MARKET AND THE KOREAN MARKET
HIGHER BUT CHINESE AND HONG KONG
MARKETS LOWER.
THE PROPERTY BROTHERS HAVE A NEW
HOME, DISCOVERY HAS COMPLETED
ITS ACQUISITION OF SCRIPPS
NETWORK INTERACTIVE IN A DEAL
VALUED AT $14.6 BILLION
INCLUDING THE ASSUMPTION OF
DEBT.
THE MERGER CREATES A PROGRAMMING
POWERHOUSE WITH SHOWS LIKE SHARK
WEEK AND CHOPPED NOW UNDER THE
SAME ROOF.
THE COMBINED COMPANY WILL BE
KNOWN AS DISCOVERY INC.
JOINING ME IN THIS EXCLUSIVE IS
CEO AND PRESIDENT OF DISCOVERY
INC. DAVID ZASLAV.
GREAT TO SEE YOU.
>> GOOD MORNING.
>> MARIA: CONGRATULATION.
>> THANKS SO MUCH MANUFACTURE
THIS IS A
MAIS IS A
MANU IS A
MANUFAS A
MANUFACTA
MANUFACTURETHIS IS --
>> MARIA: THIS IS A REALLY BIG
DEAL.
TELL ME ABOUT THE OPPORTUNITY.
>> SO FOR US, WE THINK THAT
THERE'S A REAL CHANCE FOR US TO
BE A MAJOR PLAYER AROUND THE
WORLD IN REAL LIFE ENTERTAINMENT
OR NONFICTION.
SO YOU HAVE SCRIPTED AND MOVIES
ON ONE SIDE AND THEN YOU HAVE
NEWS AND SPORTS AND IN THE
MIDDLE IS US, BETWEEN FOOD, HG,
OPRAH, DISCOVERY, ANIMAL PLANET.
WE HAVE 18 CHANNELS, ABOUT 20%
OF VIEWERSHIP ON TV.
AND THESE ARE CHANNELS PEOPLE
LOVE.
SO IF YOU LOVE SCIENCE, WE HAVE
A SCIENCE CHANNEL.
IF YOU LOVE OPRAH, YOU LOVE
FOOD, WE HAVE COOKING OR FOOD,
HG.
SO WE KIND OF BRING TOGETHER
MOST OF THE QUALITY BRANDS IN
AMERICA BUT FROM OUR PERSPECTIVE
MAYBE MORE IMPORTANTLY, WE OWN
ALL OF THAT CONTENT EVERYWHERE
IN THE WORLD.
AND SO AS A GLOBAL I.P. COMPANY,
WITH COMPANIES LIKE APPLE AND
AMAZON LOOKING AT THE WORLD AND
FACEBOOK AND GOOGLE MORE
GLOBALLY, WE NOW HAVE BRANDS AND
CONTENT ALL OVER THE WORLD THAT
PEOPLE LOVE.
>> MARIA: YOU'RE RIGHT.
A COUPLE THINGS YOU SAID THERE.
FIRST OF ALL, THESE SHOWS REALLY
DO REPRESENT LIKE YOUR BEST
FRIEND.
THIS IS SORT OF DESTINATION
TELEVISION WHETHER IT'S THE FOOD
CHANNEL OR HOME AND GARDEN, HG,
SO IT'S SEEN ACROSS THE WORLD.
I WANT TO ASK YOU ABOUT
INTERNATIONAL.
BECAUSE THAT'S ONE THING THAT
HAS BEEN A BIG DRIVER OF
DISCOVERY'S SUCCESS.
>> 60% OF OUR COMPANY RIGHT NOW,
65% OF OUR REVENUES IS OUTSIDE
THE U.S.
ONE OF THE BIG OPPORTUNITIES
WITH SCRIPPS, THEY HAVE REALLY
GREAT BRANDS AND REALLY GREAT
CONTENT.
BUT THEY HAVEN'T TAKEN IT AROUND
THE WORLD.
AND SO -- AND THEY OWN ALL THEIR
CONTENT.
SO THE FIRST THING WE'LL DO IS
WE'LL TAKE ALL THAT FOOD, HG,
COOKING CONTENT AROUND THE WORLD
BUT MAYBE MORE IMPORTANTLY, THE
BIG PLAY FOR ALL OF US IN MEDIA
IS WHO'S GOING TO GET ON THE
DEVICES AND THE MOBILE SCREENS.
THERE ARE 2 BILLION MOBILE
SCREENS, THERE'S 5 BILLION
DEVICES AND WHO IS GOING TO GET
ON THOSE AND WE THINK INSTEAD OF
PEOPLE WATCHING HOMELAND N OR
THE CROWN ON THEIR PHONE,
THEY'RE GOING TO WANT TO WATCH
CONTENT THAT THEY LOVE THAT'S
ALL KIND OF FUNCTIONAL.
SO CONTENT AROUND FOOD OR AROUND
HOME, AROUND SCIENCE,
INSPIRATIONAL CONTENT FROM
OPRAH, WE THINK THAT CONTENT CAN
WORK VERY WELL ON MOBILE DEVICES
AND THAT'S THE REAL TERRITORIAL
GRAB.
WHO IS GOING TO BE ABLE TO MAKE
THAT TRANSITION.
>> MARIA: DO YOU STILL HAVE TO
DO IT IN SHORT SNIPPET.
>>> YOU
S?> YOU
S?DOYOU
S?DO YU
S?DO YOU LOOK AT THIS IN TERMS O
S?DO YOU LOOK AT THIS IN TERMS F
LONG FORM CONTENT OR SHORTER,
YOU COULD BREAK UP SOME OF THE
CONTENT FOR THE MOBILE PHONE?
>> IT'S BOTH.
