Steinberg: Out of retirement to interview [LAUGHTER]
Steinberg: David Zaslav at Discovery's Upfront.
Steinberg: But before we get to that,
Steinberg: you dropped the big news I think within the past hour
Steinberg: that eight of your networks are live
Steinberg: effective immediately on YouTube TV. Is that right?
David: And one, eight effective right now.
David: Um, and, uh, one more on before the end of the year.
David: So nine of our channels on YouTube,
David: uh, we're on almost every, uh, skinny bundle.
David: But most importantly, we, we really earned it.
David: If you take a look at the statement from YouTube,
David: we've worked really hard on our channels.
David: We have the top four channels in America for women,
David: HGTV, Food, ID, TLC.
David: We have the number one channel for
David: African-American women with, with own.
David: We have the top channel for men in America Discovery.
David: And so a lot of these skinny bundles launched with
David: the broadcasters and sports
David: because they they kinda leveraged then.
David: And, uh, the real question was,
David: were we gonna be able to get on those platforms?
David: And the good news is that the consumer always wins.
David: We- we have said let's
David: not fight with these skinny bundles.
David: Let's fight with the consumers.
David: Let's get more of them loving our content.
David: So we've invested more money in
David: content and in our brands,
David: and we've emerged with
David: the top four channels for men, top women,
David: top channel for women, uh, for men,
David: and as a result, um,
David: YouTube announced today that
David: they're listening to their customers.
David: Customers want the Discovery Networks.
David: Um, they're putting it on.
David: We, we love the YouTube team.
David: We're gonna be getting behind them in a big way.
David: Hulu did the same thing a few months ago,
David: Sling, and for each of them, it's really a win win.
David: We're thrilled to be on and to be part of
David: the skinny bundles which exist in
David: almost every country in the world except for the US.
David: So this is great for the ecosystem.
David: Um, but it's also good, you know,
David: we think it's also very good for them.
Steinberg: And you took it very seriously to your point.
Steinberg: I mean, this has been I remember when you did
Steinberg: the interview with, with Faber, you know,
Steinberg: six, seven months back when you were just
Steinberg: gone on to Sling and Hulu I think.
Steinberg: When Hulu was about to do Sling,
Steinberg: you've tactically done this one foot
Steinberg: in front of the other over the past few years.
Steinberg: Why was it so important to you
Steinberg: given that we're talking, you know,
Steinberg: nine million households right now
Steinberg: that are the sum total of these bundles?
David: You know, it's really about, um,
David: it's about terminal value,
David: which is a fancy way of saying
David: it's about long term growth.
David: By being on every bundle,
David: outside the US we're in every bundle.
David: So no matter what age demographic, whether and,
David: whether you're buying a $15 bundle
David: or a $40 bundle or $100 bundle,
David: the top channels from Discovery are on there.
David: Here in the US, we were
David: broadly distributed with the traditional distributors.
David: But some of the skinny bundles we weren't on.
David: So we don't know who's going to win this.
David: Is Hulu gonna be the big winner?
David: Is YouTube gonna be the big winner?
David: Is Sling gonna be the big winner? Direct TV?
David: Which one? Sony. So we're kinda agnostic.
David: We're rooting for all of them because, you know,
David: the idea of a skinny bundle is
David: terrific because it means that there's less channels.
David: And by less channels,
David: it means that people are gonna spend
David: more time with our content,
David: um, we love our brands.
Steinberg: [OVERLAPPING] And this is the MoffettNathanson argument
Steinberg: around what they call scenario 2,
Steinberg: which is faster melting of the traditional ice cube,
Steinberg: more movement to the skinny bundles,
Steinberg: the fewer channels that are in there getting
Steinberg: a greater lion's share of
Steinberg: the viewership and advertising revenue.
Steinberg: You obviously got paid for this because
Steinberg: YouTube TV raised their prices in concert with this.
Steinberg: Do you think that you're gonna take up
Steinberg: affiliate revenue guidance or advertising revenue
Steinberg: guidance in any meaningful way for the year
Steinberg: now that you've got this additional?
