discovery is break it in half. on the left side is our traditional cable business. spend more money on content. about five years ago we were spending $550 million on content. now we spend over $1 billion to deliver great channels. we have 13 channels here in the u.s. and to grow that market share here and around the world. at the core of that is quality content with great storytelling and great characters. the fact that there's now -- our content is on all platforms allows us to move that quality content in different forms. not too much long term. mostly short form on to all of those platforms. so for us, our core mission is still the same. great quality content, but now we have new windows. netflix was a new window us for. mostly for 18 months and older content. amazon, youtube. with clips. being on the web. and even this past -- about two weeks ago we bought a company that distributes short form

content, but had 100 million streams in a month. and so when you see that kind of behavioral change where people are consuming content on platforms that never existed before, it comes back we think to that basic theme of quality content, great characters, great stories and if you're in the content business then you could participate in the value of all of that. >> well, we were joking behind the stage you know what everybody is watching. even now can't always say because of the privacy constraints but you know. at any given moment. >> i like the way david answered it. i think in some ways it's the same and in some ways it's changing. and we often make fun of the cable package and it seems like an old thing and it's not cool anymore and what have you. and it's important to remember that close to 90% of the homes, the tv homes in america,

subscribe to multichannel tv. to that package. either from cable or satellite or telephone. there aren't that many products that people subscribe to or buy. it's a powerful thing. what we see happening is the use of technology to make that an even more powerful experience. so we have lots of devices that act like tvs now. we used to have a big tv on the wall or credenza or whatever. now we have more than you can count in the house. they're portable. they're phones, they're tablets, they're whatever. consumers want their tv on all those devices. they want them on all the devices outside the home. they want to access programming when they want. not when the schedule -- so all of that is changing. but this idea of selling a package of tv programming for subscription i think remains very powerful. just using the technology to

make it better. >> i want to ask about the mobile in a moment, but first, you're the biggest investor in digital content, right? and why is that and where? >> so first, i'm in agreement with them with the notion that content is vitally important. when you look at what's happening in silicon valley today, it's not hard to see that there's probably going to be more xhot mization of the platform and focusing on content, we see similar statistics online than you see in the traditional landscape. 70% of people use less than 15 internet brands a month. they use five to eight apps so the curation piece of content is significant over time. when we look forward over the next 50 or 100 years, the brands

are probably going to get built in the next five years. i think people rely on curated bundles, and there seems to be incredible opportunity with the merging of the platforms together to put together the next curated set of brands and we want to have the brands. >> in the business of making content and i love that content is rising again. there was the popularity of the pipe for a while. people do want to watch or i guess it's unclear what they want when -- what they want to do i don't have it with me. i feel nervous. i reached document for it. on your smartphone, you want to watch television or they want to play games or whatever it is. how is cable really delivering that? it's becoming clear i think at least as a consumer that that could be the primary screen for a lot of people, right? >> i think it's one of the primary screens. people use these different devices for different things. you know, they certainly use a

phone less often to watch a full length movie let's say than they might their big-screen tv. but they do other things on the phone. particularly watching short things like david was talking about. one of the things we're doing is we're starting to build out wi-fi in places where people congregate. a number of the cable companies announced we'll create a common standard for roaming across wi-fi and different cable companies. so if idea is if you're a broadband customer, you can access wi-fi on your tablet and most heavy data usage is that and not cellar. we're excited about that iniative. we're building quite heavily in los angeles right now. >> david, do you think tv everywhere i know has been -- it was evangelized and now a lot of criticism from analysts as of

late. is it going to happen? that seems to me -- i hear it tv everywhere. i think, okay, that's got to be an obvious winner. >> i hope it happens. the great thing about tv everywhere, it gives an opportunity with a real business model for us to participate with glenn and the other directpeopl. when we look at the library, we own all of the content for the last 20 years or so, the netflix was attractive because it was 18 months or older. tv everywhere, if you're a time warner cable subscriber and you're watching tlc on sunday night, you can come back later and watch any of the shows that you want, but it has the commercials. so on some of the other models, where there's no advertising, and in some cases there's no measurement it's a particular challenge. here, the model really works. the challenge is that we as an industry have to come together. and if we do, i think that we'll

provide a real value to consume evers but we'll do something that's going to happen anyway. if consumers behaviorally want to be able to see our channels and our shows and our characters when they want to see it, then somebody has to figure out a way to facilitate that. that's nobody who has a better relationship with the subscri r subscribers than the cable operators. for us, i think it's important to put aside differences which we have this question of what is the right value, but we got stuck when vod came out a few years ago. the dvr hadn't been deployed and there was a great that vod was attractive to both of us. in the end we couldn't figure out how to structure the best content on the vod, so as a result, the dvr became the platform of choice because behaviorally people wanted to see the stuff they wanted to see. vod became a valuable platform but much more secondary. so i think it's imperative for

