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Discovery chief executive says sports to blame for cable costs, carriage disputes

Discovery Networks Chief Executive Officer David Zaslav

A television executive confirmed on Wednesday what consumers and programmers have long thought to be the culprit behind the high cost of pay television platforms: Sports channels.

In remarks delivered at the Goldman Sachs “Communacopia” conference on Tuesday, Discovery Networks Chief Executive Officer David Zaslav said so-called “skinny bundles” offered by cable and satellite companies still cost more than what consumers would like to pay because they’re often stuffed with channels that some customers don’t want.

“There is no such thing as a skinny bundle with a regional sports network that costs $10,” Zaslav said in comments reported by the trade publication Multichannel News. He suggested actual skinny bundles could be offered that have sports channels removed, or “puked out,” to make them more appealable to consumers.

Some companies have been quietly offering slimmed-down “economy” packages without costly sports and news channels for years. Though the packages are rarely advertised, consumers looking to cut down on costs are learning about them in forums and on blogs where fellow customers share tips on how to shave dollars off cable and satellite bills.

Comcast, for example, has offered a “digital economy” package that offers around 60 of the country’s most-watch pay TV channels, a choice that mirrors what cable television looked like in the 1990s. The focus of those packages tend to veer toward general entertainment, lifestyle and children’s programming while excluding sports channels like ESPN, NBCSN and Fox Sports 1.

In 2016, Dish Network took a bold step in offering customers more control of the channels they receive by offering “Flex Packs,” a system where customers start with a base of 50 general entertainment channels, then add packages based on the programming they like. The base Flex Pack package cost around $35 a month. Additional packages included one with local stations for $12 a month; a news package for $10 a month and two sports packages varying for $12 each.

Some pay TV companies have started to take a hard stance against programmers who leverage sports in an attempt to extort higher fees from cable and satellite providers. In April, DirecTV parent company AT&T removed NFL Network and NFL RedZone from its lineup of sports offerings across all platforms, including its streaming service DirecTV Now (later renamed AT&T TV Now).  Last month, AT&T yanked Denver-based Attitude Sports Network from the same platforms over proposed fee increases.

In July, Dish Network removed regional Fox Sports packages from its lineup after the channels were acquired by the Walt Disney Company. Those channels were sold to Sinclair Broadcasting Group in August, but the networks have yet to return to Dish Network or its streaming service Sling TV.

Discovery is one of a small handful of programmers that does not offer sports across any of its linear TV channels (the company does own GolfTV, a separate streaming-only service). Which puts Zaslav in a unique position of criticizing sports programmers without angering professional leagues or franchisees.

It also gives Discovery an advantage as customers begin looking to streaming TV services like Sling TV, YouTube TV, PlayStation Vue, Fubo, Philo and Hulu with Live TV as a replacement for traditional cable service. Although prices have slowly increased for these so-called “over-the-top” services, they generally don’t contain the same types of hidden programming and regulatory fees as cable and satellite.

Most over-the-top services have reached an agreement to carry some or all of Discovery’s program offerings, including Animal Planet, TLC and the Food Network. The offerings are attractive to streaming services that are trying to court cord-cutters toward a new form of linear television because Discovery’s program costs are low thanks in large part to the lack of sports. It also means Discovery is less likely to ask for more money when contracts are up for renewal, meaning the channels probably won’t disappear once they’re offered.

Zaslav admitted Discovery has a smaller traditional TV audience compared to other programmers that offer football, baseball and basketball, but he said Discovery’s on-demand audience — mainly those who use the company’s “Go” smartphone and smart TV apps — is made up of the millennial demographic that is attractive to companies that want to advertise on TV.

He left out one catch: That Discovery Go apps require a cable or satellite login to use.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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