Up to now the company promised that its joint venture network with Oprah Winfrey would break even on a cash flow basis in the second half of 2013. But CEO David Zaslav slightly raised the stakes this morning, promising those attending Sanford C. Bernstein’s Strategic Decisions Conference that “we’ll be making money on OWN.” The channel — which stumbled out of the gate in 2011 — is “ahead of where we thought it would be” and “finding enormous success for us.” For example, on Saturday night, when it runs original programming without Winfrey, “we’re the No. 1 network for African American women.” The comment buttressed Zaslav’s broader argument that the pay TV business is in good shape, and Discovery is doing especially well in that environment. Zaslav is unfazed by the seemingly growing number of consumers who say that they’re fed up with rising pay TV rates, and want distributors to offer channels a la carte or on low-priced tiers. “This is a very sturdy system,” he says. “Viewers really enjoy the basic package…I don’t see that being challenged.” READ MORE »
EXCLUSIVE: Big Media companies don’t tell you when something’s rotten with the corporate culture. But this list should help you begin your search. This is Deadline’s third annual tally of out-of-whack CEO compensation. It’s an account of chiefs who not only make vastly more than you and me, but also collect far more than their closest colleagues at their own companies. Corporate governance experts become concerned when a CEO consistently makes at least three times more than the median for the four other highest-paid execs that the SEC requires companies to list in the annual proxy statement. That’s the standard I use, and it indicates that 14 out of 31 media companies that I tracked and that have already filed 2012 data failed the test — in many cases miserably.
Out of whack CEO pay can send a poisonous message to employees, including others in the C-suite. Internal pay parity “is critical to ensuring fairness and encouraging a collaborative team effort,” News Corp says in its proxy. Huge disparities also can tip you off to troublesome boardroom beliefs. It might indicate that directors lack faith in the business or leadership team — and fear that things will unravel if the top dog leaves. It may be a symptom of corporate groupthink where people give the chief credit for everything that goes well, and seek scapegoats for everything that doesn’t. Or it might mean that directors are beholden to the CEO — or share a cynical and grandiose sense of entitlement — and see nothing wrong with helping him (it’s almost always “him”) stuff his pockets with shareholders’ money, even where there’s little danger that he might leave if paid less. Whatever the case, researchers find that all too often the damage from such obeisance to the CEO eventually hurts a company’s performance and stock price. (For example, here, here, here, and here.)
This list looks at the biggest and best known infotainment providers. I include Web-based companies such as AOL and Yahoo that produce and sell their own content, and added Facebook which depends on ad sales. But I left out ones including Apple and Verizon that generate most of their revenues from hardware or personal communications services. (I’ve also left out Google, where the top execs benefit from stock performance and only collect a symbolic $1 in compensation.) For context, I’ve also noted how many people the company employs, and how that’s changed since the last fiscal year, to see whether these fabulously rich CEOs were job creators. The data isn’t nearly as revealing as it ought to be. For example, the SEC doesn’t require companies to specify how many jobs are based in the U.S., or even how many are full time. I’ve also included the CEO’s 2012 compensation rank among other media chiefs in our list, as well as among all media executives listed in their company proxies, and the average compensation over the last three years. (To avoid having them counted twice, I combined the compensation that Sumner Redstone collects as chairman of CBS and Viacom, and that Charles Dolan collects at Cablevision and AMC Networks.)
A few things to keep in mind: The SEC reporting rules only cover the top-paid executives of publicly traded U.S. companies. That means we’ll miss a lot of highly paid people who work at subsidiaries of a big company; Universal Studios’ Ron Meyer may be a big deal in Hollywood, but he didn’t make the top echelon at his corporate parent Comcast. Also, the pay data given to the SEC can spike in a year when an executive cashes in stock or collects deferred compensation. Averages also can be skewed when people on the list come and go in the middle of the year. So consider this to be a starting point to judge whether a CEO was paid fairly — not a final verdict.
I’ll be back soon with additional information including a similar list showing CEOs whose pay was more in line with his or her colleagues. Here’s how the out-of-whack CEOs stack up for 2012:
1. Live Nation: Michael Rapino. The concert and ticketing giant had a so-so year generating higher revenues but even higher costs — and a net loss. Last year’s big tours included Madonna, Lady Gaga, Coldplay, Roger Waters, and Bruce Springsteen & the E Street Band. Company shares appreciated 8.1% in 2012, lagging the benchmark Standard & Poor’s 500 which was +12.7%. But the big excitement took place at year-end with the surprising departure of Chairman Irving Azoff, taking performers he represents including Eagles, Van Halen, and Christina Aguilera. That left Rapino clearly in charge — but under the watchful eye of Liberty Media, which owns nearly 27% of the stock. With a flood of option awards, the CEO’s compensation rose 138.4% to $28.5M (The package: $2.2M salary, $243,281 bonus, $2.6M stock awards, $19M option awards, $4.4M non-equity compensation, $46,408 other compensation.) That was a whopping 17.0 times more than the median for the four other highest paid execs — up from last year’s 5.5 times — and 46% of the pie. Even these numbers underplay the disparity in executive pay: The group of other execs includes Azoff who made $27.4M. The company had 7,100 full time employees at year end, up 500. (Pay rank among media CEOs: 9. Among all media execs: 11. Average annual pay over last three years: $18.7M.)