us as an industry to get behind it, but it will require us to agree on value. >> in terms of delivery, how does this all work for you? i know you have a lot of video and -- a lot of broadband intensive applications on your huffington post, for example, i see it all the time. how is this choosing your relationships and delivering wi-fi, how does it play for you? >> we want to be the arms dealer and i think, you know, our job i think is to build the best content, partner with the best advertisers and then look to the distribution partners for distribution. i think today aol hd is on several partners and we'll launch the huffington post, and then the live news show for the web. and we hope that gets distributed across a number of patter patter partners. i think we'll look at those who have direct consumer access and

two, we keep a close eye on what are the things that are going to grow and have heavy adoption. we were talking backstage a little bit, i was in the apple store with my 10-year-old son. and he was in front of one of the screens at the apple store. and he was like, dad, you know, why don't we have this in our house? i mean, like what do you have this? the computer or the what? no, the screen. they had up all the significant content brands with direct access on apple tv. i think, you know, from the eyes of a 10-year-old who doesn't know the distribution pipes it's the attractiveness how easy things are used, what content brands are in general. i think when we look at the world, we say let's make the content everywhere. and partner with as many people as possible. and then you realize have to take a step back. there is a disruption happening. but i think people like glenn and his people have tremendously strong relationships. they're in people's homes, so

we're trying to build the content for where the audience is. >> is cable adjusting? we talked about it as a pipe, now it's tv everywhere, all the other concepts that it's building out. is it adjusting to the needs of the digital company the way that it needs to? >> yeah, i think first off, i think in the last 12 months there's been a fairly aggressive push in the tv and cable space for people to start partnering on more and more of the brands. i think you're starting to see people move quickly which two years ago we didn't see. i think the second piece which is really critical is the consumer usage of the design of the box, the design of the consumer interfaces are really important because as a consumer, you're getting talk from the mobile phone to the plasma screen. i think whoever serves the consumer the best is going to have a huge advantage in the future. i think as more investment goes

into content and more investment goes across the platform, hopefully it will get easier. >> glenn, i asked this year, i know you have the technological ability to get rid of the cable box. is it ever going to go the way of the dodo bird? >> yes. although the people from cisco and motorola probably don't want to hear that. so forgive me. the -- what is happening is pretty simple. for better or worse, the world is coalescing around ip standards, internet protocol standards. there's a whole bunch of those and all devices are being made to the standards. there's millions and millions of people who can write software to that standard. that's the future. our old video platform worked very well for a long time, but it's somewhat archaic. very few people can write

software to it. it's not easy. and so that drives the set top boxes and our existing interface. i think listening to tim and talking about the apple store, a lot of what we can do here is create better interface. so we shouldn't mix up technology and the content and business models. those are three different things. the technology all things ip can create a much better user interface and our goal is to get the video service that we sell on every single device in your home, which increasingly are ip devices that you buy, eventually most people will have a so-called smart tv which is capable of displaying the services without a set top and some people are buying those today. but maybe you'll do it through a game machine, sony playstation.

as long as there's blu-ray players. roku boxes, never-ending list of things. but they're based around ip standards and we want to be on every one of them with the best we have. >> and you're talking about business model and we were talking behind the stage, i was talking about the hopper because i saw an ad for it. and david goes oh, you mean charlie? the hopper, it's a kangaroo logo and it automatically skips over commercials. i remember the whole conversation with the dvr the fight in industry. obviously it got adjudicated. everybody was happy. people would sit at home and end up watching the commercials even though they had the ability to fast forward through them. is that technology something that can be stopped or does the

industry have to find a way to make money when it comes to ads? >> well, the hopper, as charlie names it, it's -- i think it's charlie's way of kind of coming in and raising a flag and it's going to create a lot of tension. it's going to get all of our attention. i think that's probably a good thing. you know, the fact that we spend over $1 billion a year on content, we do that because we can get advertising. we have advertising support. and in the end, a technology like that could create real carnage for the industry. it hasn't -- he hasn't done it yet with the cable channels. i think it will become something that will be part of the negotiation. charlie is a distributor. he reached 14 million homes. in order to reach them, he needs our content. all of us in the content industry. and so if there's not going to be advertising, then there needs to be a lot higher subscriber fees. one thing is pretty clear. people do love consumer content on television.

