Discovery Communications Inc (NASDAQ:DISCA) Q4 2017 Earnings Conference Call - Final Transcript

Feb 27, 2018 • 08:30 am ET


Discovery Communications Inc (NASDAQ:DISCA) Q4 2017 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] Our first question comes from Steven Cahall with Royal Bank of Canada.

Steven Cahall

Yes. Thank you. Good morning. So, maybe just the first question around the synergy. We've seen a lot of media companies recently talk about using tax reform to increase their content investment. David, you've said that you have a lot of confidence, and it sounds like maybe there's some upside to that synergy number. So, between your debt paydown and investing back in the business, how do you think about allocating a lot of that savings?

And then, secondly on the advertising side, it looks like the Q1 pacing both domestic and international is pretty strong. So, can you give us any more color on what you're seeing in those markets, maybe from a pricing perspective to indicate the health in advertising? Thank you.

David M. Zaslav

Thanks, Steven. Well, first, on the advertising market. It remains I would say pretty steady, maybe leaning a little bit toward, maybe a little improved versus the fourth quarter, but not a big difference. But pricing is good, volume is good. So, we see the market as being steady to maybe a being steady to maybe a little bit stronger. Remember, in the first quarter, we have the Olympics. So, even with the Olympics, seeing what we're seeing, it may be behind that there's a little more strength. We'll just have to see.

On the synergy, as Gunnar and I said, we haven't been able to get too close, because we've been going through this process, but the more that we look at Scripps, the stronger the synergies are. So, we think $350 million is very conservative. Just conceptually, this is a one over one transaction. When I was at NBC and we acquired Universal, there was a movie business, there was a theme park business. So, there were businesses that we didn't understand and we weren't in, and then there was the cable business.

For us here, we're in the free-to-air and cable business around the world. So, we have 12 channels. They have six channels here in the US. And so, everything we do, they do. And so it's one over one. So, in terms of our ability to take that IP around the world, to put these channel factories together, to launch new channels with their IP, and to take that IP around the world and put it on platforms, we have people in place and competency to do that in every language. And so, the more we look at it, the more we see on the cost side, real optimism.

Having said that, we haven't included at all our revenue synergy; and so, the idea of what could these companies when you put them together be. And one of the things that we've looked at in terms of really getting ready, locked and loaded is the global piece of this. We look at the Scripps IP and we see that really hasn't been deployed outside the US. And in