David Zaslav, CEO of Discovery, Inc. on the future of streaming and Discovery Plus

The Interview Discusses: 

• How he helped launch CNBC, 
• What it was like working in the cable industry when it finally started to gain popularity, 
• David’s views on the current media landscape and where he believes there could be consolidation, 
• His thoughts on how content will be bundled in the future, 
• David’s thoughts on the current multiples for content companies and why Netflix and Disney have been able to garner premium multiples, 
• What it was like working with Jack Welch, John Malone, and the Dolan family, 
• And much more…

Biography:

As President and CEO, David Zaslav sets the strategy and oversees all operations for Discovery’s global suite of brands across pay-TV, free-to-air, direct-to-consumer and other digital platforms. Under his leadership, Discovery began trading as a public company in 2008 and became a Fortune 500 company in 2014. More recently under Zaslav, Discovery acquired Scripps Networks Interactive, in a transaction which closed in 2018. The new Discovery comprises nearly 20% of ad-supported pay-TV viewership in the U.S. and nearly 7 billion monthly video views, making it #1 pay-TV portfolio in the U.S. 

Since Zaslav took the helm, Discovery has launched some of the fastest-growing cable networks in the U.S., including Investigation Discovery, a leading network for women in total day delivery; and OWN: Oprah Winfrey Network, a top network for African American women. Under his leadership, Discovery networks have hit numerous milestones, with TLC breaking all cable viewing trends and recording its most-watched year ever in primetime for 2020. Brands including HGTV, Food Network, TLC and ID regularly rank among the most-popular networks for their core demo of female viewers. 

The company’s global distribution platform has, under Zaslav’s leadership, expanded to 3 billion cumulative worldwide viewers with a diverse set of brands, creating an unmatched international portfolio for viewers, advertisers and distributors. Zaslav has diversified Discovery’s content offering with investments such as Discovery Kids in Latin America, the leading preschool network across the region. Discovery has further strengthened its presence in key international markets through numerous transactions including the acquisition of Eurosport, which led to the groundbreaking agreement with the International Olympic Committee making Discovery and Eurosport the home of the Olympic Games across Europe through 2024.


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Transcript

[00:00:00] [music]

Jonathan Boyar: Welcome to The World According To Boyar, where we bring top investors, best-selling authors and market Newsmakers, to show you the smartest ways to uncover value in the stock market. I'm your host Jonathan Boyar. Our guest today is David Zaslav, president and CEO of Discovery Communications. Prior to joining Discovery, David worked at NBC where he's credited with launching both CNBC and MSNBC. David is here to talk about his fascinating career, as well as the launch of discovery's latest initiative Discovery Plus,

The Boyar Value group has been following Discovery since 2006, shortly after it was spun out of Liberty Media. Full disclosure, clients at Boyar Asset Management, as well as myself, are Discovery shareholders. What attract us to Discovery is the power of its brands and global reach. It's available in 220 countries, 50 languages and delivers 8,000 hours of original programming each year. Best of all, from an investment standpoint, unlike its competition, most of its content translates well internationally. It's able to spread the cost of its programming over its global subscriber base. David, welcome to the show.

David Zaslav: Thank you, Jonathan.

Jonathan: Thanks for being on. I'm really excited. First I just want to talk about early on in your career, you were a young lawyer in Manhattan in the '80s, and you were reading a trade publication, and I guess you saw an article discussing how NBC, which at the time was really just a broadcast company, wanted to get into cable and you did something quite unusual. What did you do?

David: I had started out as a corporate lawyer and I was at a great firm and I was busy working away, writing prospectuses, but I knew in my heart that I didn't love it. I didn't think I was actually that great at it. I was working real hard at it. A partner transferred into the law firm. He was general counsel at Warner Communications and he represented MTV and CNN and Discovery and Nickelodeon. I started [00:02:00] in my spare time doing extra work in that area. I loved it. 

The partner's name is Richard Berman. He's a federal court judge now in New York, wonderful guy. I love working with him. I got a sense of the industry. I loved it. I started subscribing and reading everything I could about it. Subscribed to the Hollywood Reporter and Broadcasting and Cable and Multichannel News.

