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Sports programming is expensive and largely unwanted by the larger group of US TV viewers, according to David Zaslav, CEO of Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK). Speaking during Discovery's earnings call earlier this week, he advocated dropping sports programming entirely in order to drive adoption of skinny bundles.
Following from Walt Disney Co. (NYSE: DIS)'s earnings report earlier this week, and the continued decline in sports network ESPN's viewership, Zaslav's comments are particularly biting. He was scathing in his comments about existing skinny bundles, such as DirecTV Now, Hulu Live and Sony's Vue, describing them as "a bit of a stuffed turkey." (See Subscribers Down at ESPN as Cord-Cutting, Skinny Bundles Bite and Hulu Joins Skinny Bundle Party.)
He said that he was seeing skinny bundles in 200 countries, but not in the US -- because a $40 bundle with sports included was not really "skinny," in his opinion. He also pointed out that customers would still need to purchase broadband on top of that cost, which would mean a total monthly cost in the range of $60-70 per month.
Instead, he advocated creating slimmed-down packages priced at $8-12, which he sees in Latin America and Eastern Europe. He anticipates that the market is moving in this direction even in the US, and will get there in time. (See Premium vs. Skinny Bundles: A Balancing Act for Pay-TV.)
This isn't Zaslav's first rant against sports programming. He's previously blamed sports programming for damaging cable's growth and for denying Discovery a share of revenue equivalent to its share of viewership.
While Discovery has covered the Olympics in the past, sports is not a major part of the company's appeal. As such, it's not that surprising that Zaslav would want to strip newer video service bundles of content that -- at least in his opinion -- costs more than it delivers. But most other large media conglomerates have significant sports-related properties, so they are unlikely to support him.
Instead, Discovery might be partnering with fellow cable programmers Viacom Inc. (NYSE: VIA) and AMC Networks Inc. for a sports-free skinny bundle, according to reports.
Zaslav's mood is unlikely to be helped by the company's performance. Discovery's earnings were below expectations, and the company lost about 3% of its US subscribers in the first quarter this year.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation
