Discovery ‘will hit 1m, $100m OTT target’ by 2017

Discovery Communications says it will hit its one-million direct-to-consumer OTT subs by 2017, bringing it US$100 million in extra revenue.

The channel operator’s CEO and president, David Zaslav, gave the forecast on an analyst call following Discovery’s full-year results.

“We won’t reach a million subs in 2016, but we do have a march to a million and we’re hoping to reach a million by 2017,” Zaslav said “A million at US$8 a month would be an incremental US$100 million.”

“And if we can get to a million, I think culturally, it could be a tipping point for us,” he added. “If we can get to a million, why can’t we get to three?”

Discovery execs told TBI about the ‘March to a Million’ campaign when it unveiled its D2C DPlay service last June. This hopes to achieve the number across its Eurosport Play app and DPlay.

Zaslav said that Discovery’s production model, whereby it invariably owns all of its programming, means it can roll out D2C and OTT service more cost effectively than others.

“When you look at the full portfolio of what we’re doing direct-to-consumer and TV everywhere, I think we’re doing more and we’re doing it at lower cost than anyone because we own all of our content,” he said.

The Discovery chief also said it was playing hardball with operators, as pay TV platforms look to squeeze channel operators on affiliate fees, and trim their channel line-ups with ‘skinny bundles’.

Zaslav said the breadth of the Discovery portfolio enables it to get better deals with operators.

“The strength of our portfolio was particularly evident in two recent negotiations, with Telia in Sweden and with Telenor in the Nordics, where we ended up pulling our signal and our drive to obtain strong sub-fee increases,’ he said.

“We are taking a much more aggressive stand to fight for the value of our content and to drive meaningfully higher sub-fees. In both instances, after we went dark, we ended up with strong renewals and a very favourable economic result.”

While operators want to reduce what they pay channels, Discovery is pushing for affiliate fee increases. Discovery has recently struck new deals with NC+ in Poland, and OSN and beIN in the Middle East.

Discovery said organic sales at the international business were up, but there were full-year revenue and profit losses on the international side.

The company reported a 2% increase in full-year revenues of US$6.4 billion. The US networks unit was up 6%, but the international networks unit suffered a 2% reverse, with Discovery blaming currency effects.

OIBDA profit was down 4% at US$2.4 billion, with a 15% decline on the international side to blame.