Discovery International’s JB Perrette

JB Perrette, president and CEO of Discovery International, talks to World Screen about the multipronged strategy to future-proof the company’s global portfolio of brands—an average of 10 channels across 220 countries and territories—in this evolving landscape. 

The media business is in full upheaval. Viewing habits are changing, consumers have infinite entertainment options and the extremely costly streaming wars are underway as services backed by media behemoths vie for subscribers. Well aware that consumers enjoy content in myriad ways, Perrette wants to make sure the Discovery brands are reaching viewers wherever they are and on their most convenient screens.

For viewers who still flock to curated linear channels—and there are millions of them around the world—DI has a variety of pay-TV networks, ranging from Discovery Kids in Latin America to Discovery Channel, TLC and ID on other continents. DI has also invested heavily in sports, acquiring Eurosport and the rights to the Olympic Games through 2024. Following the 2018 acquisition of Scripps Networks Interactive by DI’s parent company, Perrette and his teams are finding homes for Food Network and HGTV. Alongside the pay-TV channels, free-to-air broadcast stations, such as Nove in Italy and Quest in the U.K., round out DI’s traditional linear-television business.

Other viewers prefer to be in complete control of their viewing experience. For them, DI offers Eurosport Player and the on-demand service Dplay, available in the U.K., the Netherlands, the Nordics, Italy, Spain and Japan, which allows viewers to watch either entire channels or individual programs. From food and home to cars and sports, Discovery’s content generates passionate communities of fans. Many of them are not satisfied with merely watching shows passively; they want to interact with the content. This has prompted the launch of direct-to-consumer “view-and-do” products such as the MotorTrend app, the GCN ( Global Cycling Network) app and the Food Network Kitchen app, with more to come.

Recognizing the popularity and relevance of local stories told by local voices, DI has been investing in joint-venture VOD services. It has partnered with ProSiebenSat.1 Media to form Joyn, and with Cyfrowy Polsat for an upcoming service in Poland. A significant partnership with BBC Studios for its natural history and factual programming will yield products set to roll out in the coming months.

As Perrette tells World Screen, owning and controlling content has been the key to feeding channels’ schedules, rolling out on-demand and direct-to-consumer products, and quickly responding to whatever changes technology or viewing behavior may bring.

***Image***WS: Discovery has long made a priority of owning content. How is this strategy paying off in today’s media landscape, particularly with the launch of so many streaming services that focus primarily on scripted programming?
PERRETTE: It’s not only owning content; it’s owning content globally. Those two points are very important and go together, because ultimately the media business is a scaled business. And being able to have global reach—compared to some of our competitors who are great but end up being strong in one market, or a handful of markets, and don’t have global reach—is a big differentiator. Running the international business, I live and breathe that every day. We are the only number-one global media company operating in 220 markets, with infrastructure and people on the ground who know the markets in all the key places.
Very early on, the company believed in ownership of IP, partly because, from a business-model standpoint, we’ve been able to exploit it most effectively by controlling it and using it to launch great channels and brands for most of the last three decades. Now, in this new, changing world, owning IP gives us huge optionality. It has allowed us to take what was historically mainly a pay-TV business internationally and exploit some of that content in the free-to-air space. Then, in many markets across Europe, where we had a pay-TV and free-to-air business, we were able to exploit content across digital. If we didn’t own and control all those rights, we’d have to go back to the IP owner every time and say, Now we’d like to diversify into free TV, so could we also get these free-to-air rights? Or, by the way, now we want to get into the direct-to-consumer business. We don’t have to do that. We have full control of an enormous programming library, which includes more than 300,000 hours of content from the last few decades. We continue to refresh it and invest in more IP. The optionality that owning content gives us in a changing world—to do what we want and need to do, and move content across platforms and business models—is huge. And third, we looked at the world today and [saw that] several media companies are going after the scripted entertainment space. That is increasingly looking like a bloodbath of dollars; a lot of money is being spent on that side of the business. There are a lot of great companies doing that, and we wish them well, but on our side, we love our hand because the scripted business models are super expensive. They are all bidding up the prices for the same series and shows. On top of that, it’s only one business model, which is purely an entertainment business model.
Our content resonates in passion verticals, whether they be around cars, home and food, or animals and pets. And we can do it on a much more cost-efficient basis. More important than anything else, as we look at this world of direct-to-consumer, a huge differentiator—and we love our position—is, yes, our content is entertaining, but it’s also engaging. By engaging, I mean that it’s content people use in their daily lives. People don’t just watch the Food Network because they like our chefs and our talent. They watch the Food Network because they love to cook. They love food, ingredients and different ways to prepare meals. In the next chapter of our growth, we’re leaning hard into this direct-to-consumer space. We’re taking all our great content, making it available on all our traditional businesses—where we continue to grow audience and share—and then taking it to the direct-to-consumer space. In that space, we’re exploiting content on purely viewing platforms, like Dplay in Europe, but we’re also starting to exploit it in what we call view-and-do products, like our Food Network Kitchen app in the U.S., our MotorTrend app, or GCN (Global Cycling Network).
Instead of having only one model, which is to pay for high-priced premium content like all the other guys are doing, we’re building verticals, brands and content people love and know stand for excellent curation. We’re exploiting our content in the traditional linear-television landscape, and we’re offering people the opportunity to watch and enjoy it on direct-to-consumer apps like Dplay. We’re also taking a third bite of the apple by taking our content and providing it in functional ways to improve day-to-day lives in a totally different way. It’s not what Netflix is doing or HBO Max or Peacock. We love the multipronged optionality that the content we’ve developed over so many years gives us in this direct-to-consumer space.

