A bigger voyage for Discovery?

Isaac Newton once said, ‘No great discovery was ever made without a bold guess’. Following the Mediaworks TV – Discovery announcement on the 7^th. Of September, groupm hypothesize that there may be more to this than purely a desire to own a free to air network in a (very) small part of the world.

On 18^th. October 2019 Mediaworks announced that its TV station ’Three’ was up for sale. Bravo, which superseded ‘Four’, is operated by Mediaworks TV, however it is a joint venture between Mediaworks TV and NBCUniversal International Networks.

The other day, the internationally owned Discovery Inc. reached a binding agreement to buy Mediaworks ‘free to air’ TV business. The agreement is subject to several pre-completion approvals e.g. the competition commission and the OIO.

Apart from owning Three, along with its streaming service ThreeNow, Discovery Inc. will also own production and transmission of its news and current affairs service Newshub, as well as its echo stations (+1’s) and The Edge and The Breeze TV.

Discovery Inc. has stated that it will continue its joint venture with NBCUniversal in transmission of Bravo and Bravo +1

groupm believe that it is unlikely the media market will see any material operational change until at least H2 2021 in terms of content slate, sales structure and operations, and gtm activity

From a content perspective, Discovery Inc. already owns two ‘free to air’ TV stations in NZ; Choice and HGTV. Choice transmits property renovation, home and garden, food, travel, adventure, fishing, entertainment, comedy, and drama. HGTV is more focused on reality programming related to home improvement and real estate. At present there has been no announcement of integrating any of this content with the Three stations.

SKY also transmits six of Discovery Inc.’s stations; Discovery Channel, TLC, Animal Planet, Food Network, Living and Discovery Turbo. It is understood by groupm that this relationship is unlikely to change for the foreseeable future.

At present the narrative from Mediaworks TV is that it is very much ‘business as usual’ in terms of its slate and that it is likely to continue in the same vein in the future.

Regarding its key leadership in the new venture, effective immediately, current Mediaworks’ Chief Customer Officer Glen Kyne has been appointed General Manager – TV. It has been reported that Glen will continue in the role after the sale’s completion reporting to Discovery Inc.’s President APAC, Simon Robinson.

Donna Gurney, currently Head of Agency for Mediaworks, will also be transitioning to the new TV network, presumably in a similar role.

Rebecca Kent, GM of Discovery Australia, New Zealand and Pacific Islands, will continue to oversee the New Zealand SKY TV portfolio and free-to-air stations Choice and HGTV, and the Australia operations.

groupm hypothesis

The current narrative suggests very little change apart from in two specific areas, content access and technology. However, it has also been stated that much of the content and genre will remain the same along with news production, the highest cost for any TV network. The other opportunity is technology however this takes a long time to develop and / or adapt and then integrate into current practices. Given the personnel, the sales approach is also unlikely to change i.e. price positioning vs. their competition. If there isn’t much overall change in the short term, given Mediaworks hasn’t made a profit for many years, why would Discovery buy it?

Currently, Discovery Inc. is based in New York but also owns Discovery Studios in Sterling Washington and Los Angeles California. New Zealand offers a perfect opportunity for a content creation company to set up here with generous government financial support, existing production infrastructure and over whelming geography. Establishing a content company here would allow cost efficient expansion in APAC and allow the ability to offer global standard services as a white label.

Lastly, groupm understands that the initial approach was pre covid, however given the content production difficulties in the USA, and the much-publicised desire for many celebrities to re-locate to New Zealand, buying Mediaworks TV could be a very wise investment indeed, as well as being very positive news for our creative industries, the media market and most importantly New Zealanders.

Steve Tindall is chief investment officer for Groupm.

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