One day on the cover was Jack Welch and Bob Wright. Bob Wright was the chairman of NBC at the time. GE had just bought NBC and NBC really was the center of the universe. Broadcast was all that mattered at the time. Cable was just getting started. In fact, all the cable programs, services at the time were losing money. It was an experiment. It was all in the startup phase. Jack was in the on the cover with Bob saying that he thought cable was part of the future and he wanted to figure out how to get it. He was going to get NBC into the cable business.

I wrote a letter to them saying, "I've been doing a lot of work for MTV and Nickelodeon and Discovery. I love the cable business, it is what I want to do with my life. If you're going to go down this road, I'd love to be on the journey with you." Jack wrote on the top, "Bring this guy in, let's take a look at him." In retrospect, it was a handwritten letter at the time. I just thought this was a way to maybe get a shot. Looking at it now, I think it's pretty astonishing that they read it and they brought me in.

It was the beginning of a great journey. I got very close to Jack, learned a ton from him, learned a ton from Bob Wright. It was an all-star cast at NBC. I was quite lucky to be involved in NBC at the very beginning when they were starting cable and to be around such a great and smart group of people, because it had a big [00:04:00] influence on me and how I saw the world.

Jonathan: You took a pretty big risk. I mean, you were a corporate lawyer at one of these white shoe firms, and I think you took a pay cut to do this.

David: I took a big pay cut. I knew when I was doing the corporate work that I just didn't love it. It was hard for me. We all think we're good at everything, but it was difficult. You had to write these prospectuses, you had to comply with all these different regulations, it would get sent to the SEC and reviewed. I looked around at the partners and I just thought like, "I'm not sure that's what I want to be." In many ways I was stuck.

I had an apartment then they'll pay me a lot of money. My life raft was Richard Garman that I somehow by luck, I got exposed to the cable business and got the bug, but it was a no brainer to me to leave and take a pay cut just because I felt like I want to be doing stuff that I really like. I was passionate about cable. I really believed in it and getting in early stage, in retrospect, there was no experts. There were experts in every area on the broadcast side, there were no experts in cable. I got to do a lot more and I got to expand.

I did take a 50% pay cut and they all thought I was crazy. There were times when I thought I was crazy. There were times-- When we launched CNBC, at that time, since all the businesses were losing money, we tried to structure our attack on cable by using partnerships to limit our downside risk. Jack was like, "We got to find a partner."

We found Chuck Dolan from Cablevision. We partnered with almost everything with Chuck. In the beginning, Chuck owned 50% of CNBC, we're 50/50 partners and we owned a big piece of Bravo and AMC and what was called Romance Classics, which is now WE. We launched together after a big analysis that we launched News 12 Long Island, the [00:06:00] first regional news network. We did an analysis that said this was the biggest contiguous population that doesn't have its own news. I wonder if a local news network, cable network could work. We launched News 12 Long Island and each of those, we did as partners together,

During those first few years, I got there in '88, by '91, every single one of them was losing money. As '92 came, we did a very bold experiment with the Olympics, called the pay-per-view. We offered it on pay-per-view also in partnership with Chuck Dolan and they had this big thing at Boca for GE with all the GE leaders, which Jack presided over.

That year, CNBC, all of our investments with Chuck were losing money and the pay-per-view Olympics lost $100 million, which was a huge amount of money at that time. It was a real experiment in will people pay for content, specifically? Everything was losing money. We lost $100 million on that. I remember, I was heading down to Boca, and the whisper from Ohlmeyer, who, great guy, he passed away about a year ago, but a brilliant entertainment executive, he always used to say when we go up and present to GE that, "For the cost of what we're losing on what's Zaslav's doing, I could have done four more pilots."

At the time, that argument was, "You're nuts, Jack." I could have done four more pilots. We could have had two more great Primetime series for what we're wasting there. We were heading down to Boca and Don was convinced that not only was this going to be my last Boca, but I wasn't going to come out of there, that everything was losing money. That year, Jack gave an award for innovation. I got the GE Award for innovation and those guys, they were laughingly, we were all friends, cracking up, innovating by losing money on everything [00:08:00] that he is involved in, but Jack was trying to make a point.

