Twenty years ago Discovery Channel launched in the UK, and in doing so marked the birth of Discovery Networks International. In the two decades since, Discovery has fully penetrated the global marketplace. With a presence in 170 countries, including locations as remote as Burundi, Suriname and Liechtenstein, DNI brands are more widely distributed than the products of another global concern, McDonald’s.
DNI president and CEO Greg Ricca says the company’s global reach is so encompassing that it practically has nowhere left to expand to. ‘In the last five years, we probably developed the last of whatever territorial limitations we have seen,’ says Ricca. ‘In any multi-channel market that exists in the world, we have a business there.’
So how does a pay-TV outfit go from one channel in one country to 21 brands, and nearly 900 million subscribers (893 million cumulative subs, to be exact) in two decades?
Ricca cites the fact that Discovery was amongst the first cable broadcasters to distribute its channels internationally. ‘You look at the networks that have the broadest impact and penetration of audience, [and] virtually all of them were among the first brands that were launched and delivered,’ he says. The quick start helped DNI solidify long-term relationships with operators and advertisers. It also gave Discovery time to establish its flagship brand, the Discovery Channel, in the marketplace. Today, not only is the Discovery Channel one of the more recognizable global brands in television, it’s the engine that drives the company.
‘One of the great strengths that we had in particular with Discovery Channel, and also Animal Planet and some of our other networks, [is that] the content and product travels so well,’ says Ricca. ‘Every time we launch new networks, in essence, we are using content that we already own.’
One of the ways Discovery ensures its content is reusable is by focusing almost exclusively on factual. ‘The nice thing about Discovery and Animal Planet is that they are both factual brands and a lot of the programming they have is interesting to most markets,’ says Sahar Elhabashi, DNI’s chief operating officer. ‘A meerkat is interesting to almost anyone around the world, just as figuring out how myths work [through] MythBusters works everywhere as well.’
‘With rare exception, we are focused on the non-fiction part of the universe. That is still our place to be, where we find our success, where we are dominant,’ Ricca says. ‘That will continue to be our future and we will leave the fiction side to others.’
Tom Keaveny, EVP and managing director of Discovery Networks Asia-Pacific, agrees that the ties to factual programming are inherent in the company’s DNA. ‘It’s exploring your world, and it relates something to the human condition,’ he says. ‘If you look at our top programs around the world, they’re quite similar. Deadliest Catch is a huge performer; that doesn’t matter whether you’re in Australia or Argentina.’
While Discovery remains as big a global player as you are going to find, reality dictates that operating in different parts of the world is going to present different sets of challenges. As a result, much of DNI’s current strategy is locally focused, which means decentralizing operations onto a more regional scale. Currently Discovery International is divided into four regions: Asia-Pacific; Latin America/U.S Hispanic; Europe, the Middle East and Africa (EMEA) and the UK.
COMING TO THE UK
As the flagship brand of DNI, Discovery UK has 12 fully distributed channels including Discovery Science, Discovery Real Time and the sector-leading Discovery Channel.
‘Since its launch Discovery Channel continues to be the number one pay-TV factual channel in the UK,’ says Elhabashi, who is also acting managing director for the region.
Operating in one of the most mature markets in the world, and the home of factual programming, Elhabashi says Discovery UK is currently focused on optimizing its line-up of networks. ‘It’s really [about] tweaking our portfolio, making it even stronger than it has been and leveraging the global content that we have,’ she says. ‘Our success is going to come from increasing our viewership and driving ad revenue, and continuing to strengthen our relationships with affiliates in the UK.’
In terms of how this particular region fits into the overall picture, Elhabashi says Discovery UK continues to be a strong source of revenue, as well as a market that commissions a lot of content.
‘We have some shows that go to the US, a lot of shows that go all over the world, and those shows consistently rate in the top 10 or top 20 shows that travel around the world,’ says Elhabashi.
LATIN AMERICAN REACH
In its 20th year, and with 102 million cumulative subscribers throughout the UK and Ireland, Discovery UK is as relevant as ever. However, if 2009 is the 20th anniversary of DNI, it’s also the 15th anniversary of the year the company decided to aggressively pursue its international agenda.
Enrique Martinez was hired in 1994 as part of two launch teams that were set up in Latin America and Asia-Pacific. ‘Right after Discovery launched in the UK there was a little gap of time there before the company fully exploited its international plans,’ says Martinez, who has risen to managing director of Discovery Networks Latin America/US Hispanic. ’1994 is when we started stepping on the accelerator hard again.’