WS: Discovery is setting up joint ventures that are tapping into local programming, such as Joyn in Germany. What is the strategy behind that?
PERRETTE: To John Hendricks’s [Discovery’s founder] and the board’s credit, five years into the launch of this business in the U.S., when most people were either taking money off the table or plowing more money into the U.S., they were visionary and said, We have to invest in going global. What we learned over a three-decade period is that it’s great to have a pipeline of U.S. content that serves as a foundation, particularly in the nonfiction genres. While our characters may be American in some cases, the themes and the storylines are universal. They appeal to viewers in Singapore, Brazil, Italy and Russia. Then we decided we needed to continue to scale these businesses. As the markets have gotten more sophisticated over three decades of television, viewers have, understandably, been wanting to see themselves represented on TV. We’ve realized we have to start investing more in stories and characters that are relatable to that local audience. We have invested, over 30 years, tens of billions of dollars in increasing our footprint and content in telling local stories. In a lot of these markets, unsurprisingly, local content is what dominates from an audience perspective.
These global players have largely English-language, U.S.-produced stories. That’s great, and some do have universal appeal. But when you get out of the U.S., still, the vast majority of content people want is local. We have a differentiated approach. We’ve taken the view to build the leading local direct-to-consumer product, taking all the great content the broadcasters have developed over the years in their markets, and aggregating it. We’ve seen the power of aggregation in the U.S. The reason Hulu is the top aggregation SVOD service in the U.S. is that, very early on, NBC and FOX, and eventually Disney, got together and said they should create a service and put all their content in one place.
We’ve taken that model and said, OK, we should be doing the same thing. We want to be the leaders in local SVOD in all the major markets across Europe. We did Joyn, a joint venture in Germany, and we’ve announced a JV with our partner Polsat in Poland. We have the leading and fastest-growing OTT service in the Nordics with Dplay. We’ve launched Dplay in the U.K., Netherlands, Benelux, Spain and Italy. And we’re having more conversations with more partners every day. We believe in the power of aggregation—simplifying the journey for consumers by allowing them to have one place where they can find everything. And we know that the power of local content is huge. Some other services are starting to understand that, but we’ve got a long head start. It’s a costly and time-consuming journey to invest in local programming across 50 to 100 markets. We want to exploit our head start, and we believe we can be the leaders in local in several markets across Europe and maybe other parts of the world.

WS: Which brands in the Discovery portfolio are performing best in which territories?
PERRETTE: Early on, the company very wisely did not subscribe to a one-size-fits-all model. It depends on markets and regions. The international landscape is very diverse for us. One of our best-performing channels in the world is Discovery Kids in Latin America. We beat Disney, Nick and all the other traditional kids’ channels in the region with our Discovery Kids brand because we got out early. The team found white space 20-plus years ago to launch a kids’ service, so we now have the leading preschool kids’ service in LatAm. We don’t have that channel anywhere else. In Europe, some of our big broadcast networks are doing incredibly, such as Nove in Italy and Quest and Quest Red in the U.K. Eurosport has been a great hit. On the factual side, TLC had its best year ever internationally last year. We saw great success with ID. We’ve now launched Food Network and HGTV. Scripps hadn’t invested as early in the international space; they came later to the party, and it was harder with their smaller scale to drive distribution. Over the last 18 months, we’ve gotten launches or commitments to bring Food Network and HGTV to almost 150 million homes internationally.

