The Biggest Digital Threats to Traditional TV

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April 3 (Bloomberg) -- RBC Capital Markets Consumer Cyclical Analyst David Bank debate the future of media and digital content with Alix Steel and Jon Erlichman on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

What kind of content are they looking to create?

Short forms stuff.

5-10 minutes.

I am glad you highlighted a few events . that is not like a billion dollar price tag.

These kinds of deals are so important in talking about where we are going, whether it is the hollywood content providers like ron howard and brian grazer who could live in film and video for the rest of the life -- they're like if they wanted to but also thinking about where the future is going to be and a company like discovery that is very profitable come about also seeing there is so much traffic tied -- tied to online video.

This is not like the cable business or broadcast business where you are getting a license.

We're taking advantage of the worldwide infrastructure.

Whether it is on the web, i've had, cell phone.

So we see ourselves on every one of these screens.

The great thing is a great piece of content it's pushed all around the world.

Moving away from cable and tv and tv in making shows instead for the online forms out there.

Three-hour movie, apollo 13. for the record, i loved apollo 13. could but like the longest movie ever.

What is the kind of upfront capital for discovery here?

John has upfront discovery rush of front -- has the upfront on discovery.

We do not know the numbers yet but my sense is it is a pretty small lump -- pretty small number compared to this bigger ones.

I think the key is like a call option.

I do not think it represents a massive strategic shift.

I think it is a call option.

The amazon device is not about content but about distribution.

The key is the ecosystem itself is still anchored to gold in new york and time warner cable and channel 30. there is bloomberg tv.

That really need to -- needs to stay intact for the companies to benefit of the new initiatives as they mature.

We think it is a great time in media where we think you can take advantage of the small call options but the core business remains the focus.

I am wondering if there will be a crossover from the short form to the long firm -- form as an experimental venue to create programming.

Did they say anything about that?

One thing i ask is -- the goal is to not just have ron and brian grazer creating the content.

Also the expectation they might bring others along to do it, too.

I said, are those the kinds of people that will master this or the next generation that has been successful?

I think there will be an intersection.

Maybe that is what we can provide.

The infrastructure that may allow people where they are producing network and cable television and producing film and involved in creatively curious.

Here is a place where you can explore and experiment and the place you can intersect with people that are committing careers are ready to the internet and their voice on it.

L david described it as a call option, and yet it is very clear he do not know where the road goes yet.

I think that is why so many people are fascinated by it.

One thing that really interested me was that the discovery franchise, to me, the greatest strength is in the docudrama, reality-based programming area.

This initiative is like scripted short form comedy.

One of the greatest scripted producers in the world right now.

That, if anything, through me.

Seems like an association with this company, while it may be us -- maybe a fantastic strategic moved it seemed a little in congress.

We know that discovery went out and started building the business by acquiring provision three, which is different content than the kind you are talking about on the cable channels.

David laszlo knows the scripted marketing is a smaller chunk.

I think that was the thinking on that.

Maybe not unlike what discovery did where they branched out from discovery and animal planet and dealt with a very known celebrity in oprah winfrey to create the opera network.

That is where it is.

If you can cover more territory, why not cover more territory?

What kind of earnings growth do you expect from discovery over the next few years?

The stock is trading at a high multiple.

Discovery is a combination of two things.

Probably the highest growth in the pure play media cable channel sector.

The highest multiple but highest growth rate.

Arguably consistent 20 plus earnings growth.

The highest multiple in the group, the lowest nice to earnings ratio.

Still looks relatively cheap with a nosebleed 20 times multiple with growth in excess of that.

It is an odd thing.

Really high multiple but could argue it is still cheap.

China's largest e-commerce

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