Discovery CEO: Streaming Devices are ‘Dumb’

During an interview with the FOX Business Network’s Maria Bartiromo, Discovery Communications CEO David Zaslav discussed why the traditional TV model is not dead.

“Reed [Hastings] runs a great company. I think Netflix (NASDAQ:NFLX) has a fantastic consumer interface. Rather than talk about Netflix specifically… the way people used to get TV was through the TV set multi-channel to the home by either a satellite or cable curated by us in the media business and by viewers making choices as to what they want. The good news is there [are] a lot of additional players that want to aggregate content -- that can be a Samsung device, it could be an Apple (NASDAQ:AAPL) device… Netflix… Hulu, Amazon (NASDAQ:AMZN). From my perspective looking at the industry, all of those are really, this is a little pejorative, it’s an overstatement, but they’re essentially dumb devices and as great as each of those aggregators are… they only come to life if you put great content on there,” he said.

Zaslav argued the TV industry needs more of a say on how content is distributed through streaming video on demand platforms.

“The problem with those SVOD platforms is there [are] no brands, the economics are really inferior and if we work with those devices and created the right economic model I think it could be a positive. Right now I think what we are doing is we’re feeding those platforms. Those platforms are trading at higher multiples than we are and we are the ones that have the juice. We are the ones that have the content that bring those alive,” he said.

Zaslav said social devices could be exciting.

“When you think about Facebook (NASDAQ:FB), two months ago we sat down with the Facebook crew, with Zuckerberg and talked about what their vision was and it’s a very compelling company. Right now we really use Facebook aggressively to let big social communities know about the shows that we have on our channels everywhere in the world… It’s a huge vehicle for us,” he said.

Zaslav said although the cable bundle has experienced a slight decline, it’s still the way people watch TV.

“One of the things about SVOD versus live TV… is a big piece of TV is watching together. It’s watching and calling your friends and saying ‘have you seen this?’ or going to work the next day and saying ‘did you see what was on last night on Discovery or on FOX?’ The SVOD is really an alone platform. I think Netflix is a great product. HBO is a great product. A lot of those viewing products you view kind of as an addition to live TV.”

He also discussed the state of the U.S. advertising market.

“The U.S. advertising market is getting better… This quarter we will be up mid-single digits and so the advertising market is improving. Our share in general has improved this year. Our channels are stronger… So we are gaining share, spending more money on content and we committed that over the next three years, even in a down scenario, we think that the U.S. is going to be relatively flat. Over the next three years we will see growth,” he said.