Discovery CEO: Broadband is a must have

Discovery Communications (NASDAQ:DISCA) CEO David Zaslav and Scripps Networks (NYSE:SNI) CEO Ken Lowe discussed the takeover deal between the two companies, why it will be great for consumers and the transition to direct-to-consumer content.

“We’ll have a very, very strong and robust balance sheet as a $40 billion scale player, that if we need at that point, anything else we need to buy, or anything else we need to invest in, we’ll have that much more heft to go after it.  And so, this company makes us stronger in every category,” Zaslav told the FOX Business Network’s Maria Bartiromo.

According to Zaslav, the content between the two companies will remain inexpensive for consumers.

“All of our channels together are less than the cost of one regional sports network and so it’s a very good buy for the consumer.”

Though Discovery has had success providing low-cost content on cable, Zaslav sees a shift ahead from the traditional business-to-business strategy as many consumers are viewing content on mobile devices.

“The transition over the next 5-10 years is going to be going direct-to-consumer.”

As a result, the company is looking to compete on broadband against the likes of Netflix (NASDAQ:NFLX) and Hulu.

“Today, if you have broadband, and you know, broadband more and more is the way people are communicating in the U.S., it’s a must have, it’s almost like electricity, the one vehicle you can get if you don’t have cable is Netflix. And so, we do think some of the skinny over-the-top bundles could be quite compelling for us and by ourselves, with others, we can go direct-to-consumer.”

With the Scripps deal and others, Discovery has become a leading content provider on Facebook (NASDAQ:FB) as well.

“We have over five billion views a month on Facebook. We’re the largest provider, with now this, of short-form news on Facebook.”

When it comes to content, Lowe adds, focused and niche does well with advertisers.

“If you want to slice and dice the food category – let’s say you’re only interested in Italian cooking or French cooking or whatever – we find these subsets, these super subsets that we can super target and then think of the advertising possibilities if you only want this segment of the audience.”

When asked if there could potentially be more deals in the future, Zaslav said it depends on the quality of content out there.

“Bigger is more important, but not just for being bigger, the reason that we bought Scripps is that we think we got a really pure, high quality IP company.”