Discovery spends big bucks on BBC – a precursor to Eurosport sale?

Discovery, one of the first media companies to brave the direct-to-consumer OTT video landscape, is stepping up its game with a new global SVoD strategy of various thematic flavors – in the process inking a massive content licensing deal with the BBC. “What’s so special about yet another streaming video service launch?” we hear you say. Well, with its increasing investments in SVoD, there is a very real possibility Discovery could be tempted by to sell off its sports network division Eurosport if the price is right – and we could certainly name a few interested buyers (i.e. Disney).

Perhaps belatedly, Discovery is set to launch a number of new subscription video streaming services next year in territories excluding the UK, Ireland and China. Precisely how many flavors Discovery plans to go with remains to be seen but each will reportedly cost a modest monthly fee of $5, or perhaps even less, according to a mixed batch of reports.

Discovery’s pièce de résistance though is a 10-year contract with the BBC valued at $390 million – far exceeding anything the BBC has cashed in for its content in the past.

Discovery will gain exclusive streaming rights for existing BBC documentary series including Blue Planet, Planet Earth and Life, as well as collaborative efforts to produce new content for broadcast on the BBC – so a two-way agreement of sorts although no money appears to be going in the other direction.

But given the recent unveiling of BritBox in the US and Canada, the BBC’s subscription service operated jointly with UK broadcaster ITV, why would the BBC then license some of its most valuable content to a rival? Blue Planet was one of the most viewed shows on the planet last year and has singlehandedly sparked a global effort to radically reduce single-use plastic from society, so such a prominent and influential platform comes at a price.

That is because the vision for BritBox appears to be one geared towards streaming British-made boxsets and original series, which would likely include a lot of old library content, going back decades, which is currently not available even on their existing online services today, while the BBC appears to see Discovery as a better medium for getting its content into US eyeballs than BritBox.

Discovery began taking online video seriously as early as 2012 when it acquired online video network Revision3, and in 2015 it launched its Dplay OTT service in Norway – with the aim of reaching 1 million subscribers by 2017. There have also been discussions whereby ProSiebenSat.1 and Discovery will host a merged SVoD in Germany, and last summer the German public broadcaster invited rival channels to join in.

In a parallel deal this week, BBC studios – the Beeb’s commercial arm – has bought a chunk of channels from multi-channel broadcaster UKTV, which is jointly owned by the BBC and Discovery. BBC Studios will take on 7 of UKTV’s 10 FTA channels – including the popular channels Dave and Gold – in a deal valued at £180 million ($237 million). Discovery will keep Good Food, Home and Really channels as part of the transaction.

Discovery President and CEO David Zaslav said, “The new platform will be the first global direct-to-consumer service with the category’s most iconic IP including the Planet Earth series, future sequels and spin-offs to all existing landmark series, and new exclusive natural history and science programming coming in the future. There is tremendous value in the marketplace for these programming categories which have broad appeal and strong multi-generational engagement, and we hope to fill the void in the global marketplace for a dedicated high quality product.”