International Man of Discovery

JB Perrette Forges a Content-Driven Global Strategy
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JB Perrette is showing he’s more than a digital guy.

Since taking the helm of Discovery Networks International, the foreign-market programming arm of Discovery Communications, in January, he has been developing a strategy to take the content giant to the next level globally, a plan built around creating new original series, tailoring U.S. content to fit different geographic regions and launching flagship networks overseas.

Perrette joined Discovery in 2011 as chief digital officer, in charge of driving the programmer’s content across all screens. Before that he spent 11 years at NBCUniversal, lastly as president of digital and affiliate distribution and content

distribution strategy. Over his 20-year career, he has had a hand in virtually every aspect of the cable business.

“I look at my background in this role as having four key attributes, which is stuff I’ve developed over the last 20-plus years,” Perrette said. “It’s a combination of strategy, distribution — having spent several years with [Discovery CEO] David [Zaslav] at NBCU on the affiliate distribution side of the house — digital, and business and finance experience. These are the four pillars.”

SECOND TO ONE

He is tasked with taking DNI — which this year is expected, for the first time, to account for more than half of Discovery Communications’ total revenue — not just

to the next level, but beyond it.

While most domestic programmers have international operations, Discovery is second only to 20th Century Fox in terms of revenue derived from outside the U.S. Sanford Bernstein media analyst Todd Juenger said.

Discovery is just above Time Warner Inc. on the international front, even though it generates only about one third of the annual revenue of TWI’s Turner and Home Box Office divisions alone.

“Discovery has always had content that [played] very naturally in markets outside of the U.S.,” Pivotal Research Group analyst Brian Wieser said. “They have capitalized on a real trend, which is the growth of pay TV in markets that were really only liberated in the 1990s.”

After 25 years of investing in international markets, Discovery’s presence includes 200 networks reaching 2.7 billion cumulative subscribers in 220 countries and territories. Last year the international unit generated $2.5 billion in revenue, up 51% over the prior year.

Much of DNI’s growth has come through acquisitions. Last year, it bought Finnish broadcaster SBS Nordic, with 12 television networks across Scandinavia; agreed to buy a controlling interest in Eurosport International, a niche sports programmer with two channels available in 54 countries; and forged a partnership with Beijing-based WASU Digital TV Media Group for new pay TV channel Qiu Suo in China. At press time, the Eurosport deal was expected to close by late April or early May.

Discovery’s international business also has seen strong organic growth. Wieser estimated that, excluding SBS and Eurosport, DNI grew overall revenue by 15% in 2013. Advertising sales increased 25% and distribution fees rose 13%.

TRIPLE THE PLAY

Parent Discovery Communications is pumping additional money into original programming overseas and has tripled its overall programming budget from $500 million in 2006 to $1.5 billion this year.

Perrette said it’s difficult to say how much would be earmarked specifically for international programming because most shows the company buys or develops are created with the idea that they will move across all platforms.

DNI executive vice president and chief content officer Luis Silberwasser meets regularly with content producers about developing original programming for international use.

DNI’s past investments in original programming have mostly been directed at making international versions of U.S. shows. Dubbed U.S. content remains an important part of Discovery’s international lineup, but truly original shows are beginning to break into the fold.

One is Aguias da Cidade (Eagles of the City), a Brazilian reality show about the Sao Paolo police force’s helicopter rescue unit. Another is Los Carvotta, an Argentinean program that has export appeal.

“The Argentinean team found this great family, a father and son that fix cars and trade cars,” Silberwasser said. “It’s a great story that’s beginning to move outside of Argentina to other Latin America countries and is beginning to do very well.”

Perrette said the extent of DNI’s original output depends on the individual market. In Italy, it launched a show on its female flagship/TLC equivalent Real TV called Il Bosse Della Ceremonie (The Wedding Boss) that has resonated with viewers.

“It depends on the model,” Perrette said. “In Italy, where we have big free-to-air channels, we do much more local production. In the Nordic region, where we have 30% to 40% of the commercial share in certain markets, we are much more like a broadcaster, producing a lot of original shows.

“The bulk of the content and the secret sauce of our model is that the content is produced once,” he said.

“Much of it originated in the U.S., but it has global and universal appeal. Then, in pockets, we are also complementing it with local productions.”

SPORTS EXPANSION

Discovery has high hopes for Eurosport, its most recent acquisition. The sports programmer’s two networks are available in 54 countries and reach 133 million homes, making it a strong vehicle for expanding in that segment.

Eurosport concentrates on niche sports such as tennis, winter sports and cycling. In some markets it has expanded into soccer — for example, airing German Bundesliga matches outside of Germany — but for the most part it has stayed out of the frenzy for premium (and pricey) rights like  English Premier League soccer. That could change.

DNI’s SBS network already airs UEFA Champions League qualifying matches. And Discovery has aired Six Nations Rugby matches in Italy.

“On the sports side, we want to continue to strengthen and build out our portfolio,” Perrette said. “We think there is a lot more opportunity to play a role with the strong brand that Eurosport has and complement it with additional sports rights over time.”

That could mean partnering with larger distributors in some cases, or going it alone. Eurosport already has rights to several premier events — three of the four Grand Slam tennis tournaments, for starters.

“Are we open for business now — as we look to close on the deal, to exploring a variety of new rights? Absolutely,” Perrette said. “Will we continue to be smart and selective about how we look at sports rights? Yes. Will we look at everything? Yes. Are we going to do everything? No.”

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