Discovery targets 3 billion subscribers

David Zaslav

Discovery Communications boss David Zaslav has pledged the channel operator will hit three billion subscribers by the end of the year.

The Discovery president and CEO was speaking at the company’s first-ever investor day, and told the assembled analysts and shareholders that the company will deliver solid earnings growth in its US domestic market and internationally.

“Discovery Communications is like no other media company in the world, with an average of 10 channels across more than 220 markets and we are well positioned for near- and long-term growth,” Zaslav said.

“We are confident in the long-term outlook for our business and foresee continued growth in the years ahead, which we expect will produce significant free cash flow and value for shareholders.”

The bullish forecasts and commitments to investors come after a period in which Discovery’s share price has fallen – from US$37.80 a year ago to US$26.40 at the end of trading yesterday. The share price was down again yesterday in the wake of the investor meeting, though Zaslav for the first time offered investors three-year guidance.

International boss J.B. Perrette said that Discovery Networks International will deliver meaningful pay TV subs growth and increased multichannel advertising revenues.

Discovery has diversified from pay TV into free-to-air and now OTT, with its DPlay service, which TBI was the first to report on earlier this year.

Speaking to investors yesterday, Bruce Campbell, Discovery’s chief development, distribution and legal officer, gave an overview of Discovery’s digital activities and also announced the upcoming launch of Discovery Kids Play, a new TV Everywhere offering for the popular Discovery Kids channel in Latin America.

Eurosport chief Peter Hutton, meanwhile, addressed the acquisition of exclusive TV and multi-platform rights to the Olympics, a US$1.45 billion deal agreed earlier this year.

He said the Games will be profitable for Discovery, with fees from sub-licensing the rights in hand covering 70% of the cost of acquiring them and broadcasting the events.

Discovery’s guidance to investors was for a year-on-year revenue increase of 9-10% in the 2015 financial year. Earnings will be up mid-single digits, the company said. Looking further ahead, it said there will be low double-digit annual earnings growth.