"Everybody loves watching sharks,” Discovery Communications founder John Hendricks quipped at a media conference years ago, “and people will watch anything about Nazis. If we could just get sharks to fight Nazis, we would mint money.” He needn’t bother.
Discovery CEO David Zaslav, who oversees the cable empire that includes the Discovery Channel, TLC and Animal Planet, pulled in $156 million in compensation last year, up from $33 million in 2013. Expect that to change.
This isn’t a rant against CEO pay, but it is irritating that you and I helped pay Mr. Zaslav’s salary when most of us don’t use his product. One of Discovery Channel’s highest-rated shows, “Naked and Afraid,” which documents partially blurred naked people living in the wild for 21 days, boasted 2.9 million viewers last year out of 100 million households that pay for the channel through basic cable. Discovery Communications’ $3 billion in U.S. sales for 2014 means that each household paid about a buck to Mr. Zaslav. A nice gig if you can get it.
But this is how the cable cabal works—or worked. ESPN’s recent decision to sue Verizon over cable-package placement is one indication that change is afoot.
With a local monopoly, cable operators dictate packages and pricing, markets be damned. Satellite rarely competes on price. Cable bills have grown at almost triple the rate of inflation over the past two decades, according to the Federal Communications Commission. But in April, Verizon announced Custom TV, which offers a few basic channels and additional channel packs: Kids, Pop Culture, Lifestyle, Entertainment, News & Info, Sports Plus and Sports. The Discovery Channel is no longer basic cable. Neither is ESPN. Uh oh.