Discovery SWOT and PESTLE Analysis

Strength

1. Leader in real-life entertainment segment with global brands: With a dedicated global audience, Discovery presents content inspires, informs and entertains is viewers. Discovery’s global brands include Discovery Channel which has 91 million subscribers in the US, TLC having 89 million subscribers in the US, Animal Planet having approx. 87 million subscribers, Investigation Discovery having around 84 million subscribers and Science Channel having approx. 65 million subscribers in the US which explains the penetration of Discovery’s global brands in the US market.

2. Strong distribution network: Discovery is a global leader that specializes in content that is both category and genre based. It creates almost 8,000 hours of original programming each year and is viewed across 220 countries in 50 languages.is programs are viewed across all types of screens, including TV. Its innovation has enabled it to create products that reach out to people like the GO portfolio of apps and direct-to-consumer streaming services such as Eurosport Player and Motor Trend OnDemand. Discovery Kids Play is also popular along with digital-first and social content from Group Nine Media. Over the years, the Company has managed to build a strong and reliable distribution network. During the year ending December, 2017, the company acquired equity method investments, largely to enhance the Company’s digital distribution strategies. The revenue generated through Distribution network in the same year was around $3.4 Billion. Late August’17, Discovery made a deal with Amazon in Germany and Austria which gives Amazon prime members access to Eurosport’s premium content. They will also have exclusive Bundesliga LIVE on Friday nights.

3. Acquisition of Scripps helped create a leading media company: Apart from OWN and TEN acquisitions last year, there has been a major acquisition in 2017 with Discovery acquiring Scripps Networks Interactive Inc. thereby assuming control of Scripps television channels HGTV, Food network and Travel channel. It is after this acquisition that Discovery Inc. got changed to Discovery, Inc. It will also help Discovery expand the Scripp’s programming offerings to the countries where Discovery is already prevalent. Cost synergies of almost $350 million are expected to be gained from the acquisition of Scripps Networks.

4. Leading Media Company in women’s demo: The combined company after Scripps acquisition operates five of the ten most-watched U.S. cable channels among women. Women have been the driving force behind many Discovery networks, especially for ID which was the top watched day channel and ranked best in both day and primetime in 2017. OWN has ranked #1 cable network for African-American women in 2017 and is gaining since a steady pace of 12% for primetime and daytime viewing since.

Weakness

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Opportunity

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Threat

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Political

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Economic

1. Impact of global economic conditions: The global economic conditions and consumer buying patterns are factors determining revenues from advertisers. Any kind of financial instability in US and other countries where the company has its networks could adversely affect their advertising rates and volume thereby affecting their revenues. Further markets such as Latin America, and particularly countries such as Brazil, remain embroiled in governance issues. Thus Discovery needs to periodically assess the impact of these factors on its operations in these markets.

2. Lower segment margin of International markets: Both International and U.S. markets have similarities in operations, revenue generation and expenses. However the International markets have significantly lower segment margin for Discovery because of lower economies of scale in more than 220 markets which require additional cost to localize so as to satisfy the market variations.

3. Mergers and acquisitions to help leverage economies of scale: Media companies are looking at M&A as a profitable way to not only look larger but also develop exclusive content, increase negotiating power and maximize value in the telecommunication, technology and media sectors. Discovery’s acquisition of Scripps Networks Interactive will help the networks of both organizations to avoid being excluded from skinny bundles, and to have more leverage with advertising companies.

Social

1. Content preferences influenced by cultural dynamics: Local content that is culturally relevant and delivered in the regional language is crucial for engaging consumers who tend to seek content that is meaningful to them. This is key success factor for a global media and entertainment company such as Discovery Communications. In line with this trend, Discovery India in 2018 has intensified focus on India-centric programming with shows such as Breaking Point: The Indian Submarines, Breaking Point: Air Force Academy, etc. The company has also launched digital channels such as Veer by Discovery, which is set to become the go-to destination for military enthusiasts in India. Another digital first channel for women, by women, Rise by TLC will give wings to young Indian women with its progressive, clutter-breaking content. In Borneo, Discovery’s show, “Frontier Borneo,” following explorers and environmental protectors in Borneo.

2. Use of social media to engage viewers: As of 2018, more than half of the population has smart phones or tablets with access to the internet. This easy access to the World Wide Web makes them connected to the world 24*7 through various social media platforms. Discovery Communications has a strong social media presence and has ways to engage with the audience by connecting to them using custom hash tags, real-time talent engagement and also socially enhanced shows.

Technological

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Legal

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Environmental

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