LAST TIME WE WERE HERE I WAS
TALKING ABOUT A COMPANY, WE
BOUGHT A FEW COMPANIES AND PUT
IT TOGETHER AS GROUP NINE WHERE
WE DO 8 BILLION VIEWS A MONTH,
SHORT-TERM CONTENT FOR FACEBOOK.
SCRIPPS, WITHIN THE FOOD
CATEGORY, IS THE LEADER IN SHORT
FORM.
AND SO WE REALLY HAVE A MENU.
IF YOU LOVE FOOD, WE HAVE FOOD,
WE HAVE COOKING, WE'RE THE
LEADER IN SHORT FORM.
PART OF OUR AMBITION IS NOT CAN
WE OWN THE TV SET IN THE FOOD
CATEGORY BUT COULD WE OWN THE
KITCHEN, COULD WE OWN IT WITH
AMAZON WHERE YOU WOULD WALK IN
AND YOU'D SAY TO ALEXA HERE'S
WHAT I WANT FOR DINNER AND YOU
COULD SEE IT LONG FORM FROM THE
BEST COOKS AND CHEFS, MAYBE
SHORT FORM.
YOU'D GET A RECIPE.
IT COULD GET DELIVERED FROM
WHOLE FOODS.
COULD WE OWN IT WITH SAMSUNG?
WE HAVE FUNCTIONAL I.P.
AND WE'RE VERY DIFFERENT THAN
EVERYONE ELSE.
MOST MEDIA COMPANIES ARE IN --
THEY'RE
THEI'RE
THEIRRE
THEIR OPENINGS, THEIR RED
CARPET, THEIR BIG STORES.
IT'S OVER TO THE RIGHT AND IT'S
VERY COMPETITIVE.
NETFLIX AND AMAZON ARE
COMPETING.
IT'S ONE OF THE REASONS WHY
RUPERT AND JAMES AND LOCKLAND
WITH 21st CENTURY FOX SAY
THAT'S A VERY COMPETITIVE
ENVIRONMENT, SCRIPTED TV AND
SCRIPTED MOVIES, AND IT'S REALLY
GETTING DISINTERMEDIATED BY
AMAZON AND NETFLIX.
WE'RE VERY HAPPY THAT THAT
ENVIRONMENT IS EXTREMELY
COMPETITIVE AND DISRUPTED.
>> MARIA: GETTING MORE EXEATITY.
>>
COMPETITIVE.
>> WE THINK OWNING GLOBAL I.P.
IN BRANDS PEOPLE LOVE WITH A
REAL EXPERIENCE AND TAKING THAT
CONTENT IN 45, 48 LANGUAGES
AROUND THE WORLD, WE COULD BE A
DIFFERENTIATED PLAYER.
WE COULD BE A PLAY DIRECT TO
CONSUMER.
>> MARIA: HOW DOES THAT WORK,
DIRECT TO CONSUMER?
HOW WOULD YOU DO THAT?
AND TALK TO US ABOUT WHAT'S
GOING ON IN TERMS OF THE AMAZON
ELEMENT HERE, NETFLIX AND AMAZON
WILLING TO PAY UPWARDS OF
$8 BILLION, $10 BILLION FOR NEW
CONTENT.
YOUR CONTENT IS GOING TO BE
CONTENT THAT PEOPLE WANT.
THEY'RE ORIGINATING THEIR OWN
CONTENT NOW.
DISRUPTION IN THIS AREA OF
SCRIPTED MOVIES AND SCRIPTED TV,
THAT'S ALWAYS BEEN THE COOLEST,
SEXIEST AREA OF MEDIA AND IT'S
WHERE MOST OF THE BIG MEDIA
COMPANIES.
NOW YOU LOOK AT AMAZON PAYING
$6 BILLION A YEAR IN CONTENT AND
NETFLIX 8, THAT COULD EASILY BE
10 AND 10, 10 AND 12.
THE WAY THOSE COMPANIES ARE
VALUED IS MUCH DIFFERENT THAN
TRADITIONAL MEDIA.
TRADITIONAL MEDIA IS A MULTIPLE
OF FREE CASH FLOW OR EBB
OF FREE CASH FLOW OR EBITDA.
NETFLIX IS PAYING FOR PRODUCERS
AND OVERBIDDING FOR MOVIES.
THAT'S WHY YOU SEE A CHALLENGE.
THE THING FOR US IS IF YOU PAY
$10 YOU CAN GET NETFLIX.
YOU CAN PAY $15 FOR HBO BUT
THOSE SERVICES LOOK SIMILAR.
THEY'RE MOVIES AND SCRIPTED
CONTENT.
WE COULD TAKE ALL OF OUR CONTENT
TOGETHER, DISCOVERY, FOOD,
AMAZON, -- DISCOVERY, FOOD, HG,
ANIMAL PLANET, OPRAH, SCIENCE,
COOKING --
>> MARIA: CREDIBLE BRANDS.
>> WE COULD PUT THAT TOGETHER
AND WE COULD MAKE A GLOBAL
OFFERING FOR $6, $7.
AND WE WOULD BE DIFFERENT.
IF PEOPLE WANT MOVIES AN
SCRIPTED, YOU'VE GOT THESE FIVE
PLAYERS.
IF YOU WANT SOMETHING DIFFERENT,
THAT YOU LOVE AND PEOPLE COME
HOME, THEY PUT HG ON, THEY WATCH
IT ALL DAY OR FOOD OR DISCOVERY.
SO WE LIKE OUR HAND.
WE THINK THAT WE HAVE REAL
OWNERSHIP OF DIFFERENTIATED
GLOBAL CONTENT AND NOW WE HAVE
TO FIGURE OUT IF WE CAN GET THAT