Summer ratings were “a little bit soft” at some of the bigger networks owned by Discovery Communications, according to David Zaslav, chief executive of the Silver Spring, Md., owner of Discovery Channel and TLC.
“Our challenge was that in July and August, we were a little soft on ratings,” Zaslav said, speaking to investors at a conference organized by Goldman Sachs. “We were coming up against tough comparables.” The company’s networks were up about 12% this year in terms of ratings, Zaslav said, and ” so, up against that 12%, we were a little bit soft.”
The executive said various networks – he cited TLC and OWN – were turning in better performance in September, but suggested the July and August results might dampen ratings performance for the company’s current quarter. When asked if Discovery overall would be able to maintain what has typically been mid-single-digit percentage ratings growth for the quarter, he responded, “I think we were definitely hurt by the fact that we were slow on our big networks.”
The chief executive said advertising seemed to be pacing well, despite the fact that most TV networks experienced a soft “upfront” market, when they try to sell the bulk of their advertising inventory in advance. “The summer months of July and August , really, the advertising market was fine,” he said. “We just didn’t have enough ratings points to take advantage of it, or we could have overperformed.”
Zaslav said Discovery would “take a bet” that demand for so-called “scatter” advertising, or ad inventory sold closer to air date, would offset what ad buyers have described as an upfront market that came with smaller price increases for ad time than in years past. Discovery sold about 49% to 50% of its ad inventory in the upfront, he estimated, compared with as much as 54% in markets when demand is more robust.
Separately, Zaslav said Discovery was moving deliberately when it came to decisions about whether to make much of its content available on subscription-based video-streaming services such as Netflix or Amazon. At present, the company derives “less than one-half of one percent” of its revenue from subscription-based video on demand, he said, and “we feel we should only do that [kind of] deal if we get significant value” for programming. He acknowledged that Discovery’s non-fiction and reality-based programming was not as glitzy as something like the celebrated Netflix program “Orange Is The New Black,” but said the company’s offerings had significant “quality” that was worth a good price.