David: [OVERLAPPING] We're not gonna talk about guidance.
David: But what we have seen is as
David: these skinny bundles grow around the world,
David: where outside the US is a couple of years ahead,
David: we've done extremely well.
David: So we might have 14 channels in Italy or in Brazil.
David: And if we get eight of
David: our channels on and we're eight of 30 channels,
David: we get much more ad revenue as you say.
David: Brand recognition goes higher and net net it's a big win.
David: And so for us,
David: we've also been ready for this day.
David: Eighty to 85 to 90 percent of
David: our affiliate revenue relates
David: to our top eight or nine channels.
David: And so, uh, it's a big day for us, uh, with YouTube.
David: It's also a big day because
David: we announced this morning that Chip.
Steinberg: [OVERLAPPING] Yes.
David: And Joanna Gaines are coming.
David: We're gonna, we're gonna turn DIY
David: into, into their network,
David: which they're gonna take over where, you know,
David: we own the majority of it but they're owners with us.
David: Uh, they're gonna curate the network.
David: Uh, we think they're extraordinary talent.
David: We're gonna take them around the world on
David: cable but we're also going
David: to take them direct to consumer.
David: So we're super excited about having them
David: be back as part of the Discovery family.
Steinberg: On direct to consumer, I'm sure you'll
Steinberg: talk more about it today but you came
Steinberg: out a few weeks ago with kind of
Steinberg: a tidal wave of news around
Steinberg: these various DTC services that
Steinberg: are gonna be very experiential in nature.
Steinberg: What got you so excited about
Steinberg: going forward at this moment in time
Steinberg: and how will the experiential elements you've
Steinberg: talked about cooking and golf classes,
Steinberg: how will that be be scalable?
MALE_1: Well, we've been at this for the last five years,
MALE_1: we've really been trying to change our company to
MALE_1: be a sustainable long term growth company.
MALE_1: And we, we see the industry kind of broke apart.
MALE_1: The majority of the industry went to scripted series and
MALE_1: scripted movies, and that's HBO,
MALE_1: Showtime, Netflix, Disney, buys Rupert's business,
MALE_1: so they can get more IP in
MALE_1: the- in the movie and scripted series.
MALE_1: They're all going after
MALE_1: that aggregated entertainment package
MALE_1: for between $10 and $15.
MALE_1: Those are great companies we
MALE_1: think they're going to be very successful,
MALE_1: but they're all doing the same thing.
MALE_1: And people are going to say how many of those do we need?
MALE_1: Ah, a lot of the same movies
MALE_1: are turning up on all of them,
MALE_1: and it's getting more and more expensive.
MALE_1: So we look at that area and we say
MALE_1: that's going to be a tough street fight,
MALE_1: we're glad we're not in it.
MALE_1: We've pivoted away, that's the soccer ball on the field.
MALE_1: That's the, that's the really involved place to be.
MALE_1: We're everywhere else. So while
MALE_1: they were focused on that,
MALE_1: we acquired almost all the golf in
MALE_1: the world for the partnership with Jay Monahan,
MALE_1: the PGA Tour, the European Tour, Tiger,
MALE_1: because we think you,
MALE_1: you may get Netflix and HBO,
MALE_1: but if you love golf, whether you're in Europe,
MALE_1: whether you're in China, South Korea,
MALE_1: anywhere in the world you're going to love golf,
MALE_1: we own most if not all of it. Um, so-
MALE_2: So I agree with you 90 percent on this,
MALE_2: on the soccer field metaphor.
MALE_2: It has been 100 percent true,
MALE_2: now I'm at 90 percent,
MALE_2: and it's because like a couple of those Netflix kids,
MALE_2: like they wandered off a little bit
MALE_2: into your field right now,
MALE_2: between the Attenborough nature thing that
MALE_2: they just did, Marie Kondo,
MALE_2: they've got that thing going, look, it's no HDTV,
MALE_2: I'm the world's biggest HDTV fan,
MALE_2: don't, don't get me wrong.
