$142B 2015 U.S. ad spending for 200 LNA
Discovery sold less ad inventory in its upfront this year, deciding to hold back in a weaker ad marketplace to try its luck as the new TV season progresses.
"We decided to sell less into the upfront market," CEO David Zaslav said during the company's earnings call on Thursday, "The volume was not as strong as it was last year."
Discovery achieved mid-single digit percentage price increases in the negotiations, deciding to hold pricing rather than accepting smaller price hikes and selling a higher volume of commercial time.
Pricing in the later so-called "scatter market" has been strong for the last two to three years and is currently healthy, Mr. Zaslav noted.
"So our view was given that the pricing was mid-single and that the volume was a little lighter that we didn't want to sell into it," he said. "So we've held more inventory back and if the scatter market performs similar to what it's done in the last few years, we'll have some significant upside for having that extra inventory."
Mr. Zaslav's comments echo the sentiment throughout cable TV.
The cable marketplace is expected to see overall upfront volume decline 5% or more, according to media executives and ad buyers. This could mark the first time since the recession that the cable sector has experienced a year-over-year decline in volume.
Discovery's second-quarter earnings were better than expected, driven by international growth. The company earned $379 million, a 26% increase from the same period last year. Analysts had predicted earnings of about $329 million.
Revenue also jumped 10% to $1.61 billion, essentially in line with forecasts. U.S. advertising grew 5%.
The cancellation of a live televised Everest jump following a deadly avalanche in April is expected to drag on ratings beyond the missed event itself. Discovery intended to use the telecast as a launchpad to promote its upcoming new programming.
Mr. Zaslav also addressed the recent talk about consolidation in the TV industry. "Our first priority remains driving the momentum across our existing international portfolio so we can maximize the organic opportunity that our international platform provides, but we also always are looking for external opportunities that will further deepen our relationships with advertisers and distributors over the long term," he said.