Discovery wants to go OTT without alienating pay TV distributors

Discovery Go
Discovery said that what it's currently doing with its Discovery Go TV Everywhere products could translate to a broader OTT strategy. (Discovery Inc.)

Discovery, Inc. is in the early planning phases of launching a streaming video service that aggregates IP from all its brands, and the company is being careful not to disrupt its relationships with traditional pay TV distributors.

During the company’s fourth-quarter earnings call today, CEO David Zaslav said his company doesn’t license its best IP to third-party streaming platforms, and that it gives it an equitable position with its pay TV partners.

“We have great relationships with our distributors. So, we start with them. I was talking to [Charter CEO Tom Rutledge] last night. We’re in discussions with all our distributors,” Zaslav said. He added that there are ways that Discovery can work together with Charter, Comcast, Cox, AT&T and Dish Network to create more value.

“We feel good about it. The cable guys aren’t going to wake up and find out what we’re doing. They’re going to be in rooms with us figuring out what we’re doing that creates more value for both us. They have lots of broadband-only subs that they’re only selling Netflix to and they don’t like it and we don’t like it,” Zaslav said.

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Discovery didn’t provide a specific date for when its new streaming service could launch. However, he said plans to provide a value-additive service for existing pay TV subscribers and an opportunity “for not too much money” for non-pay TV subscriber to get access to Discovery’s content.

“There may be people who want to do both. They want the optionality. That’s what we’re trying to figure out. We’re talking to the distributors and because we own everything, we think we can move very quickly. And because we have the platform already in place, we think we can move very quickly,” Zaslav said.

Zaslav’s comments about early discussions for the OTT service launch arrive alongside Discovery’s fourth-quarter results. The company’s revenues rose 2% to $2.87 billion and net income rose 77% to $476 million. But the company OIBDA fell 8% to $1.1 billion as operating income decreased at both the U.S. Networks and International divisions.