David Zaslav: The Cable Boss

20 minute read
Updated: | Originally published: ;

“Behold the besuited hominid as he sips his French roast …” Amateur anthropologists will recognize the executive in his natural habitat; he hits the home gym and polishes off a grapefruit wedge, all before 7. His steadiness provokes respect, if not awe.

And then there is 55-year-old Discovery Communications CEO David Zaslav, whose nature documentary would be full of quick cuts and narrated by Harvey Keitel. Zaslav is the boss of the whole Discovery television enterprise–comprising Discovery, TLC, Animal Planet, Science, OWN, Investigation Discovery (ID) and a host of international channels, including Eurosport, the continent’s equivalent of ESPN–and he has no room, he’ll tell you, for anything other than the most unusual and compelling characters. Since arriving at Discovery in 2007, Zaslav’s followed this focus to unprecedented ratings and prominence for TLC and ID, a conspicuous and eventually successful partnership with Oprah Winfrey, a quintupling (before a recent pullback) of the company’s market capitalization, and a pay package that hit at least $106 million for 2014, big even in an industry known for outsize paychecks. (Disney’s Bob Iger took home a modest-by-comparison $46.5 million.) He supervises Shark Week and Cake Boss. No humdrum nature doc here.

So Zaslav wakes up each day at 4:45, finishes with the papers by 5. By 5:30 he’s out the door of the Majestic, the storied Art Deco building facing New York City’s Central Park, where he and Pam, his wife, live in an apartment they bought, fully furnished, from Conan O’Brien. Then what? Scotty, Zaslav’s driver, a big former SWAT cop with a bigger Cadillac, is usually at the ready. Zaslav often shakes him off to walk.

He’ll march through the park or along nearby streets. He says it gets him out of having to work out. He fires off emails and calls to colleagues overseas from the BlackBerry he carries alongside his iPhone. He does the same for his domestic employees when the clock strikes social acceptability an hour later. Most every high-level Discovery employee has awoken before 7 to a phone buzzing with a terse message: “R u up?” John Hendricks, Discovery’s founder, remembers the 6:50 a.m. call when Zaslav pitched turning Oprah Winfrey’s magazine into a channel. For Zaslav, these hours are “stolen time,” when he thinks better and thinks bigger.

While Zaslav has always been an early riser, his broody laps have taken on new value in a choppy present for the video business. The business had been a simple and great one. It worked like this: Distributors (think Comcast, DirecTV or AT&T) sell television service to homes, often alongside Internet or phone. Those who own cable networks (like Discovery Communications, Disney or Viacom) negotiate with the distributors for a fee for each channel, paid per subscriber, per month. (Networks’ revenues come from advertising sales and these fees.) For years, the number of subscribers grew steadily, as did the fees and the number of channels. But in 2013, for the first time, cable’s subscriber base contracted.

The once familiar landscape is now barely recognizable. Netflix and Amazon sponsor prestige shows that play well come awards season. Consumers can buy HBO subscriptions without owning a TV or cable box. All signs point to continued growth for over-the-top television, whereby networks deliver their content directly to consumers, so named because it bypasses a cable company’s involvement. Viewer choice will rule the day.

Now Apple is reportedly planning a cheaper and pared-down version of a traditional package that would stream by way of its devices, for about $30 each month. The lineup is expected to include several of Discovery’s networks. But the cribbed-from-cable business model of channels and one monthly bill is the exception, not the norm. Industry observers expect cord cutting to threaten the steady streams that have long powered cable networks. Discovery’s stock price, after five years of industry-leading growth, is down 30% from its 52-week high (despite gains for the major indices), making it ever more inviting to the sharks featured on CNBC, a channel Zaslav once oversaw.

Making matters worse, Discovery’s two largest cable negotiating-table counterparts–Time Warner and Comcast–plan to merge, threatening to squeeze the midsize player’s market power in advance of the expiration of its carriage agreement with Comcast this month. And on March 31, Charter Communications announced a plan to buy Bright House Networks for $10.4 billion, which would create another dominant cable player (albeit one which, like Discovery, is owned substantially by the Advance/Newhouse media empire) for programmers to reckon with. Plus, domestic advertising revenue remains in a valley. As a company of no great scale compared with some of its competitors, Discovery might have a lot to gain from a merger in an age when Wall Street wants consolidation. You think Zaslav has anything to think about on his walks?

