International Waters

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When it comes to sustainable growth, more and more programmers are looking to their international media business. Not only are there new launches to be made, but there are new advertising dollars to be courted. This month’s roundtable quizzes some of the execs heading up this overseas growth, as they discuss what areas are hot and how their brands play in other countries. Joining our discussion are Scripps Networks COO, Intl Bob Baskerville; Discovery Nets Intl evp, COO John Honeycutt; and National Geographic Channels CEO David Lyle.

How have you had to tweak your brand for international markets?

Baskerville: It’s important to us that our channels reflect the best of Scripps’ lifestyle content, but we want to make sure that it’s not strictly an imported American channel. There are local preferences and trends to take into account, as well as many cultural sensitivities to consider.

Lyle: The wonderful thing about the National Geographic Brand is that it is so strong, universal and consistent that it doesn’t need to change greatly from territory to territory. Some series are stronger in certain territories than others, but there is a reliable sameness to the core content but with a local flavour. For example, our hit returning series "Locked Up Abroad" has found a type of cult following here in the US and also performs really strongly internationally. "Air Crash Investigation" does well in the UK while "The Dog Whisperer" is a favorite in Asia and in Holland, while the series "Taboo" is a hit in Latin America. With "Doomsday Preppers," which focused on Americans who are preparing for the end of the world as we know it, we have strong expectations for when it premieres globally later this summer.

Honeycutt: With our brands reaching 210 countries, and an average of 6-11 channels, Discovery invests in a local market strategy—in order to satiate the needs of our consumers and meet the industry demands in each market. We distribute multiple channels in each market. Within our broad range of offerings, we provide content at a global and local level. We customize our programming in the local language, and customize the content to be relevant to the local viewer. Therefore, we market our brands in each market to meet the demands of their audience. We offer 26 international brands that factual, lifestyle, entertainment, in 45 languages. Our content offering is varied and diverse and meets the demands of the local TV landscape in each of our markets.

Are there countries that are particularly hot for you right now?

Honeycutt: We are focused on growth across the board since we cover such a vast number of countries. We are seeing particularly high growth in markets including Brazil for affiliate growth, India because of digitalization, and Southern Europe (Spain, France and Italy) because of our move into DTT. Diverse markets require diverse strategies.

Lyle: National Geographic is performing well across the world. In the last year we’ve had particularly strong growth in Latin America where our international series are complimented by excellent local productions, as well as in Eastern Europe.

Baskerville: Overall, our mission is to expand and monetize our brands on a global stage. This year, we’d like to continue our momentum for Food Network in the UK, grow distribution for Food Network (and for that matter, Fine Living) in the rest of EMEA and Asia, and invest in building our digital offerings so Food Network becomes a truly multi-platform global entertainment resource. We’re also looking to build the foundation for our lifestyle categories to have a significant presence in Latin America.

What has surprised you most about your intl nets?

Honeycutt: No matter where I am in the world, I meet someone who loves Discovery Channel and can name several of their favorite shows. The power and reach of this brand never ceases to amaze me.

Baskerville: It’s amazing to see how quickly Food Network in South Africa has grown. It launched in December 2010 on DStv and is already the second most popular lifestyle channel on the DStv platform. I’m also encouraged by the growth we’ve experience in Canada, with DIY Network Canada having an outstanding second year in 2011 as evidenced by doubled revenues. Food Network Canada also saw a record year for ratings and profitability, and we launched HD channels for both Food Network and HGTV in Canada last year.

Lyle: Inside the channels or behind the scenes, what I really respond to is the fierce passion of the team to make their National Geographic Channel not just a winner in their region but to be amongst the world’s best. In viewer terms, I am reminded that the same good shows… rise to the top in nearly all the territories. It seems that a hit is a global phenomenon.

How do you make sure your international offices feel like part of the corporate family?

Baskerville: It can be a challenge, but first we make sure that all offices are communicating with one another on a regular basis, usually through regular video conference calls and a department-wide off-site meeting at least once per year. We also try to make sure that our international offices feel connected to the larger Scripps family by participating in company initiatives such as employee engagement, ensuring that they’re included on all corporate communications, and have video access to watch our quarterly company meetings.

Lyle: We make jokes at their expense or try to drive them crazy like real family! All kidding aside, we talk, we meet, we share information as soon as it comes to hand. In terms of decision making on what shows we are going to green light, we get international input as soon as possible. Through Liz Dolan, the Chief Marketing Officer for National Geographic International, the channels coordinate their core marketing. As with programming, the secret of marketing success is the correct balance of international and local influences.

Honeycutt: With 37 local offices, our philosophy rests on having a very small, yet strong, DNI corporate team with the majority of the staff in region. In fact, 98% of our work force dedicated to the international business is working in our regional businesses across Europe, the Middle East, Africa, Latin America and Asia-Pacific. The local teams contribute to the overall success of our corporate operations. In order to communicate effectively around the world, we have a very strong internal communications function that helps narrow the gap between countries.

How would you describe the growth opportunities for affiliate fees internationally vs. in the US?

Lyle: In the US the total number of houses connected to cable/satellite seems pretty well maxed out. In the rest of the world, the pay penetration still has huge growth opportunity. At the same time, internationally, payment per sub has powerful potential to increase.

Honeycutt: Overall, affiliate revenue makes up two thirds of our international business operations. But, each market is so different that one size does not fit all in terms of looking at our business across 210 countries. On average, we renew contracts approximately every 3-5 years, which varies slightly from the US. And we supplement our core pay TV business with a focused effort into free to air channels or digital terrestrial television. This is a targeted strategy in a handful of more mature European markets.

What can the domestic side learn from international operations?

Lyle: Here in the States we can be reminded that hit content can come from anywhere. Also, when I watch the international promos I am very interested not just what they see as the core promotional values of shows that we "think" we know but how they express those attributes to their audience. Likewise, we can learn from some of the promotional or scheduling strategies. It is almost like having a test lab or an Off Broadway try out.

Baskerville: There’s something new challenging our efforts every day, which is what is so unique about the international business. It forces you to be nimble, but it’s also a constant reminder to always be looking forward, which is something everyone can learn from. I’d also note that different things work for different markets; just because something is successful in the US by no means ensures its success overseas.

What question do you hear most from investors on international?

Baskerville: Since we announced the acquisition of Virgin Media’s 50% minority stake in the UKTV partnership about 6 months ago, investors want to know how the partnership with BBC Worldwide is progressing, particularly as it relates to programming decisions. While the partnership is still in the very early stages, we’re very excited about being partners with the BBC and are looking forward to working with them closely in the coming years. There have been discussions with UKTV and BBC about carrying Scripps’ content on the UKTV networks, and we’re also looking at BBC content to see if any of that could also work here on our domestic networks. I think over time the UKTV partnership will carry more of our Food category programming, but right now it’s still too early to say when and how much.

Honeycutt: One of the key questions we get all the time from the investment community: you have had huge growth in the international marketplace… how much more runway is there internationally given your leadership position? And to this we say, we have a lot of room to grow.

Lyle: How can I get in front of some of those Chinese eyeballs?

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