MIPCOM: Discovery CEO David Zaslav Touts Scripps Deal, Investment in IP

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David Zaslav

"On [Wall] Street, we may not be in favor because we’re not going to [cut costs], we’re going to spend $400 [million] or $500 million on IP, and more money on building our direct-to-consumer business,” he said.

Discovery CEO David Zaslav on Wednesday said during a talk at MIPCOM in Cannes that the company's pending Scripps acquisition is “a little bit misunderstood” as Discovery focuses its future on wholly owned IP.

The acquisition will make Discovery-Scripps the largest global owner of IP, ahead of Disney.

There is synergy between the two brands, which have traditionally focused on unscripted, but the Scripps name has not seen the global reach of Discovery yet. Discovery wants to emulate the success of the TLC and ID global rollouts and buildScripps’ HGTV and Food Network as global brands.

Owning the IP and full library will save significantly on costs, Zaslav said, with factual and unscripted content having a significantly longer shelf life.

“When we looked at the marketplace we saw us, Scripps and Disney as the only three global media companies that own all of their content and have the ability to sell it to any of the takers — Facebook, Snap, YouTube, to the mobile players,” he said. “So we saw it as a significant acquisition of superfan IP.”

The two main drivers of content acquisition will be mobile companies and the “big four” platforms of Amazon, Apple, Facebook and Google, Zaslav said.

The European telecoms like BT, Vodaphone and Deutsch Telecom are snapping up content as a differentiator and the platforms are “hungry for IP,” he added.

“All four of them could go country by country, language by language, or they can come see us and we can do a deal for everywhere in the world. All the pipe companies could go out and buy their own sport or their own kids or their own IP, or they could come to us,” the exec said. “And that’s our play.”

Zaslav also has major growth plans for Discovery's direct-to-consumer products, particularly with sports. Discovery has launched a player with its Eurosport company that the CEO calls “sports Netflix,” which is distributed through Amazon in Germany. Niche interests have the most devotion — “We’ve found heavy churn if you offer everything,” he said — and Discovery is creating specific small bundles of a single sport that will have low-cost packages soon.

“Netflix is spending $7 billion to $8 billion on IP, and their only revenue is subscribers,” Zaslav said, contrasting it with his vision of 20 million micro-subscribers paying $3 to $5 per month for targeted content.

Europe will continue to be a growth market as the company already has local infrastructure on the ground in each territory, with India and China other target markets, Zaslav said. In India, Discovery is focusing on local IP in the kids’ space, and in China it is focusing on shortform mobile content that is locally relevant.

The company will continue to grow its amount of investment. While others are taking write-downs, Discovery will continue to invest. “We’re playing that IP long because we think it is going to pay off,” said the exec.

“On [Wall] Street, we may not be in favor because we’re not going to [cut costs], we’re going to spend $400 [million] or $500 million on IP, and more money on building our direct-to-consumer business,” he said.

“Our focus is what we look like three to five years from now," Zaslav continued. "As people are consuming more content, what do we have to nourish those audiences to be a long-term sustainable IP company?

"If we’re right, there’s going to be huge value creation, and if we bought all this IP and it turns out we’re no better than guys that are spending less on IP and cutting costs, then we’ll have to pivot,” he said, adding: “The question is, are we right?”