In this time of great transformation, Zaslav’s status and past happen to stick him in an unusual position. The industry’s upheaval has not only shifted distribution options but also shaken up the power-broker ranks. Analytical computer scientists have slipped into the party once confined to backslapping cable barons and well-heeled old media. Now Zaslav is trying his hardest to look the part of a leader in a scene he himself crashed not 30 years ago.

“Have You Seen This?”

The story of cable television begins in a lot of places, but let’s pick it up in the mid-1980s, when CNN, MTV, ESPN and HBO were subjects of business-world curiosity more than envy. Those nets tap-danced for distribution on satellites and on fledgling city cable systems while throwing laughable low-budget programming (and infomercials!) on their feeds. “Cable was regarded as trash back then. We were thought of as lowbrow dudes who didn’t know how to put a thing together,” says Tom Freston, the former MTV Networks and Viacom CEO and Zaslav’s industry pal. They were called cable cowboys for good reason. Unproven upstarts in their 20s and 30s were strutting around saying their service would conquer the world, even though they were losing lots of money. The business’s most visible success, Ted Turner, had failed to earn a college degree, but he had successfully defended the America’s Cup.

Inside NBC, especially during the Cosby-and-Cheers-fattened 1980s, few wanted anything to do with cable. The company stationed its small cable operations over the river in Fort Lee, N.J., to avoid the long shadow of Rockefeller Center’s legacy (and the unions). In 1988, David Zaslav, then a young lawyer, saw NBC CEO Bob Wright’s face on the cover of Multichannel News, the cable industry’s trade mag, and wrote him to ask for a job in his new department.

As a teen, Zaslav, who grew up in Brooklyn and Monsey, N.Y., was a very good tennis player–he says he could have been one of the state’s best had he not tried to coast on his natural ability. Tennis helped get him into Cornell, but he left for Binghamton after a year, finding the academics too demanding (although he maintained a 3.5 GPA his freshman year). After college came law school, at Boston University, and a corporate-practice gig. There Zaslav picked tennis back up so he could play with his firm’s senior partners, lobbying them between rallies for good cases (“I wasn’t a good lawyer, but I was a good tennis player”). One of his early assignments involved working at Discovery. Zaslav’s first taste of the cable business hooked him for good. He took a 40% pay cut to work on the launch of CNBC.

Zaslav’s new bosses found he had a natural gift for working within the sometimes confounding cable world. He would bring cable operators to Wimbledon and the Olympics, and he’d connect them to the snazzier arms of NBC–for the price of new carriage agreements for CNBC. Zaslav even made a lifelong friend of Fred Dressler, Time Warner Cable’s chief negotiator, who, given his company’s CNN stake, was wary of CNBC. Then, as now, Zaslav was energetic and effervescent, a cup of coffee spiked with Pop Rocks. His head is mostly jaw, and his jaw is mostly teeth, and his teeth are mostly white. When he speaks–perhaps about the “cawst of cahntent”–the New Yawk is unmissable. And he’s an odd duck: his emailing style, dubbed Zasbonics by employees, is full of slang, ellipses and z’s where s’s should be. (Wuz instead of was; tha instead of the.) He favors, regardless of the climate, a vest, usually a Patagonia number branded with Discovery’s logo. He says it helps him keep everything close at hand.

It’s a funny thing about Zaslav: despite working in a business full of gossip-column backbiting and internecine squabbling, he has won over many of his competitors. When asked to furnish for this story a short list of the friends who know him best, Zaslav named bosses of three rival cable-network groups (Fox, Scripps and AMC) plus executives at CNN and CBS. And Steven Spielberg, with whom Zaslav and others teamed up to take hundreds of Holocaust survivors and their families to Auschwitz in January.

