Discovery Communications (NSDQ: DISCA) is making its boldest move yet when it comes to digital: the acquisition of HowStuffWorks.com for a reported (WSJ) $250 million. Expected to close later this year, it’s only the second digital acquisition since David Zaslav took over as CEO in January, followed in March by his NBCU colleague Bruce Campbell as president of digital media, emerging networks and business development. During an interview with paidContent.org Monday, Campbell explained how content-sharing talks turned into Discovery’s most important digital acquisition and talked about the company’s plans after the deal closes. Already in place, a pre-closing “little licensing deal” so HSW can use some Discovery video. (For a sample, type “lightning” in Google, the second link should be HowStuffWorks.com’s entry on lightning complete with Discovery video.) More after the jump…
In August, Discovery acquired Treehugger.com for what our sources say was about $15 million including performance-based earnout. But Monday’s announcement that Discovery has agreed to buy HowStuffWorks.com from The Convex Group is in a different stratosphere. While Treehugger was acquired to support the new Planet Green network, HSW will, as Campbell explains, be the hub connecting all of Discovery’s sites: “This is a very important investment for us. This will be our primary platform for growth online. … We won’t be doing a lot of investments of this size.”
Moving beyond show sites: Discovery’s on-air mission to be the “leader of knowledge and curiosity. … When we think about growth opportunities … the top opportunity we see is expanding that into the internet. But when we look at where we sit today and look at our web sites, they’re largely show-driven sites. They’ve been fairly successful at that but they’re not a platform for the lifelearners and people who want to learn more about any given topic.” The conversations with HowStuffWorks started as a content-sharing effort by the smaller company — Discovery’s video for some of HSW’s tech space content. The execs were surprised to find out that the actual subjects both cover and the overlap between viewers and users. Instead of simply sharing, Campbell says he, Zaslov and HSW CEO Jeff Arnold saw “a great opportunity here to create an integrated platform around high-quality content that we don’t think exists on the web today.”
Opportunistic: Campbell says they weren’t looking to spend that kind of money and HSW wasn’t for sale. Discovery has the brand and great video assets; HSW has credibility online. “We didn’t feel like day one we could start churning out this text content and start building an audience around it.” Discovery wants to advertising to be the major revenue stream online and HSW is already hooked into the search engines.
International: “Not only is their great overlap here, but when we look at our platform around the world, we have Discovery networks in 170 countries, in some countries we have over six networks. HowStuffWorks has such great international expansion potential — you take that content, translate it into another language and its immediately relevant for that audience. In most of the markets where we are there isn’t an existing site like HowStuffWorks.” He said they likely would start with the UK and phase it in from there. “In fairness, that’s really phase two. … we want to build the integration in the U.S. first.”
What next?: Post-closing, Arnold will continue to run the 160-person team out of Atlanta. “We want these people to continue to do what they do best, which is creating content for a search-driven world.” Discovery will work with them on integrating video and driving HSW’s traffic back to their sites. They see a fit between HSW and every one of the Discovery networks.