M&E Connections

Discovery CEO’s Prediction: There Will Only Be 2-3 Streaming War Winners

Although there’s many streaming service players today, with newcomers still entering the field, there’s going to eventually be more consolidation and very few major players will be left standing when all is said and done, according to David Zaslav, Discovery CEO and president.

“If you view scripted series and scripted movies as a category, which I do, and you say that’s like an apple pie, everybody just has a piece of that pie and all of them don’t have enough” right now, he said Jan. 8 at the Citi 2020 Global TMT West Conference in Las Vegas.

That’s why all of the players want any major content that becomes available, like “Big Bang Theory,” he said, adding: “They’re all fighting over the same apple pie.”

But his prediction is “there’s not going to be five or six or seven of those players” left in the end. “Right now, they’re bidding up the cost of the content, they’re bidding up the cost of the talent,” plus “they’re not that differentiated…. I think there’ll probably only be two or three winners and I think a few of them are just going to absolutely tip over.”

Although several attendees polled indicated they thought Discovery needed to become part of a bigger media company to thrive, Zaslav said “there’s a very good argument that we’re fine.” For example, “we couldn’t be much bigger” in terms of non-scripted content including food and golf, he said.

“But at the same time, every one of [the industry’s] bigger players doesn’t have enough content,” he said, adding: “Every one of them has come to us and said ‘you have a huge library in women, a huge library with family, your content library itself is bigger than Netflix as a whole, we need more bulk, we need more great characters and brands that people want.’ And so we have had discussions about doing things with others.”

However, he told attendees “In the end, we came to the conclusion that we may have enough to go ourselves. And if we’re going to go with someone else, they really need to buy us. Because if we gave our content to somebody else to fill out one of the other big players, then we’d be giving away really the future of our company.”

Discovery really must offer its own major direct-to-consumer streaming service like Disney Plus, he conceded, noting it’s already offering such a service in Europe that’s expanding. In addition, it already offers the Discovery Go streaming app in the U.S., that’s also growing, he pointed out.

As great as Discovery is doing, he said: “In the end, this cannot be a growth business by just staying on the existing platform” because there are fans of the company’s brands who aren’t pay TV subscribers. For one thing, viewership on TV is declining, he said, adding: “We need to reach everyone.” When it comes to “eventually everyone in the U.S. and everyone outside the U.S. that has any device, we need to be on those devices long-term,” he said.

Discovery executives continue to “think we’re massively undervalued,” he also said during the presentation. “We were, two years in a row, the best-performing media company” of all, he said, referring to 2018 and 2019. While Disney stock was up just under 32% in 2019, Discovery was up 32%, he said, noting, “we’re outperforming all of our peers.”

Following the company’s 2018 purchase of Scripps Networks, the company now has the top three channels for women in the U.S., he noted. For seven months of the past year, more women chose to watch Discovery channels than any other media companies and on a given Sunday night, 35% of women in America are watching one of its channels, he said.

Discovery’s international business, meanwhile, is growing, also due in part to the Scripps purchase, he said.