Discovery CEO Looks Overseas Amid Rise in U.S. Cord-Cutting

  • `There's still a lot of growth left,' Zaslav tells Bloomberg
  • Global strategy includes buying Eurosport, Olympics rights

Discovery Communications Inc. Chief Executive Officer David Zaslav said he isn’t worried about the rise of cord-cutting in the U.S. That’s because he’s taking a global view.

"As you look around the world, there’s still a lot of growth left," Zaslav said in an interview on Bloomberg TV Monday.

The Silver Spring, Maryland-based home of Discovery Channel, Animal Planet and TLC generated about half of its revenue outside the U.S. as of the end of last year. Discovery is expanding across Latin America and parts of eastern Europe where pay-TV subscribers are still growing in numbers, he said.

Much of that overseas investment has been in sports programming. This summer, the company took full control of Eurosport, a pan-European sports media group, and paid $1.4 billion for exclusive European broadcast rights to air the Olympics from 2018 to 2024.

“When we look at it, it looks a lot like ESPN looked 15 years ago,” Zaslav said of Eurosport in a separate interview during the UBS Global Media and Communications Conference.

Discovery’s international approach has had some challenges, however. Currency fluctuations were “a big hurt for us” this year, he said.

In the U.S., Discovery has responded to consumers’ shifting entertainment habits by working with distributors like Comcast Corp. to promote TV Everywhere -- the industry’s attempt to retain subscribers by letting them watch shows online whenever they want on any device.

Discovery is "a big cheerleader" for TV Everywhere, in part because the commercials are counted in the TV ratings, meaning Discovery gets paid for that viewing, Zaslav said.

Last week, Discovery introduced a new app called Discovery Go that brings together nine of its channels. The app still requires users to log in with a pay-TV account, and while programmers like CBS Corp. and Time Warner Inc.’s HBO have introduced Web-only channels that can be watched without paying for cable, Discovery hasn’t yet done so.

Discovery owns its own content, and could offer it directly to consumers who don’t pay for cable or satellite TV. That "may be happening in four years, five years or six years," he said.

Cord-Cutting ‘Trend’?

Zaslav said it’s still too soon to tell if cord-cutting will have a long-term impact on the U.S. pay-TV business.

“We don’t know gestationally whether this is a trend” that will increase “or if it’s going to stabilize or turn a little bit," he said.

Meanwhile, Discovery has completed about 80 percent of its distribution deals with U.S. pay-TV providers and has successfully negotiated rate increases in all of them, Zaslav said.

"Even if viewership declines a little bit, we will have growth in the U.S. for four to five years," Zaslav said.

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