Discovery drops $2B on PGA Tour rights outside of U.S.

Discovery has been heavily investing in sports rights across Europe. (Pixabay)

Discovery Inc. is making a big $2 billion bet on PGA Tour golf television rights outside of the U.S. as part of its ongoing effort to become a sports TV leader in Europe.

Discovery's new 12-year deal with the PGA kicks off in 2019 and includes global multiplatform live rights and approximately 2,000 hours of content per year. On top of the live linear rights in 220 markets and territories, Discovery and the PGA will create a PGA Tour-branded, OTT video streaming service built off the OTT work Discovery has done with Eurosport Player.

“Today is a fantastic day for golf fans around the world as Discovery proudly partners with the PGA Tour to create something that has never been done before. The long-term partnership between the PGA Tour and Discovery will create the new global Home of Golf, including delivering over 2,000 hours of live content year-round and this prestigious sport’s greatest moments, stories and athletes. Following our successful first Olympic Games in PyeongChang, Discovery will contribute its strong global distribution and promotional infrastructure, in-market relationships, global sports expertise with direct-to-consumer platforms and brands to create a valuable new long-term Home of Golf offering in every market outside the U.S.,” Discovery CEO David Zaslav said in a statement.

“This partnership aligns very well with the opening of PGA Tour offices in London, Tokyo and Beijing in recent years and will support our long-term objectives of growing the game of golf,” PGA Tour Commissioner Jay Monahan said in a statement. “It also will deliver more value to our sponsors as it presents a tremendous opportunity to engage new and diverse audiences around the world.”

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Discovery has been heavily investing in sports rights across Europe. It recently wrapped up its coverage of the 2018 Winter Olympics.

However, without factoring in the Scripps Networks Interactive, Enthusiast Network and the Oprah Winfrey Network transactions, nor accounting for foreign currency effects, Discovery’s adjusted OIBDA fell 9% due in part to the 37% decline the international networks experienced due to costs associated with the Olympics.

But Zaslav was encouraged by other metrics the Olympics drove for Discovery in Europe.

“One of the big successes that we had with the Olympics was generating a half a million subscribers, paying for the Olympics in less than 10 days, and being able to build a platform that got top ratings and that generated over 3,000 hours of streaming and the ability to navigate and curate within that platform to very good reviews,” Zaslav said according to a Seeking Alpha transcript.