Discovery Inc.’s revenues slid 4% in the fourth quarter to US$2.56 billion as president and CEO David Zaslav told investors the company will outline its plans for a direct-to-consumer service early next month.
During its Q4 2020 earnings call this morning (Nov. 5), Zaslav (pictured) said the company’s strategy for an aggregated global DTC offering have come into “clear focus.” Discovery plans to showcase its product, roadmap and go-to-market strategy in early December.
“We’re going to go into real detail, we’re going to do an extensive discussion with full disclosure in early December, which we’re super excited about,” he said. “We’ll take you through — in every category — where we’re going, how we’re going, why we think we’re advantaged, how globally we think we can attack it, who’s helping us. The whole company has been focused on this… Early December, we’ll come out with the whole package and I think you’ll like it very much.”
Speculation about the upcoming service has been bubbling in the industry and the media for months. As Digiday reported in September, Discovery had posted for several programming openings for their DTC initiative, with positions ranging from SVP of original series to VPs for lifestyle, factual programming and specials and documentaries.
Zaslav remained tight-lipped about the offering during this morning’s call with investors, though he did hint that Discovery would be taking a highly curated approach to content.
In response to a question about whether the DTC service will be an AVOD or SVOD, he told investors: “Ultimately, we need to get our content in front of everyone everywhere in the world, but we’ll take you through what that balance is and which piece of that we’re going to go at hard. We’ve thought about it a lot.”
As companies such as WarnerMedia and NBCUniversal have restructured their operations in recent months with a focus on streaming, investors asked Zaslav whether Discovery would be taking a similar approach.
“There has been a lot of restructuring and I think that’s a certain strategy of viewing all IP as one set of IP. IP is IP is IP. We don’t believe that. We have a team that produces food content, we have a team that produces crime content, we have a team that produces natural history content at Discovery,” he said. “[HGTV] right now has never been stronger. Kathleen Finch is one of the best creators I’ve ever worked with and she’s got a great team. The idea of dismantling that team and saying, ‘OK, let’s just produce shows’ — I think that may be good for cost, and it may work out if you’re just doing broad entertainment… But, [as for the current structure] it’s working for us.”
As for the company’s earnings, total U.S. Networks revenues fell to $1.66 billion in Q4, a 4% decline from the year-ago quarter.
Advertising for the segment decreased 8%, which Discovery said was driven by softer demand stemming from the COVID-19 pandemic, secular declines in the pay-TV ecosystem and lower ratings. U.S. Networks distribution increased 2%.
The company touted the strong ratings performance of TLC, as the top ad-supported cable network in primetime among women and #2 among persons aged 25-54 and 18-49, as an operational highlight.
Total International Networks revenues of $902 million decreased 5%, while advertising decreased 9%. Discovery attributed the dip in advertising to a decline in demand due to the pandemic and the discontinuation of pay-TV distribution with certain European operators.
Distribution decreased 4% for the segment.
Earnings beat Wall Street estimates, resulting in an upward bump for Discovery stock Thursday morning.
In response to an investor question about whether Discovery would be looking to pursue more mergers and acquisitions in the future, following the success of its merger with Scripps, Zaslav said it would need to be “the right asset.”
“What we learned is, we can do it, we can do it quick, and we can do it while we’re growing our business. Having said that, we have a hell of a global IP company right now,” he explained. “We’ve got all this IP we’ve been producing and quietly holding onto… I don’t think we need anything… From our perspective, it has to help us grow a lot faster or it has to add real IP that’s going to further differentiate and further scale us.”
(With files by Barry Walsh)