This stuff is hard. We were making progress. We were fighting the fight. We went from 20 million subs to 30 to 40. There were only direct response advertisers in. We were fighting to get real advertisers into cable. We were able to stand up a news network with CNBC that we were proud of. We did a local news network with News 12. We tried a lot of things that didn't work, but we learned from it. He really wanted to drive this idea of risk and innovation.

Now, over dinner about a month later when I was talking to him and we were cracking up that Ohlmeyer thought that I wasn't going to get out of Boca with my job. He said, "You got a year or two to turn this around or you're not going to have a job." It was a double-edged sword always with Jack, we need risk and innovation. It needs to be measured. When things don't work, let's talk about what's not working, let's figure out what we learned from it and how we can do things differently to succeed, but ultimately, it was a business.

We got very lucky because when it turned and it turned when the number of subs started to scale, at the same time, subscriber fees were growing, subs were growing, and it became-- Tom Freston did a great job with MTV and Turner got turned around with Malone's help on CNN. It became the cool place to hang out. Once MTV really hit its stride and CNN hit its stride, then advertisers wanted to be there. When they wanted to be there, we went from selling Ginsu knives to selling Ford Mustang convertibles. We got the advertising and CPM's increasing. We got subs increasing and fees increasing. We had a great run for over a decade in the cable business, really just an extraordinary run.

Jonathan: You mentioned Chuck Dolan who is obviously a pioneer in this. He was responsible for 

[00:10:00] starting of HBO, et cetera. He was your partner on-- Came into CNBC but he left right as you were buying FNN out of bankruptcy.

David: It just shows you how precarious at the time. There were times when we would go up to GE, we didn't know GE was going to continue to fund CNBC, was losing so much money. What happened was, when we launched CNBC, we actually wanted to launch a news network. In order to launch it, we needed to get the cable operators to support us. They sent me to meet with Malone. I went with Bob Wright, and a guy named Tom Rogers. We met with John Malone. I was the little guy holding all the materials and the presentations.

We talked to John about launching a news network, but John, immediately, he had just bailed out, Turner. He was an investor of Turner and Headline. He said, "We got two news networks that we're putting a lot of resources against." FNN at the time was doing a lot of infomercials during the day, so you couldn't tell the difference between an actual news segment and something that was sponsored as an infomercial by Charles Schwab or by Salomon Brothers at the time.

John, we were in his office, and he pointed to it, he goes, "Do you see that. That's an infomercial. We need original content in cable. We need to build content that people believe is credible, that they can believe in, they can count on." That was what he and Ted were trying to do at CNN. He said, "If you're willing to do a business news network with real investment and integrity, I would support that." We went there thinking we're going to launch a news network and we left with a business news network. That's how we did CNBC.

Then a few years later, we were at 25 million homes, and FNN was at 25 million homes. John had launched us. We had gotten a lot of other operators, not all of them. We were both really struggling. They went into bankruptcy. [00:12:00] We were negotiating against the wall street journal to buy them. We felt that we needed them to survive. We went up to Jack to make a presentation out of what we can do if we put these two together and why we needed this to save CNBC.

We had this big deck with all kinds of detail of return on investment and what we could pay. Jack said, "Put that all away. The real question is, if we can own business news? If we do this deal, we own business news. Is it a business? Is it a real business that we can be proud of? Is it a business that we can make money on? Is it a business?"

At the time, we couldn't answer that question. We had to comeback to answer that question. He said, "Because if we go at this, we can't lose." The GE philosophy at that time was if we were going to get into this auction, we weren't going to lose. We came back and we talked about it. We really had a strong belief that we could build a real business around it, we could build it globally. We went into the wild west of the bankruptcy court and we bid against the Wall Street Journal, and we ended up getting it.

At that time, they were about to hit the gavel when we called Chuck and Chuck decided he wasn't with us. It did give us some trepidation because Chuck had created HBO, we were partners on almost everything, he's super brilliant. He didn't see it. He didn't see that business news was a business. We went anyway. We then owned 100% of it. It turns out, it was a good business. Chuck was right about almost everything else over the years that we've worked on together, but he actually did that.

We ended up restructuring our whole partnership years later where we took Bravo, and he took the rest of those assets. It was very fruitful. Jim Dolan was involved. It worked very well, the partnership.

Jonathan: Absolutely. Obviously, the Dolans are, I [00:14:00] think, much better operators than people give them credit for. Around the same time, they ended up buying Madison Square Garden for a few hundred million dollars. They did have other good returns at the same time.

