Discovery CEO Admits It Doesn’t ‘Make Sense’ That Revenue Is Up Amid Viewership Declines

·2-min read

It’s tough to understand why dwindling TV ratings are not having a negative impact on advertising revenues. Discovery’s David Zaslav, one of the brightest CEOs in the business, doesn’t quite get it himself.

Zaslav tried his best to explain the situation Tuesday at Credit Suisse’s 23rd annual Communications Conference. Always one for a good metaphor, as Zaslav put it: “Every [month] you deliver less tomatoes in the wheelbarrow, and every month you get paid more for your tomatoes.”

During his supply-and-demand explainer, the former NBC executive plugged Discovery+’s “ad-light” option in the process. Always a salesman.

“Three minutes of commercials — as we’ve talked to our users — they’re used to 13 or 14 minutes,” Zaslav entered the subject. “We thought that everyone would want commercial-free, but three minutes is fine with them. The difference in satisfaction between no commercials and three minutes is very low. Three minutes is almost negligible.”

“And yet,” advertisers still “need access to video content,” he added, which explains those “massive” CPMs (cost per thousand impressions).

“You’ve got a lot of dollars chasing less,” Zaslav explained. “It may not make sense that viewership is going down but revenue is going up, but boy is it.”

And in a future where streaming services Netflix, Disney+ and whatever the result of the WarnerMedia/Discovery merger is on HBO Max and Discovery+ rule the landscape, which is what Zaslav envisions, only one offers space for commercials.

“We’re gonna lean into that,” he promised. “That is a window to a lot more money.”

Zaslav will run the newly combined WarnerMedia and Discovery company, which will be called Warner Bros. Discovery, after the deal passes regulatory hurdles and eventually closes. We do not yet have a good estimate on when that will be, but the result will certainly be formidable.

Read original story Discovery CEO Admits It Doesn’t ‘Make Sense’ That Revenue Is Up Amid Viewership Declines At TheWrap

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