Ad sales unit restructured into network bundles

In its first upfront after acquiring Scripps Networks Interactive, Discovery Inc. said it may have generated as much advertising revenue as any cable network group ever.

The company also announced a restructuring of its ad sales staff, putting its 12 strongest networks into three bundles of four, each headed by an executive VP reporting to Jon Steinlauf, the former Scripps Networks ads sales head who was named chief U.S. advertising sales officer at Discovery in March.

Two of the three executives heading the new network bundles are also former Scripps executives, with Greg Regis heading the group of networks including HGTV, Investigation Discovery, Animal Planet and DIY and Karen Grinthal in charge of ad sales for Food Network, Cooking Channel, TLC and OWN.

Scott Kohn oversees sales teams representing Discovery Network, Travel Channel, Science and Motor Trend.

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In the restructuring, some senior ad sales executives are leaving Discovery, which has promised Wall Street $600 million in cost savings after the merger with Scripps. “You can’t bring two great companies together without losing some great people," Steinlauf said.

Discovery’s other networks, Destination America, GAC, American Heroes, Discovery Life and Discovery will be supported more by direct response and scatter ad sales.

Steinlauf said that Discovery had essentially completed its upfront negotiations.

“It will go down as probably one of the largest upfront ad revenue years that any cable network group has ever had,” said Steinlauf, who used to generate $1 billion a year annually in upfront sales at Scripps Networks alone.

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He declined to be specific in terms of figures because Discovery will be reporting second quarter earnings in a few weeks.

In the upfront, one of Discovery’s priorities was the raise the price on ads on Investigation Discovery. Despite being a top-rated network for women, its ad rates lagged since it began focusing on crime programming because it was misperceived by media buyers and advertisers, Steinlauf said.

In the upfront ID got the highest rate of price change of any Discovery network and of any cable network overall, Steinlauf said. He declined to say how much of a price increase it achieved.

Setting aside ID, Steinlauf said that “several of our top-tier networks in the upfront went to very high single digits” in terms of price increase on a cost-per-thousand viewers (CPM) basis.

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Discovery also saw big gains in the amount of business it did with its data driven platform Engage. Big advertiser categories employing Engage included ecommerce, finance, insurance, consumer packaged goods, automotive, home improvement and pharmaceuticals.

Another big gainer for Discovery was its Go apps, which provide authenticated over-the-top access to live streams and on-demand programming for several of its channels.

Steinlauf said Go App upfront ad revenues were up 70%. Ads on Go, which are served using dynamic ad insertion, are being sold separately from the linear ads on Discovery’s channels. He said the apps offer a younger, more engaged viewership that command a premium from advertisers.

Related: Discovery Bundles Up Its Hits 

Although it was introduced late in the upfront season, Steinlauf said discovery was able to sell several of its Discovery Premiere packages, featuring first-run episodes of the top-rated shows on Discovery’s networks. Steinlauf said ads in the packages commanded prices midway between broadcast network prime and cable prime.

“Advertisers have to look at the business differently when it comes to hits, whether they’re on OWN or ABC,” he said. In addition to reach and scale those shows generate, the premiere package includes spots in the first position in commercial pods, custom content and research.

Steinlauf said Discovery would continue to sell Premiere in the scatter market year round.

In the new ad sales structure at Discovery, in addition to the executive VPs heading the network bundles, several executives report directly to Steinlauf. Those execs are: Bobby Voltaggio, group senior VP, pricing & planning; Keith Kazerman, group senior VP, research, data & Engage; Laura Galietta, group senior VP, ad sales marketing; John Dailey, senior VP, partnership sales; Aaron Gallagher, senior VP, digital sales, leading the national digital direct sales team; and Lauri Baker, senior VP TVE sales, working with bundle teams, and focusing on the Go products.