Discovery's move to buy a 20% stake in Eurosport for $221.6M is the American broadcaster's first significant play in the sports media
marketplace. And if Discovery exercises an option to take a
controlling 51% stake in the company after two years, France-based TF1, which co-owns Eurosport, can
exercise an option of its own that would give Discovery complete control
in the company. Discovery President & CEO David
Zaslav said, "Eurosport is a much more manageable sports programming
model with diversified rights fees, as compared to higher and more
competitive U.S. sports rights." Zaslav said he was
attracted by Eurosports' portfolio of rights, which stayed away from big
ticket items like European soccer. Zaslav: "Eurosport is not in the big sports
business. It is in the affinity sports business. The goal is
that on a number of days every month -- not every day -- that this is
somebody's favorite network, whether it be skiing or tennis or curling. …
It's carved out an interesting niche that's a little bit different than
traditional sports, where the fees are very high. … It's the only
platform where if you having skiing rights and you want to build that
sport, it's the only platform where you can go and reach 59 countries."
Zaslav said the Eurosport purchase does not make Discovery any more
likely to compete for rights in the U.S. market. He said, "The U.S. sports
business tends to be dominated by huge checks that you have to spend to
buy a big sport, and then you build an asset around it. I
don't see us getting into that business in the U.S. … The attack on
sports in the United States is both aggressive and pretty well played. I
don't see anything that we bring to the table with sports. The costs
are very high. The margins aren't as attractive as our business" (John Ourand, THE DAILY).
ENHANCES DISCOVERY'S STRATEGY: Zaslav said with the
acquisition of Eurosport, Discovery will be the “largest programmer in
Europe and we'll be the largest pay-TV global programmer outside the
U.S.” Zaslav: “It really enhances our overall strategy of taking our
great content … and taking it around the world. This helps to
supercharge that international story and reinforces the fact that as a
global company, we're much stronger and geographically, we're much more
stable and positioned for growth.” He noted Eurosport is the “leader in
sports all across Europe,” and there is “no platform that even comes
close.” Zaslav: “In fact, there is no platform that's really
multi-country. So Eurosport is a great brand in 59 countries but more
importantly, they're in the sports business without paying a lot of
money for sports. … The attraction for us is we're in all 59 of those
countries with between six and eight channels of our own. In most of
those markets, we're the No. 1 channel for men, and we have a top
channel for women. When you put that together with Eurosport, we think
that we have some more value to bring to advertisers and distributors” (“Squawk on the Street,” CNBC, 12/14).