“He’s one of the most moral men I know,” Spielberg says. CBS boss Leslie Moonves says, “I know no one who is as popular in our business as David is.” AMC Networks’ Josh Sapan says, “His generosity is boundless.” Says Freston: “He’s not some Ivy League doofus who’s looking down his nose at you. It’s rare to be unpretentious in a position like that.” “When I get in in the morning and check who I’m having lunch with that day,” Moonves says, “I always get happy when I see his name there.”

And Zaslav’s business partner Oprah Winfrey? “He has beyond lived up to what he said he’d do as our partner,” she says. Zaslav had the idea for OWN in 2007, when he saw how his wife would tear pages out of O magazine. He pitched Winfrey, then hosting her syndicated talk show, on the project–it turned out to have been a longtime dream of hers as well–and sealed it by promising her money for programming alongside joint ownership of the channel.

OWN struggled out of the gate, as many new networks do. Only its struggles were costly and conspicuous, with SEC filings suggesting Discovery had sunk nearly $500 million into the project before seeing its first profit. Did Zaslav ever think of cutting his losses? “No, we had Oprah. You don’t walk away from that.” OWN finally turned profitable in 2013, thanks in part to popular scripted programming from Tyler Perry and a carriage agreement with Comcast, which called for the large distributor to pay a meaningful fee for OWN. (It had been paying nothing.) Last year, the network had a positive cash flow of $54.8 million, according to financial researcher SNL Kagan.

Winfrey recalls when OWN was struggling, in 2012. She and Zaslav had just finished a rough presentation to the press, days after Winfrey had complained on television about how difficult the network-launching process was. They were sitting in Winfrey’s room upstairs at the Mandarin Oriental hotel in Manhattan. “David said, ‘This is it. We are going to turn this narrative around. There will be no more talk of the struggling network. No more rearview-mirroring.'” From then on, Winfrey says, the channel has thrived. “He told me, ‘Every decision we make, we’ll own it. It’s our decision.’ I wasn’t going to cry in front of him, but it moved me so much, my eyes watered.”

Zaslav gained Winfrey’s ear and total trust. He sends her articles he reads and enjoys–Noam Chomsky on the roots of American racism, Stephen Fry on God, Malcolm Gladwell on character traits that make you disruptive–subject line: “Have u seen this?” And Winfrey admires the man himself. “This is a man who loves and adores his wife. He’s not like the other executives who use their families as a calling card–‘Oh, I love my wife and kids.’ Believe me, I can tell. I notice the things people do when no one else is looking. David sends me pictures from his family vacation. The love he has for Pam in particular–it makes you want to get some of that. He sees you–with a capital S. Like in Avatar.”

Zaslav says, “I love interesting people, and I try to surround myself with them. Spielberg and Oprah. Graydon Carter, he’s one of the great curators of our culture. Freston. Jack Welch. John Malone. I want to know how they think about the world, how they see it.” That’s one of the reasons Zaslav throws a big Hamptons bash each summer–2014’s drew Jack Nicholson, New York Governor Andrew Cuomo, Martha Stewart, Colin Powell, Lloyd Blankfein, Ryan Seacrest, Harvey Weinstein and Barry Diller.

“Keep Your Energy Up”

Zaslav arrived at Discovery in 2007 from NBC Cable with mandates to grow the international business and shake things up. Discovery’s major shareholders, Advance/Newhouse and Malone, had for years sat across from Zaslav at the negotiating table. (Malone’s early support had helped get CNBC off the ground.)

Zaslav jettisoned 25% of the company’s workforce and most of the executives. “There were some real turkey businesses there,” Malone says, “and David had to take them out behind the barn and shoot them.” Zaslav recalls, “People were coming in at 9, 9:30, heading out at 6.” The company needed a jolt. “Pacing is a big thing for a company. Have to keep your energy up,” he says, grabbing his second cup of coffee at 5:45 on a recent Monday morning.

His other mission was to supervise the creation of more attractive programming to compete against new rivals. Cable providers had been slow to roll out on-demand technology, with patchy inventories accessible only on set-top boxes. To wit: Netflix, the outsider, launched its online-streaming-video service more than a year before Hulu, the project backed by NBC and Fox, went online. Netflix’s stock price is up more than 1,700% since it announced streaming in 2007, creating $24 billion in additional equity that established industry players believe should have been theirs. “Netflix never should’ve happened,” Zaslav says.

