Discovery mobilizes its forces for the upcoming streaming war

After posting better-than-expected third-quarter earnings, Discovery Inc. CEO David Zaslav says the cable company is looking at ways to aggregate its vast catalog of unscripted and factual-based programming through a streaming service in a market quickly becoming crowded with streaming platform options, an industry insider told Fox Business Network.

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Thanks to a third-quarter influx propelled by U.S. and international growth, Discovery has positioned itself to "start to explore a new opportunity" in aggregating the network’s massive content library with a potential streaming platform in the United States. However, long-time streaming executive and principal analyst at Frost & Sullivan Dan Rayburn believes the network is just one of many looking to break into the streaming sphere.

“Who isn’t trying to get into the streaming market?" Rayburn told FOX Business Network on Thursday. "They recently reached deals with BBC, PGA Tour… networks can’t just (create their own streaming service) unless you’re Disney. They need partnerships, which is what Discovery has been doing by acquiring these kind of markets in U.K. and Ireland” he said, alluding to the company's recent expansion efforts abroad.

“The point of creating a streaming service is to control the relationship with consumers directly and cut out the middleman. What network isn’t going to want that?” Rayburn added.

But what sets Discovery apart is their non-scripted, factual-based programming, which Zaslav believes will carry the brand through the crowded streaming service market in comparison to scripted entertainment platforms, which have flooded the industry in recent years.

"You have some of these platforms launching with eight series, 10 series or a bunch of movies and series to come," Zaslav said according to the Hollywood Reporter. "We have hundreds of thousands of hours that people grew up on. ... We are looking now at whether we should just aggregate … all of our content in the U.S. and having something that looks very different, is very deep, has great personalities, great brands to curate through."

Zaslav added that Discovery already has full ownership and control over all of its programming worldwide, with the network adding around 8,000 hours of original content each year, describing the streaming service endeavor as "a full attack" on “people who are not pay-TV subscribers” while distinguishing the network from others who rely on scripted programming.

"We have an ability whatever we want, but we are probably the most, we have been the most friendly company in terms of the existing ecosystems, and we are looking to continue,” he recently told an analyst, according to Hollywood Reporter's report. “We are talking to existing distributors. ... We want to preserve the existing ecosystem" and also go after people who are not pay TV subscribers.”

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The Discovery CEO has repeatedly told the press in the past that the network avoids the "rock’em, sock’em" nature of the scripted programming that has become ubiquitous in the streaming sphere, which Zaslav described as "crowded, aggressive, expensive and risky" as the streaming market continues to become oversaturated.

Discovery Inc. President-CEO David Zaslav

Zaslav, who signed a new employment contract last year that keeps him at the network’s helm until 2023 according to Variety, echoed that sentiment, saying only three or four cable companies will “make it” out of seven or eight scripted entertainment-minded networks who are in the streaming sphere or looking to break into it. "It is going to be a lot of carnage," Zaslav said.

While Rayburn acknowledged that the streaming market is crowded with options, the industry expert told FBN that most consumers will likely have multiple streaming platform subscriptions, regardless of how they feel about it.

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“The streaming market is already oversaturated, Rayburn added. “The main question is, with all of these streaming platforms popping up, will consumers really subscribe to more than three streaming services? As much as many will say they won’t, they don’t really have a choice. Some families and households might cut back, but the vast majority of us will have to (subscribe to multiple streaming services.) Each service is targeting a particular niche, but there are enough consumers out there that watch different forms of content, they don’t just watch one genre or network.”

Discovery's own particular niche recently expanded after the network acquired Scripps Networks Interactive last year for $14.6 billion, obtaining the likes of the Travel Channel, Food Network, and DIY Network in a move that will likely further distinguish its streaming service from other scripted-based entertainment platforms.

And the network certainly has the money to make a go of it in the streaming sphere, having recently posted earnings of $262 million, up over $100 million compared to a year-ago profit of $117 million as a result of "higher operating results, lower restructuring and other charges and to a lesser extent, lower interest expense, partially offset by the impact from a non-cash goodwill impairment charge in our Asia-Pacific region."

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Under Zaslov’s leadership, Discovery has already been working on direct-to-consumer streaming business abroad, signing partnerships with European broadcasters like ProSiebenSat.1 in Germany for streamer Joyn and Cyfrowy Polsat in Poland, according to the Hollywood Reporter.

Earlier this year, the network signed a deal with the BBC to expand Discovery’s portfolio of natural history-related content, with a worldwide video-on-demand subscription service scheduled for a 2020 launch, while also partnering with the PGA Tour to create the streaming service GolfTV.

Last month, Discovery launched dplay in the U.K. and Ireland, which is an ad-supported entertainment streaming platform currently available in ten different markets. The streaming service features Discovery programming ranging from the Food Network to Quest and Home.

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