David: I think Chuck and Jimmy are underrated. They have a lot of innovation, great operators, and great value creators. We had a chance to trail along with them for a while, which was fun.

Jonathan: You'd mentioned John Malone. You're fortunate to have him as your largest shareholder, at least in terms of voting rights. When you want to make a deal like buying scripts, how do you use someone like him as a resource I know he's on your board of directors, but it's more than that.

David: Look, I've been around John now for 15 years. I met him when we did the deal to start CNBC over 30 years ago. He's got the most brilliant strategic mind, I think, maybe of anybody in business. As I said earlier, I think you're so defined by who you get to hang out with. Somehow, I got extraordinarily lucky, I got to spend 15 years with Jack Welch and I've spent the last 15 with John Malone, you could argue, very different.

Jack may be probably the greatest operating business leader maybe in history. John, the greatest investor, and maybe most brilliant strategic thinker. John has the ability to see how everything comes together. He has conviction in, for instance, he saw way before anyone else that the real value to cable was broadband, not the cable. He together with Mike Frese went and rolled up most of Europe and a lot of Latin America by buying cable systems. He had full conviction that whatever he was paying was really a discount, because the broadband wasn't being valued and the broadband was the value. He's been a great mentor to me. It's a gift that I get to talk to him.

[music]

Jonathan: I hope you are enjoying [00:16:00] the interview with David Zaslav. To be sure you never miss another World According To Boyar episodes, please follow us on Twitter @boyarvalue. Now back to the show.

Speaking of value creation, I look at a company like Viacom, who for years basically plowed almost all their free cash flow into share buybacks instead of investing in content. Their current content quality reflects that. What was it like for you when you bought scripts, and Wall Street puts you in the penalty box for a deal that, in the long run, is so much better for the company than simply shrinking your share count? How do you manage through periods like that? It has to be extremely difficult.

David: It's really not. We have our public shareholders. We have the Newhouse family, who really are long term investors. They're really driven by quality, investing in quality and long term growth. Malone is the same way. We don't have any conversations with either of them about what our rating was on Friday, what this quarterly number was. It's, "What is our long term strategic strategy?" That alignment, I think, has made us really entrepreneurial. It allowed us to move very quickly.

At GE, and GE was very different than operating this company, as a CEO of a public company with two investors that are aligned in long term growth. The deal that we did with Oprah, for GE, that might have been a month and all kinds of analysis. We saw Oprah, we thought we could build a great network around her that she's a great curator, she was all in. That was one conversation, and boom, we're converting Discovery Health into the Oprah Winfrey Network. I thought that owning the Olympics and all of Europe on top of Eurosport, and owning it for a decade could create real value. We're very aligned. That decision was made very quickly.

[00:18:00] What we've done in the last five years is we've transformed our company from a free to air and cable company, where we were very successful, because we had 10 to 12 channels in every country free to air channels, and content that work well, as you mentioned around the world. We recognized pretty early. John was quick to raise this issue that, we were growing 10% to 15%. Our market share was never higher up, our stock price was never higher. Our free cash flow was growing ,this is about six years ago.

We were talking about how well everything's going. John said, "How well would we do with our content if people could watch anything? How many would still watch us?" At that point there's 40 channels in France, we had 10 of them. We had all this beachfront real estate. We had a really unique advantage that a lot of people were watching us, and liked us, but we weren't necessarily their first choice. Maybe we were their third choice. We had this whole debate about the world is going between DVR and mobile screens, that people are going to be able to choose to watch anything they want.

This strategic advantage of these channels and beachfront real estate was going to be eroded over time. We had to stop looking at ourselves as a cable and free air company that bought content to fill that time. Our question became whenever we did a program deal was, is this content that people would watch before they'd watch anything? That's why, after that conversation, we went and we bought Eurosport which was investing like 100 million in sports. We took that to three or 400 million a year.

We bought cycling. We bought all the majors in tennis. We invested in local sports in Europe. We started transforming the way we produce content for our channels. We want the fewer bigger better. We need more content that people care about when they could watch 

[00:20:00] Anything.