To judge by the Discovery networks’ programming slates under Zaslav, subtlety is just another thing disrupted by video on demand. The man has overseen the launches of Sex Sent Me to the ER, Wives With Knives, Naked and Afraid, Who the (Bleep) Did I Marry?, My Big Fat Fabulous Life (not, of course, to be confused with My 600-lb. Life) and Eaten Alive. A sea captain died on his air, a 10-member family split up, and a seventh-generation daredevil tightrope-walked over Chicago and the Grand Canyon. America met Honey Boo Boo. His true-crime network gave a show to Susan Lucci and plans another for Roseanne Barr. Discovery’s networks have nearly doubled in audience share since his 2007 arrival, from 7% to more than 12% of total eyeballs, overcoming an industry hunch that his sleepy suite would have trouble with growth. Zaslav figures his channels resonate in unglamorous markets neglected by the coastal media capitals. Discovery reaches middle-aged men–indeed, in February, it was the top-rated cable network among all American TV viewers with a Y chromosome. TLC reaches the women of Middle America by parading unusual humans before them and hoping, says network president Marjorie Kaplan, that viewers relate to their struggles.

The crime network ID, which ranks fourth among female viewers 25 to 54, is a favorite success of Zaslav’s. Its boss Henry Schleiff, another onetime corporate lawyer who had spiced up CourtTV in the late 1990s, came aboard in 2009. Schleiff says, “I said, ‘This is the most popular genre in television history from Perry Mason forward, and there’s not one network dedicated to doing it 24/7, year-round?'” Today, ID has the longest average time of viewing for any network, cable or broadcast. Crime kills.

Zaslav likes to run his company like his old boss at GE ran his. Jack Welch loved talking about attack plans, so Zaslav often asks his subordinates for their attack plans, and Welch loved data, so Zaslav craves any he can get his hands on. “I f-ckin’ love data,” he says. “Don’t come to me with what you think or what you feel. I want to know what you know.”

To that end, Zaslav has enlisted Dan Wagner, the respected analytics chief for Barack Obama’s 2012 campaign, as a consultant. The long-term goal is to overcome television’s longtime weakness: targeting its viewers. While the web and direct-mail know exactly which readers they’re reaching, TV networks have historically had to sell their audiences in the aggregate–here’s the type of person who watches a particular show. But since the new year began, Discovery has been at work on compiling a database of all TV homes, with nearly 7 million so far. Before too long, 60 million to 70 million American households could see ads tailored to their circumstances–the 25-year-old male who needs a new car will see a different ad than a 41-year-old mother of two, even when they’re watching the same show. (In fact, Discovery has already launched a similar pilot program to Cablevision subscribers.) Wagner and Zaslav have another data-related dream: they hope for a future where programming decisions are made with data in mind. In that future, schedules will be optimized with input from algorithms, and computers will help creatives spot viewing trends in time to commission shows before competitors do. Wagner says there’s no reason Discovery should have been four years late to the pawnshop trend.

Zaslav says, though, that the old way of doing business will dominate for the next three or four years, at least. And there’s obviously more than one way to skin a cable customer. Culture critics talk of a golden age of television, in which a once trashy medium has come to patronize enduring dramatic triumphs like HBO’s Sopranos or AMC’s Breaking Bad. Established basic-cable players have chased the scripted-drama trend in their own ways, hoping to stumble on something that works. Yet Bravo, for example, has swelled its notoriety and ad revenue by way of collagen-happy divorcées flinging drinks at one another. The History Channel grew by ditching sepia-toned war specials for male-focused reality TV. And this is to say nothing of Rupert Murdoch’s Fox News and Disney’s ESPN, which have thrived by furnishing must-have programming to overheated superfans. A network’s negotiating position is only as strong as the cancellation notices a cable company would get if it dumped the channel.