but with all of the discussion of all the other devices, people are spending more time watching tv than ever. so there's tremendous pull there. it's incumbent upon us in the content business to preserve the models so that we can reach people and we can invest and, you know, we don't always win. you know, sometimes you can invest and your market share goes down. but if you're doing a good creativity, creating good stories and great characters, then you can really win in this business. so i think, you know, it's getting a lot of headlines, but in the end i don't think it's sustainable. in order to get the content we have to work together. i think as an industry we have shown a great ability to work together. you know, glenn and i over the years, you know, we now have 13 channels on glen's systems. we can invest in the channels. we had discovery times and we

said we're going to bet on ourselves and four years later, it's the top ten network in america and it's the number four network during the day. we are only able to do that because we work together. i think in the end we need subscriber fees and we need ad revenue. it's -- we need to be disciplined as an industry. if you even look at apple, apple came out -- and you talk about, tim, the apple store. it does look sexy and it does feel, you know, dynamic. when you go in there you feel like, wow. but it's still just a device. in order to be compelling, you need content. you need brands that people care about. you need stories that people want to hear. you need characters that people want to -- that people can identify with. and we have to remember that as an industry. the deals that we did with apple for a la carte, it didn't make sense us for. didn't make sense for us at discovery. i think if you look at the economics, it doesn't make sense for us as an industry. and so when we take our content

that we spend a lot of money on, whether it's charlie, whether it's apple, whether it's the cell phones or the web, there's a lot of power in that content. because it's stories that people want to hear and characters that people want to spend time with. we as an industry have to remember that. you know, we worked out a great industry model with the cable distributors and if we work together i think we can continue to grow. but we need to make sure that we put our content on platforms that are sustainably economic. >> if i can jump in. if you think about what we sell on tv, it's a pretty simple idea. and that is that you subscribe to a package of linear networks, subscribing means you know what it costs ahead of time. you paid for it at the beginning of the month. no matter what's there, you have it. and when you sit down to watch

tv, you have maximized the choice. it seems a little quaint and old fashioned but there's fundamentally what we have been selling for the last 40 years now. very powerful. i think that the new technology helps us to make it better, but it doesn't change that fundamental idea of choice and a subscripti subscription. so we can have a better user interface. we talked about that a couple of minutes ago. we can allow people to watch programming when they want as opposed to when it was scheduled. and whether that's in the cloud, which is where i think it should be or dvr which was the fall back or vod which is a version of the cloud, that's fundamentally an extension of this idea of letting people when they sit down to have the maximum choice and i think it's very powerful. the dual screen with advertising and subscription has been great for the content creators.

we have more tv than when i was growing up. so it's good for both. i don't think we want to destroy one of the revenue streams. >> how would it affect your business though if it does become something popular? the ability to skip the ads? the way the levers work? >> i think if you reduce revenue into the entertainment business, either subscription prices are going to go up, or there's less content made. it's not magic. david needs money to invest in content. so destroying the revenue is not going to have the result people think it may have. >> you talk about the new channels rolling out, how does ad revenue play init or the you? >> online, they won't grow this

year. so the internet itself has a miniversion of the versions facing the cable business. i'll give you an example. something we have done but a lot of other people out there work on it, we have created the project devil. we have had 7 to 14 ads on them. it was the equivalent of sitting through a long block of commercials and we decided to strip the ads off the pages and without on one ad on a page. the same amount of space, a third of the page, but force advertisers to do heavy design, heavy video. those things that advertising rates are increased by 70 to 50 times the interaction rate. consumers like them. when i listened to the ad skipping for cable this is something we're concerned about, this seems like something that's important, one of the controversial piece that i would throw out is there needs to be a project devil for video on

television and cable where i think things are thought about much differently. in my house we have a dvr, it gets used on some programming, not others. but the reality is you have a super engaged consumer who you know a lot about. and the question is what would you put either around the program or in the programming that doesn't look like the traditional hopper, you know, type area. and i'm not as familiar on the cable side with what people are working on the advertising side, but i know there's a lot of thinking going on on the internet side on this, which is how do you make more engaging advertising and then the second thing just shifting back to your mobile question is so i think that's stake number one, how do you create engaging ads? the second one, i think you have to think from a mobile first design principle which is probably every one of your cable customers and every one of the aol customer has a smartphone with them, 18 inches away from

them, regardless of what they're doing even sleeping at night. i think if you don't design your experiences from mobile first, if you take advertising into account for that, i think over the next three or four years the companies that think about advertising content from a mobile design first and kind of goes whackwards towards the bigger screens, you know, are going to have an advantage. it seems pretty clear there's a massive opportunity for people to come up with different types of formats and mix noble as another format. >> in terms of mobile, one of the problems that people have -- obviously people using cell phone networks as opposed to cable, there it's a 3-g problem. they want the video, and then it loads and it staggers, and then you have to wait. how much more investment do you think the industry has to do in bandwidth so i can watch any one of david's videos with no delay, to loading, waiting time?