The slight decline was due to the quirky way corporations value option awards; everything else was up for the Discovery Communications CEO in a year when the company stock was up 51.1%. The proxy just filed at the SEC shows David Zaslav‘s package consisted of $3M salary, $25.3M in stock awards, $15.8M in option awards, $5.3M in non-equity incentives, and $432,986 in other compensation. The “other” category includes personal aircraft use, a $16,800 car allowance, $11,083 in home office expenses, and $23,245 for personal security during overseas travel. Zaslav led Deadline’s list last year of CEOs whose pay was most out of whack with other executives, and this year’s package is sure to return him to that list. He made 13.4 times more than the median pay for the next four highest paid executives, well above the threshold (three times the median) that leads corporate governance watchdogs to wonder whether the chief executive wields too much power. Indeed, Zaslav’s pay accounted for a whopping 76% of the pie for Discovery’s top management.
Discovery CEO David Zaslav wants to quell a potentially big shareholder concern: that his pay TV networks company might become embroiled in costly bidding wars for sports rights as a result of its new investment in TF1‘s Eurosport. (That’s part of two major deals the company announced this morning.) This is Discovery’s first direct foray into the sports business. But the near-insane buying frenzies are characteristic of the U.S. market, which is “completely different,” he said in a conference call this morning. Eurosport focuses on regionally popular niche sports including tennis, cycling, skiing, skating, and curling. That’s “more manageable, much more predictable,” he says. “There isn’t one sport that they have to have….It doesn’t strive to be that big massive platform, which is consistent with what we do.” Discovery also is still feeling its way: It agreed to pay $221.6M for a 20% stake in Eurosport. It has an option to raise its holding to 51% in two years. If it does, then TF1 can require Discovery to buy the remaining 49% as well.
Although the goals were set independently, David Zaslav says that his joint venture with Oprah Winfrey is growing fast enough that it doesn’t have to expand to 85M homes — from 80M now — to fulfill his prediction that it will break even in the second half of 2013. “The ratings growth has been fantastic,” he told investors and analysts on Day 2 of the UBS Global Media and Communications Conference. The “cherry on top,” he says, is that “we’re the home for Tyler Perry on television.” On Saturdays, OWN ranks first or second with black women, attracting more of the demo than ABC, CBS, Fox, and NBC combined.
Zaslav’s comment about OWN reflects his overall optimism about the state of his company and the programming business. He acknowledged that ad sales were slow in October. Discovery was “hurt more by the Olympics than we expected” — in part due to his decision not to schedule strong shows against the games. But since the election both volume and pricing have been “quite good.” He warns that the outlook “could change a week or two from now” if there’s no compromise in Washington to avoid the so-called fiscal cliff, although “it’s getting pretty late for [the negotiations to avoid the fiscal cliff] to have an impact” in Q4.
Tyler Perry’s exclusive TV production deal with OWN shouldn’t turn the self-improvement channel into just another general entertainment network, Discovery CEO David Zaslav told analysts this morning. “This is something Oprah really wants,” he says. “We were …
Discovery CEO David Zaslav’s optimistic forecast to analysts this morning is a slight improvement from three months ago when he said that his joint venture with Oprah Winfrey would merely begin to break even by late next year. He’s impressed by recent audience growth at OWN — including the 20% ratings improvement in Q2 among women 25-to-54. “Candidly we’re significantly ahead of where we thought we would be,” Zaslav said in a conference call to discuss Discovery’s Q2 earnings. While Discovery doesn’t break out revenue and profit numbers for OWN, execs said that the channel spilled less red ink in Q2 than in did in the previous quarter which included the cost of shuttering Rosie O’Donnell’s talk show. The company warned that OWN’s losses could grow in Q3: It plans to spend more on marketing as well as programming. That’s “investing into momentum,” CFO Andrew Warren says. The recent audience growth is not a blip, according to Zaslav. “We’re quite confident that we’ve begun to find the recipe for a strong women’s network” that is “starting to be what Oprah and I talked about.” He calls OWN “one of the best brands in media, and for women it may be the best brand in media.” Winfrey is “more engaged” and the channel has a “good leadership team,” Zaslav says. He adds that Oprah.com has become an important part of the mix because it helps to provide direct contact with OWN’s viewers. He notes that all eight of its initial advertising partners continue to work with the channel.
