Discovery has become the world's number one pay-TV operator by the inventive use of popular documentaries and factual entertainment formats – but "in the world of the future, non-scripted content may not be enough".

So said JB Perrette, the London-based President of Discovery Networks International (DNI), a key division of Discovery Communications.

He oversees the operations and strategic development of DNI across 224 countries and 46 channel brands in 45 languages.

 

The division celebrates its 25th anniversary this year, and the past two years have seen a big upsurge in its investment programme. Owning more intellectual property rights, said Perrette, "broadly, that's the North star" – alongside strong, growing channel brands.

Since he arrived this summer, he has: finalised the £500m acquisition of All3Media in a joint venture with Liberty Global (itself a Discovery shareholder); increased its stake in veteran sports channel Eurosport to 51%; and taken a searching look at buying Channel 5.

So, how will the UK's largest indepen­dent, All3Media, fit into Discovery? It is on a different scale to Discovery's previous, and rather more modest, purchases of Raw TV and Betty.

It comes down to future proofing, said Perrette: "We might need to diversify into different types of content. What we like about All3Media is great content.

"Great storytelling will be the differentiator across all these different devices, so owning IP is a key for us. Having a stakeholding in a company that also does scripted is valuable to us."

He added: "Look, we are interested in a great team, incredible creatives.

At the end of the day, if more people are coming to invest in your community, you're doing something incredibly well.

"We believe in letting them operate as they do, running them as independent companies. And we will continue to invest."

Perrette continued: "I don't mean necessarily through additional acquisitions. The great team there, with the right support and financing, can to do more creative work...

"We are going to nurture them as much as possible. It will be an independent company run by an independent board. Selectively, when it makes sense, we will do things together."

His favourite All3Media Show, he said, was Gogglebox, which exemplified how Discovery approached local hits.

"A show [that is] working really well here, could it do well [elsewhere]? Could it travel to the US? Maybe not Latin America. This is what the creative team does every day."

Perrette's interviewer, Shine CEO Alex Mahon, turned the conversation to David Abraham's controversial MacTaggart Lecture, which had raised the question of reforming rights ownership.

She said: "We think of Discovery as one of the more aggressive rights acquirers. Now you own a very big independent. How are you going to square that circle. Isn't there an inherent conflict?"

JB Perrette speaks to Shine's Alex Mahon (Credit: Paul Hampartsoumian)

Perrette answered: "From a Discovery perspective, we will always be looking for rights, global rights; we need multi-screen rights, rights everywhere in the world."

As for the fear of US takeovers undermining British broadcasting, he said: "I'm a basic thinker. At the end of the day, if more people are coming to invest in your community, you're doing something incredibly well. You're now seeing capital flow into it.

"The beauty of creative industries is that they are very dynamic. Ultimately, if people don't like a certain regime, they go off and start their own [company]. It is a very dynamic culture."

Mahon noted that Discovery's historic strength was that no one show was bigger than the channel – the opposite to the Breaking Bad phenomenon. Could the Discovery brand survive as a genre-­based player, she asked.

Perrette countered: "Your average viewer wants to have infinite choice. Choosing individual shows might be true of the highest scripted content, but [for] a lot of content, people still want someone to guide them. Brands become ever more important, not less."

How could Discovery achieve that in each individual country?

"It has morphed," said Perrette. "We started out heavily developing content for the US networks, taking that around the world. That was the first pillar of Discovery's existence.

"Increasingly, now, the second pillar is US-to-global, UK-to-global [content], from our international production team created here in London and launched three years ago. And that includes taking content back to the US.

"So we have series, franchises [such as] Deadliest Catch. It is one of our biggest franchises ever; wherever we screen it, it works. We don't have to do much tinkering with it, because it's about the male pursuit of adventure.

"Even if they are American shows, we think of them as having universal themes, great characters, great stories."

Perrette conceded that the TV market is getting tougher: "Many view it as a dangerous landscape, but [we] continue to believe that if you invest in content, you can find the viewer.

"We had a 4% audience share of pay-TV in the US six or seven years ago, when we were investing $400m a year.

"We now invest $2bn in content and we have an 11% share.

"From a Discovery perspective, we will always be looking for rights, global rights; we need multi-screen rights, rights everywhere in the world."

"Those are US numbers, but that has been done, frankly, in all of our markets around the world.

"We have a brand, ID [Investigation Discovery]. It didn't exist seven years ago. We created it, focused on non-fiction crime/suspense and we now have the number-four network for women in the US, in 75 million homes around the world and we are going to take it to 100 million in the next couple of years...

"So, for us, it is still about being creative, being able to develop brands, even in a fragmented world. We believe every market is different. What might work in the UK might be a little bit different to what works in Germany.

"So we believe in tailoring brand content as well with each of the local teams, and allowing a network to programme as it thinks meets the audience needs of that culture.

"So we have Discovery Kids in Latin America, which is not available in the US. In Eastern Europe, Discovery started a second, edgier ID channel, but toned down ID for Asia.

"This really is about the Brazilian team, the Turkish team, the German team, figuring out what works best with content that comes out of the pipeline – US and local – to maximise audiences."

Eurosport, he said, fitted into the non-fiction Discovery brand because it offered the potential for big live audiences. Therefore, "it will secure more value advertising".

Perrette said that revenue was split 50:50 between subscription and advertising, but in the mature Western European market there was a regional policy of offering free-to-air Discovery channels, too.

He stressed a sense of kinship with Eurosport. "The Discovery team decided early on that, instead of taking money out of the business, they would reinvest every dollar back into the business and, early on, in 1989, when Sky launched here in the UK, Discovery was one of the first channels, and Eurosport and Discovery both launched together."

Perrette explained: "We obviously will invest in the Eurosport brand. It has an incredible history: a pan-­European channel, a strong brand, operating traditionally in the second tier of sports rights.

"Our strategy will be more aggressive. So, for us, the game will be strengthening selectively."

For example, Discovery and Liberty Global have opened talks to jointly buy a stake in Formula One racing.

Perrette ended his first RTS appearance with an observation on one consequence of soaring tablet use that he feels is rightly spooking the TV industry.

"What doesn't get talked about – but which is of a lot of concern [is that] the ratings we use to define TV are still in the horse and buggy age. We are making decisions on data that isn't accurate."

Session Nine, "Keynote – JB Perrette – The Voyage of Discovery", was produced by Alan Clements. JB Perrette, President, Discovery Networks International, was interviewed by Alex Mahon, CEO, Shine Group.