Discovery Communications CEO David Zaslav said the era of cheaper, sports-free skinny bundles is coming, but first, the U.S. has to wean itself of expensive and largely unwanted sports programming.
On Discovery’s earnings conference call Tuesday, Zaslav said that cheap monthly packages of programming, free of sports and containing most of the networks viewers want, similar to offerings in Europe, will eventually make their way to the U.S.
Zaslav lamented that current slimmed down offerings in the U.S. like DirecTV Now, Hulu Live and Sony PlayStation Vue aren’t true skinny bundles because they are laden with networks that are heavy with sports programming, which he called “a bit of a stuffed turkey.” Outside the U.S., sports-free skinny bundles are prevalent and Discovery networks are on most of them.
“I see the skinny bundle in 200 countries,” Zaslav said on the call. “There is no skinny bundle here. The skinny bundle in the U.S. is a fiction. The idea you have a $40 offering filled with regional sports, an incomplete package and then you have to buy broadband on top of it. In the end I think the market will be rationalized.”
Zaslav noted that including broadband costs, skinny bundles could cost between $60 and $70 per month, compared to the $8-$12 monthly charge he sees in slimmed down video packages in Latin America and Eastern Europe. Eventually, he sees the U.S. market moving in that direction too.
“I believe that will happen. I think these overstuffed turkeys are going to end up being a challenge from a consumer perspective,” Zaslav said, adding that SVOD services like Netflix, Hulu and Amazon have the right idea.
“We as an industry need to complement that with a quality offering that’s a true skinny bundle in the spirit of what’s working around the world,” Zaslav said. “I think that will happen. It’s just a question of when.”
Discovery reported earnings earlier Monday, with total revenue up 4%, fueled by a 1% gained in domestic ad sales.