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‘We have started to talk to Harpo about the international possibilities of OWN, either as a whole or for programming.’


TVWeek : I am wondering two things. First, what you think about the TV Everywhere concept in general as a content provider, and second, how is that concept handled in various international markets.

Mark Hollinger : Generally speaking, it’s all a question of business model. [What you want to know is] there a version of TV Everywhere that provides a good business model for us, a business model that doesn’t just have us moving audience into a lower monetization form of media.

I think there is. As we talk about it internally, as we talk about it with distributors, we talk about how do you maintain the value of viewers online for ad sales purposes versus the value of those viewers on TV.

There are ways that that can be done, but it’s really all about the business model for the online distribution and can you make it robust enough. We’ve seen this with certain distributors and certain markets, they’ve been using the TV Everywhere idea and that kind of name. And it’s the same issue, if you’re a cable operator in the UK or in Japan or wherever. It’s the same of types of issues, the same pressures that they’re facing online and they often do look to the US for a bit of guidance as to what works and what doesn’t work. So I’m sure were going to see the exact same set of conversations play out internationally over the next two or three years.

TVWeek : International is clearly a growth engine for the company. Could you what that means looking forward? For example, what percentage of total revenue of the company comes from International?

Hollinger : About a third of the revenue of the company is International, so it’s a pretty big chunk of our business. In terms of the growth prospects, very generally speaking—because we’re dealing with roughly 175 markets—[these] international [markets], as compared to the US, are places where [subscription] TV is less mature and less penetrated as the percentage of television households so there’s upside growth there. Generally the [subscription] television advertising markets are less mature than in the US, so the relative balance of ad dollars that go to broadcast versus [subscription] is less, so there’s a lot of upside there.

Then I would say that in terms of our business, the good news is that we’re very well penetrated. We got out early, Discovery is the most widely distributed [subscription] television channel in the world. Our portfolio is very strong market to market, but in big mature [subscription] TV markets, like in the UK, we actually have more channels than we have in the US. In other markets, we’re less mature, the portfolio is smaller but it’s a lot of the same brands that you would see in terms of Discovery, Animal Planet, Science Channel. It’s a lot of the same channel brands and it’s a lot of the same programming.

One of the things that we have started to do and you’ve seen us do in the last three years with David Zaslav having joined us, is a retooling of the portfolio. Trying to find the best way from an audience and an ad sales perspective to maximize the channels that we have. So if Discovery Homes is not working, let’s try Planet Green. If Discovery Health has limitations let’s use that distribution for OWN.

We’re starting that same process now on an international basis, to try to really build strong audiences and ad sales propositions beyond Discovery, which is a very big driver of business internationally.

TVWeek : That leads us into the next question, which is how your content translates globally and what works and what doesn’t work?

Hollinger : We have the benefit of programming in the broad genre of nonfiction that travels a lot better than fiction programming, than sports programming, than news programming, than virtually any other category

We have the added benefit of having this enormous production engine in the United States and as a company, Discovery Communications produces and uses more hours of nonfiction content than anybody in the world. So we have this big engine of 13 channels in the US producing content, and a very good portion of that works either in its format as produced for the US or as a format to be modified for international.

We supplement that with local acquisitions, certain levels of local co-production, because obviously the channels have to look and feel local. We also do probably more language customization than anybody in the world. We customize our services into at least 35 different languages.

What we’ve found is that classic nonfiction works generally very well and that lifestyle programming works less well—it tends to be more culturally specific. And, frankly, history programming works less well on a local basis [if it’s not localized].

So again, in International we stay in the sweet spot of classic science, natural history, adventure, archeology, space—a lot of the classic genres at Discovery network. That stuff tends to travel more than other forms of nonfiction.

TVWeek : As you know, a lot of reality shows that have been seen here on the broadcast networks, such as “Survivor,” “Fear Factor,” and “Weakest Link,” just to name a few, started in non-U.S. markets., Are there shows Discovery has maybe put on itself in another market and then said, ‘Wow, that’s working so well in Singapore, we should actually do a US version of this show?”

Hollinger : Off the top of my head I can’t think of a show that has been a big success in the US that we can say started with our own development team internationally.

TVWeek : Though Discovery is overwhelmingly a company that shows non-fiction programming, with the Hasbro deal here in the U.S. you’ll start showing some fiction kids programming. And you do some fiction programming internationally, don’t you?

Hollinger: Yes. In Latin America, on our channel called People and Arts.

TVWeek : Could you talk a little about that?

