DNI Casts Eye Toward Western Europe

Europe New “Emerging Market” for International Networks
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New York – Discovery Networks International, the overseas programming arm of Discovery Communications, is gearing up to make a big splash in Western Europe, introducing new shows and channels on the continent in the hopes of grabbing an even bigger slice of the TV market share.

The programming giant – it has more than 1.8 billion cumulative subscribers in 218 countries worldwide – is doing that through a combination of programming and channel launches as well as strategic acquisitions of existing programmers. On April 4, DNI announced that it would launch four shows from its popular Oprah Winfrey Network – Oprah’s Next Chapter, Oprah’s Master Class, Oprah’s Lifeclass and Super Soul Sunday – on its soon-to-be-launched TLC channel in the U.K. TLC, one of Discovery’s most popular channels in the U.S., is expected to make its British debut at the end of April.

While the OWN shows could be a precursor for a future launch of that channel in the U.K., it is part of what has been a concerted effort by Discovery to step up efforts across the continent, including Spain, Italy, France and Scandinavia.

At DNI’s upfront presentation here on April 4, Discovery Communications CEO David Zaslav said the media giant sees a wealth of opportunity in Western Europe, calling it the new “emerging market” for Discovery.

Western Europe has been particularly hit hard by the global recession, and the television market has taken its share of lumps, with overall TV advertising declines in the double digits in countries like France and Spain.

“For us, this is a good time to lean in to Western Europe, this is a good time to get a better understanding locally of each of those markets, to grow market share,” Zaslav said.

He noted that in the fourth quarter, DNI’s market share outside the U.S. increased by 25%, while its ad sales grew about 18%. In Western Europe, DNI grew about 15% last year, Zaslav said, “across countries that were really struggling.”

Zaslav added that while ad sales should have risen 25% to 26% with such a market share boost – which highlights the continued softness of the international TV ad market – DNI is laying a foundation for future growth.

“More and more people are spending time with our channels in Spain, Italy, France and the U.S., but the markets are not that healthy,” Zaslav said. “We’re not getting the full utilization of our market share. But market shares are sticky.”

Zaslav said once viewers select their favorite channels, it’s harder to get them to switch. Transforming its channels into the top channels for international viewers is DNI’s ultimate goal.

“When Western Europe turns, if we have more channels that people are spending more time with,  then Mark [Hollinger] and his team, country by country, are able to fully maximize that, you’ll see even more substantial growth,” Zaslav said.

Aside from launching international versions of its programming and networks, Discovery has been making strategic acquisitions. Last year it spent about $240 million for a 20% interest in TF1’s Eurosport Group pan-European sports channel and four other networks and separately agreed to acquire Scandinavian general interest network SBS for $1.7 billion.   The SBS deal is expected to close next week.

DNI CEO Mark Hollinger said the SBS deal was made as part of an effort to expand Discovery’s scope beyond the factual business, adding that the Scandinavian markets are stable from a currency perspective and have high penetration rates for pay TV and broadband.

“The markets ticked all the boxes in terms of a place to invest with a certain level of safety but also with a great potential for growth,” Hollinger said.

DNI hasn’t centered all of its efforts on Western Europe. Hollinger added that its Discovery Kid’s children’s network recently crossed the 20 million subscriber milestone in Asia, and has launched HD channels in Poland and Latin America.

DNI also is growing market share by creating market-specific versions of popular U.S. shows and more are expected to be on the way. For example, DNI has developed a Brazilian version of its popular U.S. Discovery Channel reality showDual Survival, which places a military-trained survival instructor and a “hippie” in various challenging environments, said executive vice president and chief content officer Luis Silberwasser.

He added that DNI is constantly looking for shows that could translate across several different markets. Last year it took its popular Italian reality show Shopping Night – where a group of women are let loose in a clothing store at night and are rated by a team of judges on their fashion selections – and tweaked it to create Ultimate Shopper which is currently airing in Brazil and should find its way to the U.K. TLC channel at the end of the month.

“When you put all of those things together, that’s what makes Discovery different than any other media company in the world, and why our channels are resonating with audiences out there,” Silberwasser said.