Zaslav: Nets Should Export to Emerging Countries

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New York — Emerging markets like Brazil, Russia,
India and Mexico are the new growth frontiers for cable networks,
according to Discovery Communications CEO David
Zaslav, who said he happens to run the company blazing the
biggest trail.

Zaslav, speaking at the B&C Hall of Fame/Paley Center for
Media “TV 3.0” event here, said roughly 45% of Discovery’s
overall business comes from international markets.

But such traditional foreign-TV strongholds as France,
Italy, and the United Kingdom are facing the same problems
as the U.S.: The markets are maturing, and television viewership
is stalling. True growth is coming from emerging markets
like Brazil (where Discovery added 750,000 subscribers
in the first quarter of this year), Mexico (which he said has less
than 45% pay TV penetration), Russia and India.

“It feels like the U.S. did when I worked at NBC,” Zaslav said
of the international market. Zaslav headed NBC’s cable business
for almost a decade before joining Discovery in 2007.

There are about 47 million pay TV customers in
Latin America now, expected to grow at a 12% annual clip
for the next five years, Sanford Bernstein media analyst Todd
Juenger reported last week.

The analyst said Discovery was uniquely positioned
to capitalize because of the sheer number of its international
channels and their economics: “Every time a new
subscriber is added, Discovery collects the most incremental
revenue and profit.”

Discovery has been growing domestically: U.S. ad revenue
rose 13% in the first quarter, its second consecutive quarter
of double-digit ad growth. The company also reached agreements
with subscription video-on-demand providers Amazon
and Netflix for older content.

Zaslav said he was disappointed with the current
sluggish pace of rolling out TV Everywhere authenticated
online extensions, but said new services could
emerge once the platform is more fully deployed. Networks
should be able to offer deeper libraries of shows
to consumers, and Discovery has a 20-year library that
could be stored in the cloud and provided directly to
the consumer.

“The first step is TV Everywhere,” Zaslav said.

Zaslav said access to Discovery shows on Amazon and
Netflix haven’t cannibalized viewership of the linear TV
networks, but it’s too early to determine all the impacts of
online distribution.

 “Those of us that feel comfortable, shouldn’t be,” he said.
“Those of us who feel too encroached, it’s too early.”

The Discovery chief gave his company a “B” grade regarding
social media and mobile strategies. The programmer
has tried a little bit of everything, he said. The company
recently bought Revision3, a digital video provider drawing
some 23 million unique monthly viewers watching more
than 100 million video streams per month, with brands and
characters that have about 50 million Facebook friends.

Zaslav said Discovery gets more “traction” from consumers
that come to via Facebook than
the ones that surf there directly. “That’s pretty sticky for
us,” Zaslav said.