Zaslav, surveying the industry, argues that Discovery, with its low programming cost and recognizable brands, has the best blend of them all. Scripted drama? Please. “It’s like a kids’ soccer game–everyone saw something that worked and started chasing the ball. It’s way too expensive.” Discovery spends on the order of $300,000 or $400,000 for an hour of programming, while a scripted hour can cost several million and might not translate as well overseas. Sports? “ESPN’s stuck paying whatever the leagues want for their broadcast rights. They’ll never be able to control the cost of programming.” (“It’s like heroin,” says Malone. “You’ve gotta keep buying and buying it.”) Reality? Forget it. “Every show now is about a family with giant beards running around a house full of pigs. That’s not real, and viewers want real.” And Fox News? “Well, that’s not a cable network. That’s a political advocacy project, a damn good one.”

Mirroring Roger Ailes’ conservative triumph was one of the lifelong liberal Zaslav’s first projects when he arrived at Discovery in 2007. (The two have a history that dates back to America’s Talking, the MSNBC predecessor run by Ailes until 1996, when Zaslav was a junior executive in the cable group.) Zaslav took one of the networks, Discovery Home, and shaped it into Planet Green, figuring that environmental evangelism would draw a crowd while aligning with Discovery’s suite of brands. Says Malone: “We thought corporate America would sign up too. But we found out corporations were scared to death of claiming greenness. They were afraid they’d get investigated and then get pushback for their hypocrisy.” Schleiff says, “I told him, this should be called Planet Don’t Watch.” Zaslav says now, “It was a bad idea. But at least it failed fast.”

While programming isn’t his forte–he has cycled through network presidents, particularly at TLC–branding is. He’s good at selling what he’s got. Discovery is the network for curiosity. Investigation Discovery for mystery and suspense. TLC for family and understanding. OWN for living your best life. Perhaps when the very idea of a cable subscription begins to seem antiquated, strong brands may be all that’s left standing.

Zaslav is proudest of Discovery’s international success. Its overseas entities, long in the tadpole stage, now croak like bullfrogs. In 2014, for the first time, more than half of the company’s revenues came from overseas. While operating income for its domestic networks fell 2% in 2014, the international networks’ operating income grew 18%. While the margins abroad aren’t as fat as the U.S. ones, the boss delights in the brands’ prominence and the Wild West feeling that comes from growing in places like Brazil and Mexico. Zaslav has said the Discovery Channel is Vladimir Putin’s favorite network–although now that the Kremlin has started pushing foreign pay-TV programmers off the air, he can no longer be so sure. Nonetheless, Discovery has the additional advantage of owning most of the programming it airs, so foreign licensing fees don’t create the headache they do for most other network groups. And most of its shows, even some of TLC’s American grotesqueries, translate well internationally once they’ve been dubbed in the local language.

Perhaps Zaslav’s only bigger success came with his 2014 contract extension, which pays extremely well but primarily in Discovery stock rather than cash. The deal, which runs through 2019, will by its end make Zaslav an owner of Discovery shares worth $250 million to $300 million, pending fluctuations in the share price. The poker junkie likes to say he’s all in, and he loves his hand.

Malone, who has guaranteed Zaslav, so long as he’s CEO, the right to match any bid for Malone’s personal Discovery stake–29% of the company’s voting shares–watches carefully. “It’s been straight up for seven or eight years. It’ll be interesting to see a smart guy now figure out how to deal with these headwinds. I’m sure he’ll do it well. But David’s gotta do a little thinking.” Zaslav says he shudders just thinking about retirement. “I hope never to not be doing this.”

Walking down Central Park West, with the sun still yet to rise, Zaslav recalls a party at Jack Welch’s Trump Tower penthouse many years ago, before Oprah and Spielberg and his own glitzy parties. He and Pam looked out Welch’s window and marveled at the park’s trees. One day, if they ever made it, they would get a view like this. But down here on the street, in the morning darkness Zaslav loves, no one would be able to discern Frederick Law Olmsted’s curated natural beauty. The only attraction at this hour–you can’t miss it–sits atop a small tower near Columbus Circle: a broad red-and-white light-up sign with three letters, CNN, telling him how far he and his industry have come, and just how strange the future might be.

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Write to Jack Dickey at jack.dickey@time.com