Food, Home Focus Give Discovery a Ratings and Revenue Edge During Pandemic

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Key insights:

Covid-19’s early impact on the TV advertising industry will become starker over the next week, as more media companies announce their first quarter earnings. Last week, AT&T reported a 24.1% year-over-year quarterly decline in advertising revenue among its Turner networks, due in part to the coronavirus-related cancellation of March Madness and NBA games.

Most media companies are facing billions in lost domestic ad revenue related to Covid-19—caused by the cancellation of live sports and the abrupt exit of major TV advertising categories like travel—while also grappling with a Hollywood production shutdown that is depleting their content pipeline.

But Discovery Inc. is a rare exception, with an advantage over many of its peers given that it’s uniquely positioned for this current moment. It doesn’t air sports in the U.S., and has multiple networks devoted to the very subjects that have quickly become top of mind among housebound consumers: cooking and home improvement.

Meanwhile, the company has quickly begun producing at-home versions of several shows, and is in the process of turning around multiple quarantined-themed new series—including a version of its HGTV staple House Hunters, called House Hunters LOL, in which comedians will poke fun at past episodes of the franchise.

While Discovery faced the same advertiser losses from key categories like travel, theatrical and casual dining—which pulled spend quickly as the pandemic began to spread and businesses closed—industry sources expect the company to be well positioned and fare better than its peers when it announces quarterly earnings on May 6.

During moments of national or global crisis, “there tends to be a concentration of viewership around things that people are familiar with, comforted by and trusted,” said Jon Steinlauf, chief U.S. advertising sales officer at Discovery. “HGTV, DIY, Food Network, Cooking Channel and Motor Trend are in this cluster of channels that provide a lot of comfort, optimism, inspiration and useful ideas during these times.”

With Americans sheltering in place, “they’re also looking for things to do with this time that they now have on their hands,” said Steinlauf. Those topics include home projects (both in the house and the yard), cooking and automotive work.

As a result, several of Discovery’s networks are seeing big ratings gains. Among its target adults 25-54 demo, Food Network is on track to have its highest rated month in primetime since March 2014, and its highest-rated month in total day since April 2012. Several Food Network series have seen their highest ratings in more than a year, including Spring Baking Championship, Chopped, Beat Bobby Flay and Diners, Drive-Ins & Dives. (All ratings are live-plus-3 numbers.)

HGTV is the No. 3 cable network in total day in women 25-54 (and takes the top spot among non-news networks), while MotorTrend is up 19% among men 25-54 this month.

And TLC is the No. 1 cable network in primetime this month among women 25-54 (with ratings up 40% year-over-year), and women 18-34 (a 69% increase). That’s in large part due to its hit 90 Day Fiancé franchise, whose latest installment, Before the 90 Days, has set franchise records each consecutive Sunday this month among adults 25-54, women 25-54, women 18-49, women 18-34 and total viewers.

The series also has been the No. 1 show on Sundays this month—on both broadcast and cable—among women 25-54, 18-49 and 18-34.

With audiences flocking to these shows and networks, the company is also seeing advertiser demand in scatter from food, household cleaning, home products, insurance and big box retailers, as well as online dating services.

“When 9/11 happened, Food Network’s ratings went through the roof because suddenly we were this safe haven and happy place for people. It’s nice to see the content we make suddenly has more of a purpose than just escapism,” said Kathleen Finch, Discovery’s chief lifestyle brands officer, who oversees 11 networks at the company, including HGTV, TLC, Food Network, DIY Network and Cooking Channel.

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