MALE_2: But like, it obviously I don't
MALE_2: think has you in a cold sweat,
MALE_2: but doesn't it bother you like
MALE_2: a little bit that they're sort of veering there now?
MALE_1: No, because 50 percent of what people
MALE_1: watch on TV is scripted series and scripted movies.
MALE_1: I love the fact that they're all on
MALE_1: that side of the field at that ball.
MALE_1: The other 50 percent is what we do and it's open field.
MALE_1: And so yes you might get a great cooking show on Netflix,
MALE_1: but, but we have the number one channel in
MALE_1: that space with all the greatest chefs
MALE_1: and people hang around with us all day long.
MALE_1: Like in natural history,
MALE_1: we did feel the need to beef up.
MALE_1: We have Discovery Animal Planet and Science,
MALE_1: we have all Global and we have that Global Library.
MALE_1: But we felt like you know what?
MALE_1: We have to- we wanna be dominant,
MALE_1: we wanna have the greatest
MALE_1: natural history library in the world,
MALE_1: because we think that's a real differentiator.
MALE_1: Every family may want HBO and Showtime and Netflix,
MALE_1: but what family wouldn't want
MALE_1: the greatest stories of the planet that we live in?
MALE_1: And so we did this deal with BBC,
MALE_1: the biggest deal they've ever done,
MALE_1: for the next 10 years we
MALE_1: own the majority of the BBC library,
MALE_1: which includes all the great titles
MALE_1: that people saw all around the earth.
MALE_1: So it's Planet Earth, Frozen Planet, uh,
MALE_1: Walking with Dinosaurs, uh,
MALE_1: Woolly Mammoth, no, for us
MALE_1: that's our Star Wars and our Marvel library.
MALE_1: So while Iger is looking to build on the,
MALE_1: on the, on the Marvel and,
MALE_1: and Star Wars library,
MALE_1: we're going to be building on these
MALE_1: great titles that have been in
MALE_1: every language and inspired
MALE_1: every family around the world.
MALE_1: And we think that what family wouldn't want that
MALE_1: for three or four dollars to be
MALE_1: able to see this great blue chip content,
MALE_1: and then be able to dig down and
MALE_1: learn everything they want about the moon,
MALE_1: about Saturn, about the enda- endangered species.
MALE_1: And we're going to document the Earth, so I mean,
MALE_1: to us it's these baskets Natural History,
MALE_1: Oprah, Chip and Joanna Gaines.
MALE_1: You know, when you- when when,
MALE_1: when my folks were growing up,
MALE_1: it was Julia Child,
MALE_1: then it was Martha Stewart.
MALE_1: But [OVERLAPPING] there is no body,
MALE_1: there's nobody in that space
MALE_1: now that Chip and Joanna are going after,
MALE_1: which is, the garden, the home,
MALE_1: redoing your office, faith, family,
MALE_1: food, and so we think they could be very big,
MALE_1: home is big, food.
MALE_1: You know, so we're in
MALE_1: these baskets that are very- nobody's in our lane.
MALE_1: So the question is can we make our lane?
MALE_2: Right. And the question is-
MALE_1: Mobile and transactional.
MALE_2: And, and here's my next question for you,
MALE_2: or maybe my last question,
MALE_2: which I think you'll take it's a high compliment
MALE_2: and then also not want to answer. All right?
MALE_2: When you look at CBS,
MALE_2: and they're looking for
MALE_2: a leader who could really take that to the next level,
MALE_2: and your name is constantly
MALE_2: bandied about as one of the best operators,
MALE_2: and you've been acquisitive and you've done transactions,
MALE_2: do you think to yourself ever,
MALE_2: the next leg for us to do would be to have a network,
MALE_2: would be to have a station group,
MALE_2: would be to be part of a CBS and run the whole thing?
MALE_2: Is there, is there a mega deal that you think is
MALE_2: out there waiting for you beyond
MALE_2: what you've done with scripts?
MALE_1: There could be deals out there and we're going to be-
MALE_1: our goal is to be generating
MALE_1: 3 billion or more in free cash flow.
