Discovery CEO: Cable needs an $8 skinny bundle to compete with Netflix

Discovery Communications CEO David Zaslav speaks at Investor Day 2015
Discovery has recently been tied to other programmers including Viacom and AMC Networks in reports that suggest those networks are working on launching an entertainment-only bundle.

Discovery Communications CEO David Zaslav said that pay-TV operators in the U.S. are missing an opportunity by not offering an $8 skinny bundle that’s priced competitively with Netflix.

Speaking today at a Bernstein investor conference, Zaslav said pay-TV operators will eventually need to offer a skinny bundle to meet consumer demand. He said the bundle will have no sports, a few networks, and will cost $8 to $10. Zaslav said that a new skinny bundle priced at that point wouldn't necessarily compete against or replicate what Netflix is offering, but it would offer another programming option for around $8.

“That’s what’s worked everywhere else in the world,” Zaslav said, adding that channel bundles without sports are accelerators for the pay-TV market everywhere in the world.

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Discovery has recently been tied to other programmers including Viacom and AMC Networks in reports that suggest those networks are working on launching an entertainment-only bundle.

Speaking earlier this month at a J.P. Morgan investor conference, Viacom CEO Bob Bakish said that a $10 to $20 skinny bundle without sports would be launching within the calendar year. Bakish reiterated that Viacom is in deep talks with at least one MVPD about a channel bundle that can help bring in new customers at a lower price point and also help keep existing customers in the pay-TV ecosystem.

RELATED: Viacom CEO says $10-$20 entertainment channel bundle coming this year

Outside of traditional pay TV, Discovery also has a lot of irons in the fire in terms of OTT and direct-to-consumer, although Zaslav warned that his company is still working on the whole monetization thing.

“We’re not making much money with direct-to-consumer,” he said.

Zaslav said the Eurosport Player, which he again referred to as “sports Netflix,” has drawn in a couple of hundred thousand subscribers so far. In the U.S., he said Discovery’s authenticated GO apps could soon see 2% advertising growth, adding that the CPMs for those apps are higher than traditional linear because people are watching longer.

Zaslav said Discovery’s authenticated apps are almost all additive and they are not cannibalizing Discovery’s traditional linear business.

This article has been update to clarify David Zaslav's comments about Netflix.

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