Ever since he was tapped to run ad sales for the merged Discovery Communications and Scripps Networks Interactive companies in March, Jon Steinlauf has been hinting at a major restructuring as he combined the two sales teams. “There’s going to be change, probably later in the year,” he told Adweek in April. “Right now, we’re all focused on the upfront.”
And now that Discovery, Inc has wrapped its upfront negotiations for the first time as a combined company—in what Steinlauf said is one the most lucrative upfront hauls ever for a cable portfolio (see more below)—he is rolling out his new structure for the ad sales team, which also includes several layoffs, this week.
Steinlauf, the former Scripps ad sales chief, is focusing on 12 of Discovery, Inc’s 17 networks. He is reorganizing the sales teams around three network bundle structures of four networks each—grouped by synergies in audience, content and ad categories—and built around three “leader channels” with the strongest brand identities and CPM history: HGTV, Food Network and Discovery.
The first bundle includes HGTV, ID, Animal Planet and DIY. HGTV and DIY were partnered together at Scripps, while ID and HGTV share engaged female audiences (they finished No. 1 and No. 2 most months in women 25-54 among cable networks). And Animal Planet fits in because of the crossover between home owners and pet owners.
Greg Regis, who comes from Scripps and is currently svp of advertising sales and media partnerships, will become evp, national advertising sales and oversee that bundle.
Bundle No. 2 includes Food Network, TLC, Cooking Channel and OWN. Food and Cooking had been paired at Scripps, while TLC and OWN represent broader appeal, pop culture and lifestyle programming. And given TLC and OWN’s food connections (with Cake Boss and the just-concluded Welcome to Sweetie Pie’s respectively), Steinlauf sees an opportunity for food brands to expand to those networks.
Karen Grinthal, svp of advertising sales for Food Network and Cooking Channel, will become evp, national advertising sales, and head up that bundle.
The third bundle is comprised of the portfolio’s male-focused networks: Discovery, Travel, Science and Motor Trend Network (formerly known as Velocity). That will be headed up by Discovery’s Scott Kohn, currently group svp of regional advertising sales, who like Regis and Grinthal have been promoted to evp, national advertising sales.
That leaves five other networks in the portfolio that won’t be priorities for the sales team: Destination America, Great American Country, American Heroes Channel, Discovery Life and Discovery Family. Steinlauf said he will continue to sell them in the upfront but “they’ll be more in the DR [direct-response] market on a day-to-day basis.”
Separately, Steinlauf is forming a client partnerships team (headed by John Daily, svp, partnership sales), that will work with brands interested in buying cross-platform, cross-bundle and tapping into its other offerings, like audience targeting platform Engage.
As part of its restructuring, Discovery is laying off what sources called a “significant” portion of its ad sales team, pegging the number of exiting employees in the double digits. Discovery and Steinlauf declined to comment on specific numbers.
“When two great companies come together, it’s somewhat unavoidable that you’re going to wind up losing some great people,” said Steinlauf. “Unfortunately, that’s the position we find ourselves in right now.”
In March, the former Scripps ad sales chief was tapped to oversee ad sales for the combined Discovery, Inc as chief U.S. advertising sales officer. He then sprinted to pull off a united upfront event for the portfolio’s 17 networks.
Former Discovery ad sales chief Ben Price, who was passed over for the top spot, announced in April that he would be leaving the company after the upfront.
In a bit of awkward timing, Discovery confirmed the ad sales layoffs shortly after it announced a contract extension for president and CEO David Zaslav through the end of 2023. His target bonus will jump from $9 million in 2018 to $22 million next year, according to a Discovery filing with the Securities and Exchange Commission, but his base annual salary will remain at $3 million.
ID gains fuel strong upfront
The restructured organization, with Steinlauf said will be in place by Monday, comes as Discovery, Inc. has completed its first upfront negotiations as a combined company.
“We think it was one of the largest revenue upfronts ever for a single cable network group in one upfront,” said Steinlauf, who declined to provide revenue specifics ahead of Discovery’s next earnings release.
Last year, NBCUniversal’s upfront haul approached $6.5 billion for the company’s entire portfolio, but that figure included broadcasters NBC and Telemundo. (NBCU hasn’t yet finished its upfront negotiations for the 2018-19 season.)
Discovery secured high-single digit CPM (cost per thousand viewers reached) increases on what Steinlauf called its “top-tier brands.” The company also met its volume goals, selling about 50 percent of the portfolio’s commercial time.
Steinlauf also received big increases for ID, which he said was his “No. 1 priority” in this upfront. “ID finished as, if not the highest rate-of-change network in the entire broadcast and cable market, then pretty damn close to it. The market saw the value, and our correction was justified,” he said.
He had prioritized ID because of its position as one of the highest-rated cable networks in women 25-54 and adults 25-54. “It’s a highly engaged audience that watches live,” Steinlauf said.
Discovery’s strongest categories in this year’s upfront were home improvement, consumer packaged goods, food, retail, automotive, travel, restaurant, tech and particularly pharmaceutical, which Steinlauf said had the most year-over-year growth.
This year, Discovery more than doubled the upfront commitments for its audience targeting offering, Discovery Engage. One “long-time, blue chip client,” which tested the product in the scatter market, is now devoting 30 percent of its entire portfolio spend to Engage, said Steinlauf.
The company saw a 70 percent increase in upfront ad spend for its TV Everywhere apps, called Go.
Steinlauf said there was also interest in Discovery Premiere, the new offering he rolled out just last month which allows brands to advertise exclusively in first-run episodes from a mix of the 30 most-watched shows across the entire company.
In the upfront the company sold around a half-dozen sponsors for Premiere, which it will now sell year-round. “People are seeing as a great strategy for the way the market is built right now,” said Steinlauf, nothing that on Sunday, the portfolio had 11 of the top 12 cable shows in women 25-54, led by TLC’s 90-Day Fiancé.
“This is our third year in a row of strong upfronts,” said Steinflauf. “That says a lot about how TV is performing from an ROI perspective for advertisers.”