WS: What is the role of free-TV channels in your multipronged strategy?
PERRETTE: They provide an enormous amount of scale for advertising partners, and we see that continuing to grow and do well. They also serve an [important purpose for viewers], which is how it’s worked in Italy, the Nordics, and Spain, and in Germany with Joyn. When you take content in the pay-TV world, and someone’s paying you for that content through a cable or satellite system, and you want to make it available online, there is natural friction that will exist. The great thing about free to air is that we don’t have that issue. Not only are we seeing great success on the free-to-air channels in the traditional linear model—with audience shares in the U.K. and Italy hitting historic highs last year—but on top of that, free to air is serving as a treasure trove of content to launch our direct-to-consumer business. And that has both advertising [and subscription] capabilities because we have a dual model: a free layer of ad-supported content,  which then sells consumers up to a premium layer of non-ad-supported content and experiences. So that broadcast content serves a fantastic dual purpose of helping us continue to do well in traditional television, while also building and scaling our direct-to-consumer business.

WS: You mentioned Eurosport. Discovery has made significant investments in sports rights. What products and services are you offering?
PERRETTE: [Our offerings are] not dissimilar to what we are doing on the entertainment side. We have the linear channels Eurosport 1 and Eurosport 2 that continue to perform very well. We have the Eurosport Player, our multi-sport direct-to-consumer product, which is doing very well and growing. We have our passion verticals. What differentiates us is that we have launched view-and-do ecosystems and products for specific areas of passion and interest. We have GolfTV for golf fans. We have GCN, the Global Cycling Network, for the biggest global community of cycling fans. It’s not a one-product approach. We have all three tiers, from big and broad television to aggregated sports to specialty view-and-do products in certain areas of passion. We’re investing in the golf space in a major way and trying to build out a golf ecosystem that allows fans to not just watch the PGA tour everywhere outside the U.S., but do more, like watch master classes with Tiger Woods and get tutorials. We see great promise for building out these robust communities of fans around specific sports interests.

WS: Eurosport is the home of the Olympics across Europe through 2024. What innovative coverage did Eurosport offer during the 2018 Winter Olympics, and what will it provide for the Tokyo Summer Olympics?
PERRETTE: In 2018, during the Winter Olympics, we did a variety of things that allowed us to over-deliver on our promise to the IOC and its president, Thomas Bach, at the time we did the deal, which was to bring the Olympics to more people on more screens than ever before. For example, on the programming side, we used technology and innovation like the Eurosport Cube, which was the first augmented reality set that we used in PyeongChang. Athletes loved coming in and being able to take video images off the screen and deconstruct how they came over a jump or how they passed a gate in a skiing race. Eurosport Cube was a big innovation. We did a huge amount of digital publishing and short-form content. There were several things that we did and are planning to do for Tokyo. We want to leverage a lot of what we learned: 4K, Ultra HD, augmented reality, tools and graphics.

WS: Tell us about the deal with BBC Studios for natural history and factual programming. Do you have plans to offer that content to consumers in a different or new way?
PERRETTE: We looked at our library and the BBC library and our production capabilities in the space of natural history. [With so many viewing options], people want places where they can easily find their favorite genres. Part of that idea was to take the best of the BBC’s natural history content and our library and make a definitive collection of content about the world around us, the animals in it and what is happening to our planet. We couldn’t be more excited, because it’s both a super-exciting business proposition and also maybe the most core element of our mothership brand, the Discovery brand. We’re planning to roll that out on some of our aggregated video services, like Dplay in the Nordics, imminently. And we are exploring other ways we may roll it out in other territories and across the world, potentially as part of this factual project or something slightly larger. We’re hard at work iterating on a couple of ideas we’d like to do hopefully later this year.

WS: As you look out the next 12 to 24 months, where do you see opportunities for growth? The international business contributes significantly to Discovery’s revenues.
PERRETTE: We’re about 40 percent of the company. The Scripps acquisition rebalanced us. We were approaching 50 percent, and we were on a path to be larger than the U.S. before the Scripps deal. We’re a big component of the Discovery group and continue to be a strong driver of growth for the company. That’s our continued objective, and we see a lot of opportunities in all the areas we talked about—in free to air, in pay TV still, and certainly in the direct-to-consumer space.

This interview was conducted prior to the COVID-19 global pandemic. Media companies are currently shifting their strategies in the wake of postponements—including that of the Summer Olympics. “Our essential planning and deliverables are complete and will now shift into next year,” Discovery said in a statement. “We will continue to develop our products and offerings to best serve our customers and marketing partners in 2021.”