Discovery Communications is ready to invest in sports-rights for pan-European sports broadcaster Eurosport, according to the global media and entertainment company’s chief financial officer, Andy Warren.
Discovery, which completed its acquisition of Eurosport last year, said that spending on sports-rights is likely to squeeze financial margins in 2015.
“Revenue growth in 2015 will outpace adjusted OIBDA (operating income before depreciation and amortisation) growth, mostly due to increased content spend at Eurosport,” Warren said. “After nine months of controlling the asset, we have now determined that we must bolster our investments in sports-rights in the near term in order to fully maximize the growth potential of the asset in the medium and long term.”
Some of those rights will be “specialty rights at a low cost” to strengthen Eurosport's “over-the-top” online streaming service, Eurosport Player.
Discovery chief executive David Zaslav said: “Our European OTT offerings are giving us a growing revenue stream, a growing direct-to-consumer offering and valuable learnings that we can apply in the US and other markets – and we are just getting started.”
In a trading update, Discovery said that its overseas division recently became a bigger revenue generator than its domestic US business. Full-year revenue of $6.265bn (€5.5bn) in 2014 represented a 13-per-cent increase of $730m, with revenue generated by Discovery’s international networks division increasing by 28 per cent.