MALE_1: We're generating a lot of free cash flow right now,
MALE_1: and we'll be looking to buy additional assets,
MALE_1: probably more likely IP, like we- the,
MALE_1: the golf deal we own
MALE_1: all the cycling in Europe, we own the Olympics,
MALE_1: Chip and Joanna, that's an- they will look- that's a,
MALE_1: a, a deal where we're buying IP.
Speaker 2: More of the rear view mirror is free to air channels.
Speaker 2: You know, we're already
Speaker 2: the third largest TV company in America.
Speaker 2: We're almost twice as big as CBS.
Speaker 2: You know, we have 18 channels.
Speaker 2: Outside the US, we're a big
Speaker 2: free to air broadcaster all across Europe.
Speaker 1: Mm-hmm.
Speaker 2: So [NOISE] picking up
Speaker 2: more free to air to us, that's what we do.
Speaker 2: I don't know that that helps us that much.
Speaker 2: The question is, what
Speaker 2: IP does that free to air channel own,
Speaker 2: and how compelling is it?
Speaker 2: And can you transfer it from
Speaker 2: just the TV set to
Speaker 2: devices either in that country or all over the world?
Speaker 2: You know, were we
Speaker 2: designing our entire company to be different
Speaker 2: than everyone else in the second area which
Speaker 2: is we're a global IP company.
Speaker 1: Mm-hmm.
Speaker 2: We are- we are a full on global IP company.
Speaker 2: And so we have- we now have a menu.
Speaker 2: You know, do you want food, do you want home.
Speaker 1: It- it- it.
Speaker 2: Do you want natural history?
Speaker 1: It- it- it's-
Speaker 2: You want [OVERLAPPING].
Speaker 1: You- you- you talked this morning with- with
Speaker 1: our friend Maria about how it's
Speaker 1: a people business and how the day after
Speaker 1: you closed the Scripps transaction,
Speaker 1: um, you know, you got on the phone,
Speaker 1: you got on a plane and went to the-
Speaker 1: the Gaines family to kind of get them
Speaker 1: to re- you know, re-signed up, right?
Speaker 1: It seems like it's a lot of your management team and
Speaker 1: the executives that you- the way
Speaker 1: you did these virtual MVP details.
Speaker 1: How much is Discovery about
Speaker 1: the management team that you've built and what do you
Speaker 1: do to put in the water so that you've been able to do
Speaker 1: this against people that are conglomerated
Speaker 1: and owned by cable companies?
Speaker 2: Well, I think we had a great team.
Speaker 2: Ken Lowe at Scripps built a fantastic team.
Speaker 2: And so we looked at buying Scripps as- as getting
Speaker 2: toget- put together two of
Speaker 2: the greatest management teams around.
Speaker 2: But ultimately we can't forget,
Speaker 2: we're about the content.
Speaker 2: So we might be in
Speaker 2: business with the PGA Tour everywhere in the world.
Speaker 2: We might- we might be in business with the European tour,
Speaker 2: but ultimately, we need the players,
Speaker 2: we need Tiger [LAUGHTER] and we need the players.
Speaker 2: That's who they tune in for.
Speaker 2: They tune in for Oprah.
Speaker 2: Uh, they tune in for Chip and Joanna.
Speaker 2: They tune in for the Property Brothers.
Speaker 2: You know, they- they- so we're about people.
Speaker 1: Yep.
Speaker 2: And you know that's why Chip and
Speaker 2: Joanna was so important to us.
Speaker 2: That's why Tiger is so important to us because ultimately
Speaker 2: people tune in to hear stories from people.
Speaker 2: They wanna see people and they
Speaker 2: wanna hear their stories and they wanna be inspired.
Speaker 2: And that's kind of the core of what we are.
Speaker 1: Well, we'll leave it there. Congratulations on
Speaker 1: a day of amazing announcement, David.
Speaker 1: Thank you for sitting with us.
Speaker 2: Thank you.
Speaker 1: Back to you guys at the Stock Exchange.
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