The evolution of Discovery Networks Latin America speaks to the nuances between different regions at DNI. Unlike the UK, which is over 90% penetrated, pay-TV in Latin America is still in less than a third of the households in the region. This requires more focus on diversifying the region’s portfolio of brands with an emphasis on appealing to different demographic segments. There is also an effort to fill in the gaps in terms of distributing the networks that have been launched.
‘There is still a lot of growth [needed],’ says Martinez. ‘Can it get to the 90% that we have in the U.S or Canada? In a reasonable timeframe, say the next five years, we should be approaching the 50% penetration mark.’
Other goals that are on the radar involve dealing with the challenges of a maturing pay- TV environment. These include piracy and an under-developed advertising sector as well as working on refining the ratings system. ‘We still find a lot of discrepancy. We are working closely with ratings providers to improve measurements, improve sampling and have a ratings service that is completely transparent and accountable,’ says Martinez.
What Discovery Latin America does provide is an opportunity for more localized content. According to Ricca, DNI splits its programming roughly 70-30 between globally distributed programs and local acquisitions and productions. ‘We certainly have plenty of air time and opportunity to bring in content that is culturally specific so that the overall feel can be accomplished,’ he says.
In Latin America this translates to offering programs in three languages and launching Discovery Civilization, a joint venture with the BBC that is exclusive to the region as well as Portugal and Spain. There are also two Hispanic brands that are distributed in the US market: Discovery en Espanol and Discovery Familia.
GROWING IN ASIA-PACIFIC
Localized content is a strategic concern in Asia-Pacific as well. At the moment there are seven brands in Discovery Networks Asia-Pacific, a region that must balance the challenge of distributing to both developed and developing markets.
‘For us the word is ‘relevance.’ What we do is local production that isn’t just for our region but [for] around the world,’ says Keaveny. Last year, as the eyes of the world were on Beijing for the Olympic Games, Discovery Networks Asia-Pacific focused a lot of its production around global series such as Man Made Marvels. While remaining a globally distributed series, Man Made Marvels was able to localize its content by focusing on structures such as the Bird’s Nest, Water Cube and the Beijing Airport. ‘We did some of those things, which on one hand were local production, but they were also global productions,’ says Keaveny. In total, Keaveny estimates the Asia-Pacific region produces 500 hours of localized content per year.
Keaveny says the current focus for the region is on rolling out its seven brands, and launching in new markets to add to its 442 million cumulative subs. ‘Our strategy going forward is to really develop our business in the most populous region in the world,’ he says.
As stated, the contrast between markets in the region is stark. Taiwan, for instance, is one of the world’s most penetrated markets at 99%. Then there is Indonesia, which Keaveny conservatively estimates at 5%. But it’s the potential of under-penetrated markets combined with huge populations that present the region’s biggest growth opportunities.
MAKING MOVES IN EMEA
When it comes to Discovery Networks EMEA, growth is something that can be talked about in the present tense. In the five years since he joined DNI, EMEA EVP/managing director Arthur Bastings has helped shape the strategy, including a shift away from a more pan-regional approach to one that is, yet again, more localized.
Currently there are six business units in EMEA, and Bastings says the strategy over the last five years has been to build up the infrastructure for those businesses. By focusing on a local business structure as a means of stimulating audience growth the EMEA region has been able to develop its ad sale business. ‘That has been one of the key drivers of our growth,’ says Bastings.
In this part of the world Discovery Networks International has its targets set firmly on 20-to 40-year-old males. It’s a demo that Discovery has been able to deliver better than any other network in the region, resulting in ‘very interesting relationships with advertisers, and advertising agency groups, because it’s a very attractive demographic for clients across EMEA.’
EMEA also has to deal with a range of markets. Much of Europe is highly penetrated, but there are countries in the Middle East and Africa that need developing.
According to Bastings, Discovery EMEA operates at around 60-40 global content to local content. It’s this focus on the local that he hopes will continue to deliver the audiences he needs. ‘If you don’t have anything of interest for people to connect with, then it’s a very quick conversation,’ he says.
Thus far, audiences have been something Discovery Networks International has been able to deliver all over the world. And in the current economic climate, where no one region is immune to the downturn, it’s that aggressive approach to global distribution, combined with a dual-revenue business model, that Keaveny and Elhabashi say will help DNI ride out the storm.
‘The difference for us as compared to media as a whole is we are well positioned globally; we’ve got a broad spectrum approach to the planet,’ says Keaveny, adding DNI’s dual revenue approach, which incorporates ad sales and distribution, helps ease the effects of a recession because it’s not as vulnerable.
‘In a recession most people don’t downgrade or get rid of their cable subscription. They end up watching more television,’ says Elhabashi.