>> i think that goes back to my wi-fi comments. so we're not in the cellular business, if i can distinguish that. and everybody i talk to in that business says there's never going to be enough band width to do -- in terms of consumption and content and through put what you can do with a big wire. that's just physics. so i think a big wire plus wi-fi will meet a lot of your needs. but if you're driving your car or whatever, that's somewhat limited. particularly with video which is a big user of band width. >> that's pretty amazing. if it's physics. i always assumed it was a matter of time before all the things become available. but maybe it really doesn't. which would change the business. this is how you're planning. >> hopefully you're not watching your tv while driving your car anyway.

>> i have noticed sometimes they do have the little movies. so maybe we should turn that off while we're driving. but david, in terms of your planning for the future, you talked a little bit at the beginning about sort of the chunks that you would do more shorter form stuff that you put on mobile. but do you anticipate that changing in terms of what you're offering as the bandwidth changes, if it gets bigger does that change it? or do you think you're providing what customers want? >> well, the truth is we don't know what the customer wants. we acquired rev 3 a couple of weeks ago. they had a couple hundred streams, and we're very professional content, highly produced. this is much more raw, authentic storytelling. but 100 million views across all of the discovery, we had about 60% of that. we had about 60 million. so here's a small company that

had 100 million. that that is saying is that there are people out there that don't want to necessarily just see professional content. there's other content that they want to see. so we acquired this company because we're about satisfying curiosity on all devices, on anybody that wants to consume. and it's important for us to stay flexible. and look in the marketplace and see what's working. you know, we have always been aggressive about not using our long form content on any platform except for a dual revenue stream platform like glen. so we didn't put it on the web. we felt like the business model wasn't there. but we did spend a lot of time digitizing our entire library and working with short form. we found that what may be logical which is that people want to watch a show on a phone, they'd much prefer watching clips from man verse wild or a little piece of a tease on what's coming up on cake boss. so i don't think we should

presume that every device has a similar type of consumption. and i think what's going on on youtube and on some of these small groundup silicon valley companies are important. for us, we expect to learn a lot. and it may be that years from now, we'll continue to have huge market share, hopefully with glen because i think it's not going to change that people love to sit and watch stories on their tv in the living room. but we may be satisfying curiosity in a much different way with different kind of people, with much shorter form and different stories than we do in our traditional business. so i think the answer is we don't know. and we have to really hear from the consumer as to how they want to consume content on a phone, on a web, on every device. >> so i think david's raising the challenge of business models, so the technology is ultimately all ip, all digits. video is made professionally by

everybody -- everybody wants access to everything. and i think if you think about the traditional linear network, that comes from the broadcasting business. so you have one tv station, out to multiple people and you had to schedule -- 8:00 tuesday night, and you put ads in between. so we arrived at the length of shows that we have, whatever it is now, 22 minutes for the so-called half-hour show. this technology lets you have shows of any length. it can be five minutes or three hours. it's creatively a very different model. i think the question is how do you pay for all that? and how do you sell it to people? that's what you're struggling with. >> and what's interesting is that some of -- if you look at what's going on at rev 3 they're generating all the streams and their cost of content is much

lower. now, most of that stuff -- you wouldn't expect to see on the traditional set. it doesn't tell the type of story that people want to hear when they turn on discovery or tlc. but there's an interest in consuming content and learning an satisfying the new platforms. for us, our key priority is growing our channels around the world. but we don't want to wake up one day and find out that these video streams become an important way that people are satisfying a different type of curiosity and we're not there. and so i think it's really apples and oranges. >> when you talk about -- you just said something sort of so sank row saint, it's the length of the show. are your shows going to be different in length? a seven-minute show, ten-minute show? >> yeah, we're experimenting with this right now. we have some appointment-based viewing stuff we're doing. michael eisner with his company.

we're testing a lot of this right now. we basically service 30,000 other publishers with our video network. we have 300,000 high quality clips that we send out to other publishers. i think the average length of time people are watching videos is fairly short, but growing. number two, i think when you think about what is going to get attraction, as you lay on the platforms, brands are really important. consumers recognize brands. they want to watch them. and then we started to really test out, like we launched a program a few weeks ago. we got 10,000 or 20,000 people watched it and then the next week 50,000 people. how do you test out appointment viewing for the web or mobile and then how do you do it across the huge spectrum of content? and one of the other things i would say over the longer period of time, probably not shorter period of time, when you listen to what