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Perrette: GolfTV helping to drive distribution negotiations

The launch of GolfTV is driving improved channel distribution revenues at Discovery, the US-based broadcast giant that owns the direct-to-consumer streaming platform, to complement new OTT subscription revenues generated by the service, according to JB Perrette, president and chief executive of Discovery Networks International.

Speaking today as Discovery announced its second-quarter results, Perrette said that the service, which began streaming live PGA Tour and European Tour coverage in selected markets at the start of the year, has already afforded Discovery improved leverage in carriage negotiations with operators.

Perrette told analysts on an investors call: “It’s a bit of a two for one. We have the great traction that [Discovery Golf President] Alex [Kaplan] and the team have developed on the product itself and our direct-to-consumer app.

“It’s also helping us on our core traditional business. In markets like Japan and Spain where those markets were up earlier this year, not only did we expand our relationship on the direct-to-consumer side, but we leveraged it for our entire portfolio to expand and strengthen with great revenue on our core.

“We have other key markets like Korea which come up next year and that’s a market that today, in the Discovery legacy business is way underserved. It’s a very small market for us and we’re using those conversations there to see if we can develop additional channel opportunities in our core business.”

A wide-ranging GolfTV agreement with Jupiter Golf Network, the Japanese pay-TV broadcaster owned by J:COM, was the first to be signed in the wake of Discovery’s 12-year, $2bn (€1.8bn) international rights agreement with the PGA Tour announced last year.

Perrette added: “So you’re seeing that two-for-one opportunity of great digital and direct-to-consumer traction that will accelerate over time, but also more immediate impact of helping our core business through traditional affiliate and broadcast relationships in those markets which are allowing us to launch and accelerate in a couple of those markets.”

Speaking earlier this year, Perrette claimed that GolfTV had facilitated new conversations for Discovery in Asia, a region he admitted had been a “a trouble spot for us.”

Live golf rights in additional international markets, including Korea next year, will kick in as existing deals with broadcast deals expire, although the US market is excluded from the PGA Tour contract. However, the recent acquisition of Golf Digest, the golf publication, coupled with a programming and content agreement with star golfer Tiger Woods, have allowed the service to “attack the US,” according to David Zaslav, Discovery’s president and chief executive.

GolfTV also offers live coverage of the Ladies European Tour and PGA Tour Latinoamérica, and last month secured rights in southeast Asia to the Open Championship.

Discovery today reported a three per-cent second-quarter fall in revenues at International Networks, the business unit that houses Eurosport, the pan-European sports broadcaster.

Discovery generated revenues of $1.02bn at International Networks to the three months up until June 30 (excluding foreign currency fluctuation impact), comprised of $466m in advertising revenues, $518m in distribution revenues and $36m in ‘other revenues.’

Excluding the currency fluctuation impact, advertising revenues rose by five per cent, thanks chiefly to higher pricing in certain European markets, while the 3-per-cent distribution revenues rise was attributed to growth in Latin America.

International Networks’ adjusted second-quarter OIBDA (operating income before depreciation and amortisation) was $286m, a 15-per-cent year-on-year decrease. Including revenues from US-based operations, Discovery reported overall revenues of $2.89bn in the second quarter, a 1-per-cent uplift, with total adjusted OIBDA of $1.28bn, a 5-per-cent rise.

Commenting on the results, Zaslav said: “We delivered another quarter of strong operating and financial performance, with the benefits of the Scripps Networks acquisition flowing through all areas of our global business, while also accelerating our pivot to digital and direct-to-consumer offerings with IP that powers people’s passions.”

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