Broadcasters received moral support this morning from cable in the looming battle against the new Auto Hop feature on Dish Network‘s Hopper DVRs, which enables the machines to automatically recognize and skip over ads on …
It’s a sweet deal, especially when you consider that Discovery shares lost 2.8% of their value in 2011 and three of the company’s four other top execs made less than they did in 2010. Zaslav’s compensation, reported in an SEC filing, consisted of nearly $3M in salary, $20.3M in stock awards, $23.9M …
Discovery CEO David Zaslav was as optimistic as he could be yesterday when he spoke to analysts about his OWN joint venture with Oprah Winfrey. But his company’s annual report filed this morning at the SEC tells a …
UPDATE, 7:05 AM: CEO David Zaslav refused to put any daylight between himself and Oprah Winfrey as analysts in a conference call this morning asked for more insight into the prospects for their struggling OWN joint venture. Now that Winfrey is running the operation, it has “a team she has confidence in, and I have confidence in,” he said. He sidestepped a question about whether Discovery has the right to terminate its agreement with Winfrey, or to re-purpose the channel — for example by moving it to the Web. “We’re up for about a year,” he says. “If we grow a meaningful audience, and we think we will, this will be a significant asset.” Zaslav says that the channel “learned a great deal about its audience” last year and is “off to a nice start in 2012″ with returning shows including Our America With Lisa Ling and Sweetie Pie. Also, “Oprah will be featured in additional formats. … We’re excited to grow this network in 2012.” The company says that, as a matter of policy, it doesn’t break out profits for individual channels.
This is now happening — I have learned that Discovery Communications COO Peter Liguori will be leaving the company after two years. The veteran TV executive is expected to stick around until the end of the year. (He started at Discovery in January 2010.) He will not be replaced. Liguori, who previously ran Fox and FX, is the latest top Discovery Communications executive to exit as the company’s president and CEO David Zaslav now faces three upcoming major departures in his upper ranks; Discovery Channel president Clark Bunting and Discovery Communications CFO Bradley Singer both announced earlier this year that they will leave at the beginning of 2012. Bunting’s announcement came a couple of months after he was made to report to TLC General Manager Eileen O’Neill in an executive restructuring. Despite beating earnings expectations in the just-reported third quarter, Discovery Communications continues to struggle with its joint ventures, especially OWN: Oprah Winfrey Network, which sucked up another $12 million investment in 3Q. Liguori was hands-on involved in the January launch of OWN and in May he was named interim CEO of the fledgling cable network following the departure of Christina Norman. Two months later, Winfrey took over the CEO position, and Liguori’s involvement decreased to a point of him having no day-to-day role at the channel. In addition to representing Discovery Communications in its three joint ventures — OWN; The Hub, which also has had a hard time; and 3Net — Liguori’s duties as COO included oversight of Marketing, Discovery Studios, Corporate Communications and Corporate Affairs, Business Affairs, and Media Technology, Production and Operations.
UPDATE 6:15AM: Discovery just put out a release announcing Liguori’s departure:
Silver Spring, Md. – Discovery Communications today announced that Chief Operating Officer Peter Liguori has decided to depart the company at the end of the year. Liguori was responsible for launching numerous creative and brand marketing initiatives around the world, including overseeing the successful launches of Discovery’s joint ventures in The Hub, OWN, and 3net.
President and CEO David Zaslav said, “Pete’s leadership, enthusiasm and creative vision have brought a fresh and important perspective to Discovery.
Oprah Winfrey and Discovery Communications CEO David Zaslav have run out of excuses: With their unofficial relaunch today of OWN, they’ll have no one to blame but themselves if their struggling joint venture fails to show a big improvement in the ratings following a dismal 3Q. In its targeted demo, women 25-54, OWN delivered a rating of .16 — down 16% vs. the same period last year when the channel was still Discovery Health. OWN may have set a deceptively low bar for itself; word is that it cut back on marketing in preparation for the relaunch. Still, the channel is betting everything on Oprah’s star power — and, to a lesser extent, Rosie O’Donnell’s — and that will be put to the test beginning today with the launch of The Rosie Show (7-8 PM) and Oprah’s Lifeclass (8-9 PM). Winfrey’s program, built on clips from her syndicated talk show, begins with one of her classics: for an episode about “ego,” she will include scenes from the show where she illustrated how much weight she lost from a liquid protein diet by wheeling in a wagon filled with 70 pounds of fat. Discovery will air both shows today on TLC, Investigation Discovery, Discovery Fit & Health and Planet Green as well as OWN. The joint venture also is spending more than $10M for marketing, not including free ad time on Discovery-owned networks. The cash is going for ads on hit shows such as The X Factor and Dancing With The Stars, as well as radio and billboards, and websites including Yahoo, Google, People.com, Technorati, and TVGuide.com.