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Discovery CEO: 'Our IP library became more valuable in the last year'

David Zaslav, Discovery Inc. CEO and President, joins Yahoo Finance's Kristin Myers and Andy Serwer to discuss the launch of the company's new streaming service, Discovery+, and how COVID-19 has impacted business.

Video Transcript

KRISTIN MYERS: Welcome back to Yahoo Finance Live. We're continuing our conversation now with Discovery CEO and President David Zaslav. Our editor-in-chief Andy Serwer is also here for this conversation. David, I want to ask you about the impact that this pandemic, that 2020 has had for you guys, at least when it comes to production.

We saw a lot of shows from a lot of different networks really put on hold throughout this year. How did that impact you guys? And what does that mean for 2021 and beyond?

DAVID ZASLAV: You know, we've been really quite lucky in that unlike scripted series, a lot of what we do particularly, on Food and HG and Cooking, we were able to figure out a way to do that and have, for instance, Joanna Gaines-- Chip film the show-- one of her early shows. Mike Rowe had a friend of his come in and at a distance film his show. We did about 1,000 or 1,500 hours of content, which we produced in the kitchens, in the living rooms, in the homes.

And so we do have shows like "Deadliest Catch" or "Gold Rush"-- we have a number of shows that are-- a number of our crime shows that are produced in ways that make it difficult, but we were able to uniquely produce a huge amount of original content. And what that did was it really helped us grow ratings domestically and around the world. And when people looked at it, they recognized that it was culturally of the moment.

You know, they loved the idea that they could see some of our talents' kitchens, and families, and homes. But they also-- we were talking about what was going on in the world. So it felt more contemporary. The ratings were better.

And so the audience excused the idea that we weren't in a studio, and we learned how to produce for a lot less money very authentically. And that helped us. Plus, we happen to be in a lot of genres where in a very difficult moment around the world, people wanted to escape. And so watching Food, or Cooking, or HG, or ID, or Discovery became very advantageous, coupled with the fact that so many other networks were just in repeats.

And so our IP library became more valuable in the last year. And we learned how to produce for less money. And we were able to continue to produce, as we do today, in ways that other media companies can't. And our content also has a much shorter cycle. We could shoot a food show and put it on the air the next day, whereas scripted series sometimes could take a year or two years to produce.

KRISTIN MYERS: Now, speaking of 2020, with everyone at home, of course, we saw huge growth numbers, at least when it comes to these streaming services. Disney+, for example, really shattered expectations. And I'm wondering what kind of growth expectations that you might have for Discovery+ and if you think that, considering that 2020 was such a strong growth year for so many of these streaming platforms, if you think that you might have missed out on some of those folks, especially as we have the vaccine being rolled out and people are getting excited about leaving their homes again.

DAVID ZASLAV: Well, we think we're just in time. We wanted a launch where we had a very robust, full, and complete offering in the entertainment genre-- real life entertainment. And we wanted to launch with a great partner like Verizon. We're now in every Verizon store. We're being offered to over 50 million Verizon families.

But also people have been watching Amazon and Netflix and HBO for the last couple of months. And here we come, you know, right now-- unfortunately, for the next few months, things are going to remain pretty quiet. But most people are asking what I'm asking-- what do I watch now?

And so here we are with a library as big as Netflix-- fresh-- it's never been offered like this before-- as well as over 55 new original series. We're going to have over 1,000 hours of original content and loads of exclusive content. So I think we come at exactly the right time.

People are looking for something fresh. They're looking for something different they have loads of services that are scripted series and scripted movies. But they don't have anything like us. And so it's one of the reasons why I think Verizon, why Hans and Ronan said, we're with you. And we're with you all the way.

And we think that this could be a great product, because we go well along, but we also go well with Disney. It's also one of the reasons why Vodafone in Europe with over 100 million customers has come on board to use us to help de-commoditize their platform. So we think we're just in time. And Disney did a lot of the hard work, as Netflix did, of getting people behaviourally comfortable with buying these products-- I mean, moving them around.

I went to my mom's house when "Hamilton" debuted to get Disney+ for my mom. She needed to have it. And so she learned a lot about, how do you get a product? How do you watch? How do you go between? How do I get it on my TV set? So we think we're coming at the perfect time.

ANDY SERWER: David, I know you're never one to rest on your laurels, so I have to ask you-- what's next, both from a programming and a production standpoint? What do you see over the horizon here for us?

DAVID ZASLAV: I think more and more exclusive content-- we announced today that we did a deal where Oprah Winfrey is going to be doing super soul conversations. You know, the idea that we've all had a standing start with this pandemic, we're all going to be different when we come out of it, how are we going to live our lives, what are we going to do differently. Oprah will be doing that exclusively for discovery plus.

Outside the US, we have a very unique model. We're the leader in sports, and we have entertainment and non-fiction all across Europe. And we have entertainment and non-fiction in Latin America in local language. And so we're launching this product globally.

So unlike most of those other products that you showed earlier in this conversation, we don't think you can make it as a US-only service. We think the scale of global-- being in India, being across Europe, being in Latin America, owning your own IP-- we think that's the secret sauce. And one of the big advantages that we have is we have local content in language in every country in the world.

And so when Disney and Netflix are saying, I have some great scripted and great movies and I have a little bit of local content, we're in those markets saying, we have a huge amount of local content and local sport. And so once again, we see ourselves as differentiated, one of one, and a great companion to these other great products. But for us, it's always been about owning our IP globally so that we can go above the globe. That's what's made Netflix really successful. That's what's making Disney. So successful. And we think that's what's going to make us so successful.

KRISTIN MYERS: Before I let you go, David, I have to ask you about pricing. As I mentioned at the start of our interview, $4.99 for Discovery+ with advertisements, $6.99 without is on the cheaper end of the spectrum. But we have routinely seen other streaming services hit consumers with price hikes. I'm wondering how long you guys are looking at keeping that $4.99 and that $6.99 in place, and if you guys are anticipating price hikes in the near future.

DAVID ZASLAV: Our number one objective is scale-- global scale. We have a traditional business that's outperforming everyone else in media that has real growth and real free cash flow. We now have this opportunity to take our IP globally and scale it. And so our objective is to get as many people that have Netflix or Disney all around the world to say, I'm going to take Discovery+ too.

It's a great product. It's been getting great reviews. We have great brands and characters. It's easy to navigate and curate, because you can look at the characters and brands that you love.

We've navigated very similar to Disney, because they've been so effective in creating a very simple way for people to find what they love. So our number one objective is scale. And we think the pricing that we have is perfect. Let everybody else raise price. We're a great, great value, and we would argue the best value in the US and around the world.

KRISTIN MYERS: I'm not going to lie, I myself have been streaming a lot of the shows in the Discovery family. I'm not going to say which ones specifically have gotten me addicted lately--

ANDY SERWER: Oh, come on.

KRISTIN MYERS: Discovery CEO. It's the "90 Day Fiance" franchise. I'm not going to lie.

ANDY SERWER: All right.

KRISTIN MYERS: I really do love it. I've gotten everyone in my family addicted to it as well. Discovery CEO and President David Zaslav, Yahoo Finance Editor-in-Chief Andy Serwer, thank you both for joining me today.

DAVID ZASLAV: Thank you. Thanks, Andy, thank you so much.

ANDY SERWER: Thanks, David.