pre-existing affiliate contracts in the region,” he said.
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