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Zaslav Backs TV Everywhere

9/20/2010 12:01 AM Eastern

Discovery Communications
has resisted the lure of providing
its content online in the
past, but CEO David Zaslav said
the programmer would be open
to the TV Everywhere concept
with one caveat — it has to make
money.

So far, Discovery has been slow
to embrace online content delivery,
opting instead to use its websites
to deliver snippets of video
aimed at driving viewership of
its TV channels. Speaking at the
Bank of America Merrill Lynch
Media, Communications & Entertainment
conference in Newport
Beach, Calif., last week, Zaslav
said that could change with the
onset of TV Everywhere and an
ability to monetize Web content.

“Our deals provide that distributors
have the right to our content
through to the TV set,” Zaslav
said. “We have been very careful
about not putting our content
out onto other platforms when
the economic model doesn’t
support it. TV Everywhere is actually
something we are very encouraged
by. If we can get our
content through TV Everywhere
authorized out onto the Web, and
Nielsen can measure it or someone
can measure it so we can
monetize it, it would be very attractive.”

While TV Everywhere offers
a future revenue opportunity,
Zaslav was equally encouraged by
the impact the January launch of the
Oprah Winfrey Network could have
on carriage fees for the channel.

Zaslav said that, currently, Discovery
Health — which OWN is
essentially taking over — gets minuscule
carriage fees compared
to other Discovery networks
(SNL Kagan estimates Discovery
Health gets an average of 12 cents
per subscriber per month from
distributors). That should change
once Oprah takes control.

“We think there is a meaningful
opportunity if we can build a
strong network with the Oprah
brand and all the resources that
we’re putting on it,” Zaslav said.
“We’re bringing a lot of value to
the cable industry — Oprah herself
coming to cable is a big value.
If we can build that, our position
is that we should be able to
get value over time. We are having
discussions with distributors
now, and those are ongoing.”

Zaslav wouldn’t say what the
network will ask for in carriage
fees. Several reports have estimated
OWN could attract between
40 cents and 50 cents per
subscriber per month.

Zaslav was also encouraged by
what he characterized as a strong
upfront market, which should
drive increases in advertising. He
added that ad revenue was up 13%
in the second quarter, and guidance
for the third quarter was for
another increase of 13% or more.

“We will be [up] more,” Zaslav
said.

The Discovery CEO also had
high praise for the ID: Investigation
Discovery network, which he
said is the fastest growing network
in the Discovery Communications
fold. And while he said that all of
Discovery’s networks are profitable,
FitTV and Military Channel
may undergo some changes in the
future, perhaps along the lines of
its Discovery Kids network, which
in a joint venture with toymaker
Hasbro will relaunch in October
as The Hub.

“Some of our channels, we are
trying to figure out what’s the best
use,” Zaslav said. “They are profitable
today, and if we had our
way we would build those channels
ourselves. FitTV and Military
are two of the channels that we’re
trying to think of; for now they’re
profi table but what could they be
to have a bigger audience, a stronger
brand, a bigger contribution?

“We have been investing less
in those channels as we look at
our opportunities either with a
joint venture opportunity, which
we would only do if we thought
that somebody brought something
to the table that would
make the channel significantly
more valuable, like an Oprah or
Hasbro.”

September