Discovery Expands Its Reach Overseas to Ensure Growth

“Here Comes Honey Boo Boo,” the reality show on TLC in the United States, has become an unlikely hit in Brazil and dozens of other countries where it is broadcast on some of TLC’s 150 international channels. To help explain its particularly American milieu and language, the episodes come with a glossary of common terms: “concurso de brillo” in Spanish for “glitz pageants”; “gorduchéte” in Portuguese for “chubette.”

The series and its popularity overseas are just one aspect of Discovery’s growing international business. The company, based in Silver Spring, Md., owns 14 domestic cable channels including Discovery, OWN: The Oprah Winfrey Network and Animal Planet, but its executives see growth coming from places like Brazil, Mexico and Russia.

“We don’t see ourselves as a domestic media company,” said David M. Zaslav, Discovery Communications’ president and chief executive, in a phone interview from Moscow, where he was visiting with the company’s 32 local employees. (The week before, he had business meetings in Paris, Switzerland and Belgium.)

Discovery’s strategy signals how the cable television business in the United States is maturing. With a proliferation of channels competing for a diminished number of total viewers, media companies have looked elsewhere for growth.

Last year, News Corporation paid $335 million to complete its acquisition of the Singapore-based ESPN Star Sports, previously a joint venture with the Walt Disney Company. Viacom has in recent years expanded its footprint in Russia, Eastern Europe and Latin America. In India, the company owns Colors, a Hindi-language general entertainment pay TV channel.

“You have many markets with substantial G.D.P. growth ahead of them and multichannel infrastructure growth,” Robert M. Bakish, president and chief executive of Viacom International Media Networks, said in an interview last year. “TV in the U.S. is pretty well saturated.”

Discovery has channels in 217 countries and territories in 45 languages as well as 1.3 billion subscribers outside the United States. In the six years since Mr. Zaslav took over as chief executive in 2007, the company has grown from making around $720 million in total profits, with roughly $120 million coming from overseas, to making $721 million just from its international business, or 34 percent of its total profit of $2.1 billion, in the fiscal year that ended Dec. 31.

In the coming weeks, Discovery is expected to close its biggest deal yet: a $1.7 billion acquisition of SBS Nordic, a Scandinavian programmer that includes 12 television networks, radio stations and digital assets in Denmark, Finland, Norway and Sweden.

The SBS deal came around the time Discovery agreed to pay about $240 million for a 20 percent stake in Eurosport, a Pan-European cable sports channel that broadcasts tennis, cycling and cross-country skiing and other sports in 59 countries, and other pay television assets owned by the French media company TF1 Group. The transaction gives Discovery the chance to take majority ownership of Eurosport in two years.

After the SBS acquisition closes, more than 40 percent of Discovery’s business will come from abroad, making the company the biggest among its competitors in the international cable television business. On Thursday, Discovery will hold its annual upfront presentation to unveil its business and programming plans to advertisers and reporters.

Thirty-eight percent of Discovery’s revenue last year came from its international business, compared with 44 percent for News Corporation, 29 percent for Viacom and 28 percent for Time Warner, according to Wall Street estimates in Discovery’s latest investor presentation.

Article source: http://www.nytimes.com/2013/04/01/business/media/discovery-expands-its-reach-overseas-to-ensure-growth.html?partner=rss&emc=rss