Philo’s success is just what investor Discovery needs

In a quarterly earnings call on Wednesday, Discovery's CEO quietly acknowledged the company's dependency on upstart Philo.
The logo of Internet cable TV alternative Philo. (Image: Philo/Graphic, The Desk)Disco

Streaming cable TV alternative Philo has topped 700,000 subscribers, a Discovery Networks executive said on Wednesday.

The subscriber figure was released during an earnings conference call with Discovery investors, with chief executive David Zaslav praising the streaming service for being a good partner and helping Discovery find pockets of success in what are bleak times across the media landscape.

Philo, a private company based in San Francisco, had not released a subscriber count prior to Wednesday. A statement released by Philo prior to Discovery’s earnings call put the number of subscribers closer to 750,000.

Discovery’s programming is available on Philo as well as several other streaming services, including Google-owned YouTube TV. But Philo and Discovery have a deep relationship: The media company is one of several listed as investors in the streaming service. Other private investors include AMC Networks, A&E Networks and ViacomCBS, all of which make some form of their pay television programming available on the service.

Philo is a budget streaming service that offers more than 60 live channels and thousands of hours of on-demand programming available for $20 a month. The service has added a number of new channels over the last few months, including Sony’s Get TV and Urban One’s TV One, while promising not to raise subscription fees for customers.

Price and content are two things that have made Philo a standout in the streaming space — budget-conscious households have for years considered streaming services to be an alternative to costlier cable and satellite television packages. Those considerations have accelerated in some households as budgets become tighter, with Philo standing out as an affordable way to stay entertained during troubled times.

Content distributors like Discovery are attracted to Philo, too: As people drop cable and satellite television, the number of people who are able to tune into their channels drops as well. By offering channels through streaming services like Philo, programmers like Discovery recoup some of those lost eyeballs.

“We naturally won’t be immune from subscriber churn, particularly in cases where it’s driven by economic pressures,” Zaslav said on Wednesday. “[But] we remain well represented, maybe the best representation of anyone across the [streaming television] landscape in the U.S., where there continue to be pockets of strength, such as from Philo [which offers] a more-affordable, entertainment-only true skinny bundle.”

The success of Philo and other streaming services likely provided a hint of inspiration for Discovery: On Wednesday, Zaslav said the company would soon offer its own direct-to-consumer streaming service focused on non-fiction, reality-based content. He did not offer a launch date, price point or platform or geographic availability for the upcoming service.

Discovery likely sees its partnership with Philo and its forthcoming streaming service as necessities to stay afloat given the changing media landscape: Its quarterly profit fell more than 70 percent after companies withdrew ad spending from its channels due to the ongoing coronavirus pandemic, and it’s unclear how long it will take for the network to find its footing on the other side of the crisis.

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