Over the next couple of years, that got really refined as the world got sharper and moved quicker than even we thought. I think we were the earliest mover in this direction. We early on said, we're going to own all of our IP globally. We're going to upgrade the IP we have. We're going to buy content that people want to watch when they could watch anything. Then we had to ask the question, what content do we own that people will pay for before they'll pay for dinner? It wasn't good enough that they would choose us over anybody else for free. What do we have that's so important that they'll pay for that before they'll pay for dinner.

Sports in the Olympics we thought was important with that.

That's why we went so hard against Chip and Jo. That's why we did the Scripts deal. People saw the Scripts deal as a deal that we were buying a cable channel business that over time was going to decline. What we loved is, we looked and we saw that they owned all their IP. They had no participants. There were really no competitors in the food and home space. They hadn't taken it international. We were in every country and we had the ability to proliferate that content on existing channels or launch channels. More importantly, we were looking to launch a global platform.

We saw home food, cooking and travel and DIY as a massive IP library that also had huge appeal to families, to women. We looked at it and we thought, and it also was very strong in terms of how well it worked around the world. We viewed the script's deal as an acquisition of brands, characters, and most importantly IP. When we put our IP together with theirs, that we would be pretty formidable.

For a very long time, we've seen the world differently than most media companies, because most of the media has been attracted to this idea of [00:22:00] scripted series and scripted movies, which is a lot of fun and it's pretty sexy. There's a lot of big stars, but for me I'm very driven by data and I'm driven by viewership patterns. That's how we decided to launch ID, a crime channel. We took a look at what people are actually watching. What's making CBS so successful. What do people love? They love crime. May not be sexy, but we launched it. It was the number one channel for women in America with crime.

Every time we looked at the viewership data and the analytical data, it said to us that more than 50 or 55% of what people watch is not scripted series and scripted movies. That we have a real game here. If we could take the level up of discovery and animal planet and food and HG and TLC and ID and Oprah that this real life entertainment that maybe when you ask somebody, "What did you watch this weekend that you loved?" Maybe they'll say The Crown, but when you actually look at the data, they spent more time watching 90 day fiance.

When you look at the social data, what are people talking about online, there's much more social energy against 90 day fiance, or chip and Joanna Gains than there is against The Undoing, which is an unbelievable series on HBO. There was a real fork in the road over the last couple of years where they gold rush effectively of seven great media companies fighting over a scripted series or scripted movies and we may be wrong.

This is where John was completely on board that, let's just follow the data. If for the last 25 years, people have spent 50% or 55% of that time watching this content that we have in these genres that we love, and 45% to 50% on scripted series and scripted movies. Do we think that over the next 10 years, when there's a more aggressive transition to acquiring content and consuming content than [00:24:00] paying for content, that they're only going to consume and pay for the scripted series and scripted movies and behaviorally not still want the stuff that they're spending half of that time with now.

In essence, that's been our bet and we're going to see if we're right. We just launched Discovery Plus. We did a deal with the BBC to get their entire natural history library with all the great titles, Planet Earth and Frozen Planet and Blue Planet. Most of those we worked on with them. We're producing a lot of new content with the BBC. That'll be exclusive globally with us. We did a deal with History and A&E and Lifetime to get some of their best content and with a mission of, let's see if we can own, let's see if we could be this broad, compelling entertainment offering in these content genres that are not scripted series or scripted movies.

We think it's a great companion.

If we're right, then this will be the companion that if you have Netflix or Disney, then you have Discovery Plus, you have HBO. They're all great, but they're not all going to survive. Disney and Netflix now, they're above the globe. They have real scale and you got to admire what they've been able to accomplish. You got six or seven other players trying to compete. I think those that compete in the US only are going to have a very difficult time. I don't see in the long run, how that really works.

Ultimately being able to offer IP globally and the scale of that and the efficiency of it is so compelling that I think it's hard to compete otherwise, but those are great companies and they're fighting that out. If we're right, not only are we a great companion to each of them, a reaggregating of the bundle, but most of those services don't have content that by their very nature, it's not a companion. People get up in the morning and they put on food network or they put on HG, or they put on ID. The same way somebody gets up in the morning and they put on [00:26:00] The Today Show.

Jonathan: You had just said Discovery Plus is complimentary to Disney Plus and Disney and Netflix, is there a chance of ever bundling them together, or does having Discovery plus as a standalone kind of service preclude that?