Hollinger : It’s a joint venture channel with the BBC and it’s probably now been in the market roughly ten years. It’s very well distributed in Latin America and from the beginning it’s been a channel that has had a lot more scripted content on it than anything else would have.

The idea behind People and Arts has been let’s find an outlet for the scripted programming the BBC has in a market where they didn’t have a history of either success with own BBC channels or big program sales.


VWeek : You have the Oprah Winfrey Network—OWN—coming up next year here in the U.S. Is that a channel that you will be translating globally?

Hollinger : We have started to talk with Harpo about the international opportunities for the network either as a whole or for programming. We both are very excited that there will be certain markets where we’d love to see the chan

nel get distributed, and we’ve already had interests from a number of markets, so I think there will be an international life for OWN.

TVWeek : What are some of the markets that you feel provide you with the biggest opportunities moving forward?

Hollinger : I would say for short hand purposes, the BRIC countries are big growth markets..

TVWeek : Which ones are those?

Hollinger : The BRIC countries are an acronym for Brazil, Russia, India and China. In that order, Brazil is a big growth market for [subscription] TV, and we’re very well established there. So that’s a big growth market for us.

Russia and really all of central and eastern Europe have been very, very good growth markets for us.

In India, we just launched another two channels. It’s a great economy, lots of growth. It’s pretty open to channels from the West because education is so important in that market. They just love our networks. So that’s a great market for us.

China remains sort of frightening for everybody in Western media—more potential than real dollars at this point. But if you could find a way to really crack into the Chinese market in a big way, it’s certainly growing as a consumer economy and as a big media consumption society as well.

If you look at the world, where the [subscription] opportunities are best are a lot of the markets where the economies are developing and/or transforming. The big, established First World economies tend to be either mature from a [subscription] TV point of view or have interesting regulatory constructs that we have to deal with. So the UK is very mature as market. Germany and Japan both have interesting regulatory constructs that we have to deal with that which may make things a bit challenging there. So it’s those developing and transformational markets that tend to be the big opportunities for us.

TVWeek : Is there any market where you’re not in but you’d really like to be in?

Hollinger : Realistically no. I would say we are in every market in the world where there is [subscription] television. There are obviously markets where we’d like to be in a more substantial way, but we really have managed to get at the very least Discovery Channel, if not multiple channels, into every [subscription] TV market in the world.

TVWeek : Is there one show that you’d feel comfortable saying is Discovery Communications’ most popular show in the world?

Hollinger : I would say right now probably ‘Deadliest Catch.’ deadliest-catch1.jpg>It’s great visually, it has great stories. Quite frankly even if you just watch it as a visual event, it’s very compelling. So I would say right now that is probably our biggest global hit.

TVWeek : Given the worldwide recession, plus the various regulatory challenges you face around the world, what keeps you up at night?

Hollinger : One is just the current environment which has currently slowed down the penetration growth of [subscription] TV in some markets and which has hit the [subscription] TV ad market in some countries just as it has hit part of the other advertising markets. But all of that feels like we’re probably heading into more positive territory.

I would say that the biggest challenge for us on a global basis is the interplay between [subscription] TV and broadband, very generally speaking. We all have free, ad-driven content on broadband, and can [subscription] TV generally—with us obviously as a big beneficiary of it—really maintain its business model in the face of broadband? The impact of free content on broadband is probably the single biggest factor, over the next five years, that’s going to create challenges for us.#

To read our introduction to this special report, "Cable TV Programmer of the Decade," click here.

To read our interview with Discovery President and CEO David Zaslav, click here.

To read our interview with Bruce Campbell, President, Digital Media and Corporate Development for Discovery, click here.

To read our interview with Bill Goodwyn, Discovery’s President, Domestic Distribution and Enterprises, click here.

To read our interview with Henry Schleiff, Discovery’s President and General Manager of Investigation Discovery, Military Channel and HD Theater, click here.

To read our interview with Marjorie Kaplan, President and General Manager, Animal Planet Media Enterprises, click here.

To read our interview with Laura Michalchyshyn, President and General Manager, Planet Green, Discovery Health and FitTV, click here.

To read our interview with Joe Abruzzese, President of Discovery Advertising Sales, click here

To read our interview with Eileen O’Neill, President and General Manager of TLC, click here

To read our interview with Clark Bunting, President and General Manager of the Discovery Channel, click here.

To read our interview with Carole Tomko, President and General Manager of Discovery Studios, click here

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Source : http://www.tvweek.com/in-depth/2010/02/mark-hollinger-president-and-c/

Mark Hollinger, President and CEO, Discovery Networks International