We have to be mindful of competition. We are in a competitive environment in virtually every market we operate in. But Discovery has been in these markets much longer than anyone else and we are much better established in terms of relationships with viewers and the industry. India has particularly been strong for us. We have a strong game plan in place. Competition is something we pay attention to but not something we get distracted by.A 20-year Discovery veteran, Mark Hollinger serves as President and CEO for Discovery Networks International (DNI). In this role, he oversees the strategic development and daily operations for a division that distributes 26 entertainment brands, in 45 languages in more than 200 markets across Europe, the Middle East, Africa, Asia-Pacific and Latin America. Hollinger joined Discovery in 1991 as Vice President and Deputy General Counsel. In 1994, he was named Acting General Manager for Discovery Channel Asia. Based in Hong Kong, he was responsible launching the flagship network in Asia and India. Q. Are there any special plans given that the first phase of digitisation is just three months away? How are you viewing this?
Earlier this year, Hollinger made a significant announcement in Discovery Kids. In this conversation with Noor Fathima Warsia, he shares more on Discovery’s India experience so far and road ahead. Q. Competition in India has increased significantly in 2011. Did this impact your game plan in any way? We certainly have to be mindful of competition. We are in a competitive environment in virtually every market we operate in. History is available in many other markets we are present in, and so is NGC. But we have been in these markets much longer than anyone else and we enjoy the best and long term relationships with viewers and the industry. We have a strong game plan in place. Competition is something we pay attention to but not something we get distracted by.
The experience in India has been very good. Throughout Asia, we are the number one player by a substantial margin in share of audience. In some markets, we compete much more closely and in some, we have outranked all of our competition put together. India has particularly been strong for us. There are other markets where it has been very competitive. History and NGC also produce good content. In some way, that is good because it creates a bigger audience for the nonfiction space. We can take advantage of some of the new audiences that come to the domain but right now we are very strong.
We are being cautious. We are very excited with the benefits that digitisation can potentially bring. We would expect our full portfolio to be available as more homes become digital. It is a great step. However, it is complicated. This is the first time in my memory that there is mandated digitisation of the cable business as opposed to a mandated conversion of broadcast from analogue to digital. Given the number of systems that we have to deal with over the next three years, we expect it to be complicated. We don’t want to change our business plans too quickly, until we see how it settles. We see quite a few benefits but we are going to be cautious. Q. And can be expected from you in the next five to seven years...
Given the priority of the international business and how much I enjoy being a part of this great international team, I suspect you see me on this same chair for that much time. Q. You have been in Discovery for 20 years now. Tell us more about your experience and what kept here for so long.
I have had the opportunity to do many different things here. I joined the company as a lawyer. There were about 200 employees at the time and I was the third lawyer the company had. The international business was simply a minority investment that we held in another company that operated our channels in Europe under a license. We had just got TLC in the US. If I looked at the path from that moment to now, the company has seen enormous growth. For me, I had the chance to see a lot. I came to Hong Kong to get Discovery Asia launched. I then went back and continued to be involved in not just legal but also in international business development. That was when I spent a significant chunk of time in India, trying to work out the best way to launch here. For the last three years, I have been focussed on international a 100 per cent. Variety is the spice of life. I have had the chance to see an awful lot of different things.
The other thing about Discovery is the very interesting combination of good business and mission. Those two things are very logically related and permeate Discovery. It is undoubtedly a for profit business. We are here to provide value for our shareholders. However, there is also a mission about the place. If you talk to any Discovery employee, they would say that what drives them in large part is putting out, for the consuming public, high quality informational media. They feel we are putting out something that, in a clichéd sort of way, is good for people. You can’t always market it that way but that is the mission is simply beyond making television and making money. All of us have, literally on a weekly basis, the great experience of telling a taxi driver or the person in the immigration line or the hotel clerk or whoever it may happen to be that we work for Discovery Channel. There is this little smile that comes to their face and they are like, I love Discovery. And after 20 years, I have never got tired of hearing that. Q. Let’s begin with the big news - Discovery Kids. There is a perception that Discovery Kids would be competing with the likes of Viacom’s Nick and others. What really was the thought process behind the channel?
We would not have launched Discovery Kids if we would have thought it to just be our version of the networks that are already here. As the Asia team and the India team looked at the kids market, they found a wide gap for a channel that combined education and entertainment in the way that we have do, targeted at kids slightly older than preschoolers. Discovery Kids will have the Discovery genes in it. We have been extremely successful in this in Latin America – it is a slightly younger demographic there. The joint venture with Hasbro in the States, The Hub, takes the same approach there. Every show is intended to be fun but it also imparts information. We think that that is a perfect brand fit with what we have here in India, a market that reveres education. We have found a piece of the market that is not populated yet. Q. Your strategy revolves in ensuring a certain number of channels and building the business from there. But how does the economics of the investment and revenue work on this?
We have a very good economic model that has a few foundation elements to it. Because non-fiction content travels particularly well across borders, we are able to aggregate the investment power of the 210 markets, including a very big content investment engine in the United States. Last year we had a billion dollars worth of programming investment from around the world. We don’t need to invest in inventory market by market; it is a very efficient content investment model. We have chosen to be an international business as opposed to an American business that distributes channels internationally. To give you an example, if you look at the staff of DNI, only 2 per cent is in our headquarters Washington. The rest are in the markets where we sell the channels. When you have that kind of infrastructure in place, going from three channels to four channels or more is much easier and efficient. Over the years, the non-fiction category has broadened out substantially. There is a lot of breadth in nonfiction and for us, it has made sense to populate that breadth as much as possible and not to be simply limited by what we started doing. Q. What does Discovery’s 2012 agenda look like?
We expect 2012 also to be a good year. The year will again see emphasis on our flagship channels – Discovery, Animal Planet and TLC. We continue to invest in those because they drive the business. During 2011, we created a DNI Production and Development team, which a new kind of production unit, specifically tasked to develop content for DNI. We will see that those shows hit air this year. There are new channel launches. Discovery Kids Asia is one we have great hopes for. I suspect there would be other launches along the course of year that we are not quite ready to announce yet. But that is what we do every year – we launch a few channels, different channels in different genres and territories.
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