David: Nothing's precluded. What consumers are doing is they're doing their own bundling. In a way, the basic cable bundle worked really well for so many years, because even though it was 250 channels, the average person only watches five or six channels. When you put that clicker in your hand, each person in the family curated differently, each person had their own five or six channels and that worked very well.

What we believe is there'll be a re-clustering. In the end, there's not going to be 20 apps and you're going to be sitting there on Google saying, what's what? They'll probably be some consolidation on the scripted series and scripted movie side. We think that there's going to be times that you want to watch Star Wars, that you want to watch the next season The Crown. There's going to be times you want to watch Bobby Flay and Guy Fieri, and you want to see Oprah doing a super soul session about what life's going to be like after the pandemic or Chip and Jo.

We think we're part of a concentric circle, we've just taken our space. I think the consumer themselves will be reaggregating, but I also see that it's not unlikely that some of us come together and package it. We're 4.99, somebody else is 6.99, but together you can get us for 7.99. Then you go with that other programmer. We have to figure out what's the secret sauce of what's the right basic cable got it. How do we put it all together in one place in charge?

One of the problems is that at least in the US the price just kept going up, and unlike the US every other market doesn't have sports in basic and so it got very, very expensive. They'll be a rebundling and it's not unlikely that a year or two from now, if we get to big scale, [00:28:00] they'll probably be a lot of players that say to us, "Can we bundle with you? Can we come in with you? We'd love to get access to your millions of subscribers." Or, "Would we love to be bundled with Disney or Netflix?"

Over time, that could make a lot of sense. It might make a lot of sense for them too. We're probably the best at what we do. Ultimately, I think either by the consumer doing it, or by us coming together, or by consolidation of those that are too small. Ultimately there'll be a rebundling that'll make it more efficient and easier for consumers.

Jonathan: You mentioned consolidation. I was looking back at our reports from 2006 and 2008, and you had the precedent transactions, BET went for 24 times, Bravo 23 times, Comedy Central 29 times. Today you're seeing really good companies trading at much more modest multiples. What happened to the good old days?

David: What happened was, in those days, the industry was a train track. It went on forever. All we did in those days was try and build the biggest train, or the widest train, or the fastest train. We pay a big multiple for BET. Someone pay a big multiple for Bravo, because the view was, it's going to make my train faster to go on this track and the track is going to go on forever. The phones that are all TV sets and the cost of cable content, and the appeal of being able to put together your own content of everything you want to watch made it pretty clear that that was not going to go on forever. It went from growing double-digit to slight growth, to flat, to declining.

We think it's going to decline slower than people think, but that track's not going to go on forever. There's a whole demographic that doesn't get an apartment right now and they, one, have to wait for cable to get hooked up because they got their phone and they have broadband may be more important than cable to a lot of people at this point. The world is changing 

[00:30:00] 

in a meaningful way, and the real question on multiple is the multiple compressed because when you look at the terminal value, nobody could really predict how fast will it decline, How much longer are people going to be watching on sets in their TV on a cable based on a cable or free-to-air offering.

Disney has broken out, because Disney has proven because of their IP, their global IP, and offering it on Disney plus, that they are a global IP company. They are not a cable and free to air company. We're still valued as if we are a global cable, and free to air company. We're in every country, virtually every country in the world, and every language. Our share is still growing. Last year, we had over 3 billion in free cash flow, domestically and internationally, I think we outperformed everyone really and commercially and from viewership perspective. We're trading at half the multiple we were trading out a few years ago, and that's not unfair.

No matter how great of a job we do, if we can outperform every quarter, the fact that subscribers are declining here in the US and they're declining a little bit outside the US and behaviorally people are watching more content off of the traditional platform. It's fair to say that when there's some uncertainty, and that the value should go down. Our whole mission with Discovery Plus is there's only two global IP companies and that's Netflix and Disney. We're the only other global IP company in the world. We're one of three.

The difference between us is we have different content than them. The advantage we have is we actually have content in every language in the world. We have boots on the ground in every country, we have relationships, we understand culturally each country. If you said, "What company has more local content in every country in the world?" We'd be number one. Our mission is to prove that we're not a cable and free-to-air company, although we're proud of that. We're outperforming in that free cash flow [00:32:00] and that continued good performance, we think is going to be a real engine for us for a long period of time.

