The programming menu at Discovery just got a lot more flavorful.
The completion on Tuesday of Discovery’s $14.6 billion acquisition of Scripps Networks Interactive creates the industry’s largest group of lifestyle, factual, and unscripted entertainment cable channels as Scripps’ Food Network, HGTV, Travel Channel, and others merge with the owner of Discovery, TLC, and Animal Planet.
With Scripps in the fold, Discovery has formally changed its corporate moniker from Discovery Communications to Discovery Inc. Scripps CEO Ken Lowe has joined Discovery’s board of directors. As part of the transaction, Discovery is closing its longtime headquarters in Silver Spring, Md. The enlarged company will operate from home bases in New York and in the former Scripps headquarters in Knoxville, Tenn.
All told, Discovery is home to 19 channels that target a broad swath of adult demographics. Discovery CEO David Zaslav sees opportunities for the enlarged company to use its programming muscle to power new OTT platforms, with partners or possibly as a solo offering, and to make a more compelling pitch to advertisers looking to reach viewers across an array of niche affinity groups. Discovery will also have a greater ability to cross-promote high-priority programs on various networks thanks to the wider reach into the food, interior design, travel, and home improvement sectors dominated by the Scripps channels.
“We now have a full menu of demos,” Zaslav told Variety. “If we now go to an advertiser wanting reach to launch a new car or new brand, we can really cater to their needs between male and female demos. We have a very compelling offering, with more breadth and scale and flexibility than we had before.”
Zaslav promises that Discovery will “go into this upfront as one company” offering cross-network buys to advertisers in creative ways.
The other big opportunity that Zaslav is eyeing is the potential for Discovery channels to be anchor tenants of new OTT channel packages that are taking shape. Zaslav does not expect to force all 19 U.S. channels onto every new platform, but the scope of its brands can allow the company to offer niche-targeted bundles at a low price.
“We’re very focused on being on every skinny bundle offering, and we’re quite ambitious about the idea of whether we should create our own bundle,” Zaslav said. He notes that the pay-TV market in Europe has adjusted to smaller thematic packages of channels that are sold for far less than the $40-plus pricetag even for new skinny bundle entrants in the U.S.
“The U.S. is the only country where the cost of entry for consumers is $40, $50, $80,” he said. “Go anywhere else and you can get packages for $8-$10.”
Zaslav blames that on the fact that the largest media companies have used their clout to force carriage of sports channels and broadcast TV stations that add to the total cost. “As a result, you’re seeing a secular decline in the U.S. that doesn’t exist elsewhere,” he said. “Right now, we’re closing the door on families that don’t have a lot of money and on the youngest generation.”
Discovery’s strong footprint in international markets also promises to speed up the process of expanding Scripps channels around the world. Food Network and other Scripps flagships have a limited presence in a handful of foreign markets. That gives Discovery a lot of room to add channels or take the best of Scripps programming to enhance existing services, Zaslav said. The first order of business is to get Scripps content into Discovery’s “factory” that converts English-language programming into some 48 languages.
“We have a wealth of material,” he said. “We’ll do some experimentation, but we’re going to get at it quickly.”
Zaslav laid out the new management structure for the enlarged company last week. Former Scripps Networks Interactive chief programming officer Kathleen Finch, now chief lifestyle officer for Discovery, has the biggest channel portfolio with oversight of 11 outlets.
“Kathleen has been very impressive in her ability to grow brands,” Zaslav said. “We’ve been looking at Food Network and HGTV with envy for a long time in terms of how well they are run.”