Discovery plans to offer full details on its soon-to-launch streaming service in December, the company’s top executive said Thursday, formally launching the owner of Food Network, HGTV and the Discovery Channel into the media industry’s rough-and-tumble streaming wars.
Speaking to investors, Discovery Chairman and CEO David Zaslav indicated he would discuss content, distribution and other basics of the effort, which would vie with rivals that typically place more reliance on scripted miniseries and movies. Discovery’s new service, Zaslav hinted, would bring to bear the company’s full library of content, which is largely stocked with unscripted programs devoted to lifestyle topics such as cooking, nature and cars.
Zaslav touted the fact that Discovery had retained control over the bulk of its library and had not ceded programming rights to other streaming carriers at a time when many media companies are rushing to do so. He also noted Discovery controls many international versions of its flagship programs, giving a new streaming service the ability to attract consumers around the world. “We have been holding our content for this moment for a very long time,” Zaslav said. which will lend Discovery an advantage as it seeks to parry with Netflix, Amazon and Hulu, among others. “People won’t say ‘Oh, no another 40, 50,000 hours of content,'” Zaslav said. “They will say, ‘That’s the stuff I love.”
Discovery is among the late entrants to the battle. AT&T’s WarnerMedia and Comcast’s NBCUniversal have recently launched streaming efforts and ViacomCBS is expected to expand its current CBS All Access hub into a product called Paramount Plus. But Zaslav believes his company’s effort can vie with competitors. “‘We will go at in a way we think is quite unique,” he said, and the ability to curry connections with audiences in different countries “is a big differentiator for us,” he said. “We are going to play into that and play into it hard.”
Discovery unveiled those details as it posted a third-quarter profit despite a slump in ad revenue at both its U.S. and international operations. The company enjoyed a tax benefit and relied on cost-cutting maneuvers to navigate through conditions caused by the coronavirus pandemic.
The company said revenue fell 4% — with U.S. advertising sales down 8% — but cut down on expenses and narrowed tax expenses from the year-earlier period. That helped buoy a 15% increase in the net income available to the company, which rose to $300 million, or 44 cents a share, compared with $262 million, or 35 cents a share, in the year-earlier quarter. Earnings totaled 81 cents a share after being adjusted for amortization costs and restructuring costs.
“In the midst of macroeconomic uncertainty with the ongoing COVID pandemic, as well as the continuing evolution of our industry, we remain focused on positioning Discovery for long-term growth and shareholder value creation through the execution of our strategic priorities, including our next generation initiatives,” said Zaslav in a statement.
In the U.S., revenue fell 4% due to shortfalls in advertising and despite increases in fees from distributors. Discovery said subscribers to its fully distributed networks were down 4% in the period, while subscribers to its total portfolio of networks was off 6%. Revenue from international operations fell 5%.
The company has positioned itself as an alternate to other media companies by providing unscripted programming focused on broad-niche topics like food or lifestyle, while bolstering its holdings with investments in providing sports to European audiences. During an investor call Thursday, Zaslav said the Discovery planned to unveil a “roadmap” for its plans to unveil a new streaming-video service in early December.