If we can scale Discovery Plus above the globe, then if we can prove that people will pay for our content, that 50% it's not scripted series or scripted movies, then we'll be a global IP company. Then all of a sudden, we got a train track that goes on forever again, because if we have a relationship with consumers around the world with unique content, unique brands, and unique stories, then it goes on forever. That's why Netflix its valued is so high because they're a train on a track that goes on forever.

Our mission is that traditional business is more like a boat now that had a river with a current with it and now the current has moved against it. We're adding engines and firepower to power through it but ultimately, the current is against us. If we can take all of our global IP and with Discovery Plus build a real global IP business, then the value creation for our shareholders will be enormous.

Jonathan: When you bought scripts a few years ago, how close to what it is now, like with Discovery Plus, did you envision it? Was this all part of a master plan of putting everything together or have you had to pivot along the way?

David: No, it's been pretty close. One, we thought that together with Scripts, we could be the number one media company in America for women. We thought that it was a very good proposition for the ability to market more broadly to women. We had TLC and we had ID but now we have the top five channels in America for women plus the number one channel for African-American women. We thought that even in the traditional marketplaces could be advantageous. We started producing content almost two years ago for Discovery Plus.

When we launched with 55 original series, we've had in mind all along that we need great [00:34:00] original content on Discovery Plus. When we closed on scripts, the first visit I made was to Waco, Texas, to figure out how do you get Chip and Joanna Gaines back with us because there's just not that many great authentic characters that America loves. Chip and Jo also have an ability to curate content that people love, and that's the secret sauce of what we are. We're not just great brands and great stories , we're the characters that you love. There's just not that many great, charismatic, authentic characters that people love.

As you look around, whether it's Martha or Oprah or Chip and Jo or Mike Rowe or Guy Fieri or Bobby Flay, you look around at our portfolio. I think that's another differentiator for us and I think in the long run, that's going to help. It also helps people curate. When they come to our platform, some of these streaming services we noticed, people go there and they go, "Okay, what do I do now? What do I watch? It creates some anxiety.

Even in the research, a lot of people said, "I don't need more content," because they are going through these platforms where there's just lists of series, "What the hell do I do?" Iger and Chapek were very clever in the way that they organize Disney Plus. It's almost very retro, they organize Disney Plus and then they basically put five logos out. Those five logos are the five channels that you love on your cable system.

There's 250 channels, but what am I getting when I get Discovery Plus. When I get Disney Plus, I'm getting Pixar, I'm getting Star Wars, I'm getting Marvel, I'm getting Disney family movies, I'm getting Nat Geo. It's a very calming effect, but it also is very inviting from a curation perspective. I'm in the mood to see some Disney family movies, so you go through that portal. I think that's a big advantage for Disney. Netflix has a different model where they've just been able with their algorithm to be very effective about recommending things to you, and they're so successful [00:36:00] that their friends recommend things to you.

Jonathan: You've been more than generous with your time. You had just mentioned Disney, and they have a great business model in that they own great IP, but they're able to further monetize it with merchandise and theme parks. Have you ever thought of some partnership or joint venture as lots of your content would degrade in that kind of ecosystem or could you do it alone because you are a global IP company, and you should be able to monetize it even further and get that premium multiple?

David: For us, I think we have such an efficient model on the cost of our content, the speed to market, we don't have any participants, we own all of our content 100%, we have a factory that converts it to 52 languages. The efficiency, we generated over 3 billion in free cash flow last year, our margins remaining very strong. For us, I think Disney is a great merchandising company. They do have theme parks, and hotels, and all this other great stuff.

For us, if three years from now, or four years from now, Discovery Plus is a full-on scale global IP offering, Discovery will be a huge company because on the left side, we have this traditional business that's a free cash flow machine that's growing, that has brands and characters people love. If we can prove that we're a global IP company, I think then will be one of the sustainable winners, and we'll likely be one of the players that people look to tuck in with.

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Jonathan: David, I really want to thank you for your time. I'd love learning more about your career, and especially the exciting things you're doing with Discovery Plus. Thanks for being on The World According to Boyar.

David: Thank you, Jonathan.

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