David Zaslav wants to conquer the world and if along the way he can help save
it, so much the better.
The chief executive of Discovery Communications does not have far to go.
Discovery, home to cable channels the Discovery Channel, Animal Planet and
now Planet Green - a 24-hour channel that teaches Americans how to live an
environmentally friendly life - beams into 173 countries already.
All Zaslav has to do is wake up some of his sleepier channels and drive up
thin overseas profit margins. As reality shows like Big Brother begin to
show their age, he hopes the day of the documentary has returned.
“A lot of reality programming is starting to look similar,” he said in an
interview at his US headquarters in Silver Spring, where visitors are
greeted in the lobby by a huge dinosaur skeleton. “Coming back [to us] for a
bit of nourishment, along with your entertainment, we hope is going to be
more attractive.”
Discovery’s reputation is for natural history and science programmes, like
NASA’s Greatest Missions celebrating the Apollo moon landings, but these
days its big hits also include more offbeat entertainment offerings such as
the survival exploits of Bear Grylls.
“At our core we have the best content, the stuff that really satisfies
curiosity,” said Zaslav, who joined from NBC in January 2007. “That is what
works best around the world.”
Zaslav’s newest baby, Planet Green, took the place of Discovery Home in
America in June. He wants it to be aspirational, not preachy. A cookery show
is broadcast from a Whole Foods store, for example.
“People should go away from watching Planet Green and be inspired a little
bit,” he said. “The idea is that we all can do better, not talk about what
anybody is not doing.” It is just the thing to draw in organic foodies and
people who drive a hybrid car, as well as advertisers chasing the green
dollar.
Even with 350m subscribers for its biggest channels, Discovery is the latest
American broadcaster to acknowledge that it must boost its overseas
business, where more than 70% of its audience already lies.
“To secure long-term growth in traditional and new media, it is now essential
that American companies build businesses outside the domestic market,” said
Pete Smith, the London-based president of NBC Universal International.
His company, one of the four big American networks, last year bought
Sparrowhawk Media, owner of the Hallmark Channel outside the US, and more
recently Carnival Films, producer of the BBC1 drama Hotel Babylon.
Discovery’s gross margins are 29% at its international arm, which made up a
third of its £465m revenues last quarter, compared with 52% at home. In
Britain, its largest territory outside the US, the company gets fees from
Sky and Virgin Media to air 11 channels, plus advertising income, which has
been suffering from a downturn.
Discovery’s latest top-rated show is Deadliest Catch, which follows fishermen
during the Alaskan king crab season, and was watched by 216,000 the week
before last. To boost its reach, Zaslav would love to start broadcasting on
Freeview.
“It is something all of us in the content business in the UK are looking at,”
he said. He will also be in the queue to launch high-definition channels
here.
Factual programming offers clear economies of scale. Without actors,
documentaries are typically cheaper to make than drama, export around the
world more easily than news or lifestyle programming and age well, which
bodes well for repeat runs.
“Whilst landmark productions certainly find space on BBC1 and BBC2, the genre
has to a great extent decamped and now thrives in the arena of dedicated
documentary channels," said Shane O’Neill, who runs Chellomedia, the
European arm of John Malone’s Liberty Global, which part-owns Discovery.
It is estimated that Discovery spends £100m a year on British commissions.
Zaslav wants more overseas productions for his American schedules.
“We have to get rid of this American domestic arrogance - the idea that what
is created in America is best in class and we’ll just push it. We need to
push and pull,” he said.
Discovery gained its independence on September 18, the culmination of a
year-long attempt by Malone to untangle the broadcaster’s complex ownership
structure.
Malone will combine his stake with that of Advance/ Newhouse Communications -
owner of the Condé Nast publishing house - to create a new public company,
but keep 23% of the voting rights.
Zaslav said that public status would give the company more scope to acquire
assets.
He has already bought a web-site, Howstuffworks.com. But Zaslav’s prime task
has been to add impetus and viewers to Discovery’s channels. That involved
ditching shows such as Monster Garage and American Hot Rod that strayed from
its stated aim to educate and inform.
Zaslav also began the hunt for strong brands to cut through the multi-channel
clutter. That is why Oprah Winfrey Network (OWN), run in conjunction with
the chatshow host of the same name, will replace Discovery Health in late
2009.
If anything else needs a makeover, Zaslav believes it is Discovery’s
long-standing relationship with the BBC. Discovery is the BBC’s most
important overseas partner. The pair co-produced the landmark
natural-history series Planet Earth, which drew huge ratings for Discovery.
Two more projects, Frozen Planet and a series on apes, are in the pipeline.
The BBC rakes in profits through its commercial arm, but how much it has
contributed to Discovery’s £2.5 billion market value is a moot point. At the
moment, the BBC’s reluctance to cede control of online rights to its
programming is a more pressing issue.
“The relationship was built at a simpler time,” admitted Zaslav. “Video on
demand didn’t exist when we did our deal. DVD sales weren’t part of the
overall business model.”
The pair also co-own Animal Planet, Discovery’s second-widest distributed
channel, and the lesser People+Arts in some territories. However, the BBC
took back advertising sales for its channels in America from Discovery
because it felt they were not being promoted hard enough. It is also trying
to rebrand all its overseas channels under the BBC banner – to which
Discovery is unlikely to agree.
“They’re still with us,” Zaslav added. “On the other hand, there may be
things, over the years, that they would feel better if they owned and we
would feel better if we owned. There’s a lot we can do together. Our
challenge is how to make that relationship work the best and I know that’s
their focus, too.”
