Discovery Communications is planning to move its headquarters out of downtown Silver Spring.
In a letter to employees obtained by Bethesda Beat, Discovery CEO David Zaslav wrote the company was making changes to its global real estate strategy.
“Chief among those changes, we have made the decision to move our global headquarters to New York City,” Zaslav wrote. “We have therefore made the difficult decision to reduce our footprint in Maryland over time, with the ultimate closure and sale of our One Discovery Place headquarters building in Silver Spring, expected in 2019.”
Zaslav’s letter says Discovery also plans to create a “National Operations Headquarters” in Knoxville, Tennessee, and a “Technology Hub” at its facility in Sterling, Virginia.
“We also plan to maintain a small Network Hub in Maryland to house select networks and roles that support them,” the letter says.
Discovery recently acquired Scripps Networks Interactive, which is based in Knoxville and operates TV networks such as HGTV and the Travel Channel. The deal was valued at $14.6 billion in cash and stocks.
The transaction was expected to close early this year, Discovery said at the time of the deal.
The company employs about 1,300 full-time employees in Maryland. A Discovery spokeswoman told Bethesda Beat in July that many company executives were already based in New York City at that time.
Zaslav wrote that although “Maryland is where the magic of Discovery first began,” the company made the decision to move because executives believe it is the right choice “for the long-term success of our company.”
County Executive Ike Leggett told Bethesda Beat Tuesday morning that the county and state worked to try to keep the TV and media company in Silver Spring.
“The county and state made every reasonable effort to ensure their long-term viability in the county,” Leggett said. “It’s a tough, tough business decision that responds more to the economic model where television is going. We’ve been great partners for a long time. They’ve been a model corporate citizen.”
Leggett said the county and state made a “tremendous offer” to try to keep Discovery in the county, but he added, “given the overwhelming challenges in the industry, it was too difficult for them not to go in a different direction.”
Discovery held a meeting Tuesday morning to notify employees.
“I’ve been told the county and state have been working hard to keep them, but the cost of doing business is much higher here than in Tennessee,” Montgomery County Council President Hans Riemer said. “Unfortunately, the Silver Spring headquarters is filled with administrative and business positions.”
“It’s a real loss for Silver Spring and Montgomery County,” Riemer said. “It’s a lot of jobs. It’s a lot of families here that are being upended.”
Zaslav wrote in the letter to employees that the Scripps acquisition enabled Discovery to “undertake an in-depth analysis of where we work and how we work.. .”
As part of that analysis, Zaslav wrote the company determined the “most efficient locations” for its business “to thrive now, and into the future.”
Discovery Communications, which owns the flagship property Discovery Channel, as well as other channels such as Animal Planet, TLC and Investigation Discovery, has been struggling as more and more cable customers end their cable contracts and switch to streaming and online media services such as Netflix.
Discovery has been headquartered at a large building in downtown Silver Spring next to the Metro station since 2003.
Zaslav wrote the company plans to move into a new headquarters building in New York City in the second half of 2019.
Discovery spokesman David Leavy said in an interview Tuesday that the company does not yet know where the employees based in Silver Spring will go if they stay with the company during the transition.
He said the company will have more information for Silver Spring employees after the company finalizes the Scripps acquisition, which is expected to happen at the end of the first quarter this year.
When asked if he knows where the employees will go, Leavy responded, “We’re months and months away from knowing the answer to that question.” However, he said the company wants to give employees time to evaluate whether they want to remain in the area, where many employees have created roots, before employees offer to move with the company to New York, Tennessee, or the company’s other locations in Los Angeles, London, Paris and elsewhere.
Leavy said the company will evaluate positions at Scripps and Discovery to decide which employees will be part of the company’s transition.
“In any big acquisition, you want to take the best from ‘A’, the best from ‘B’ to build ‘C’,” Leavy said. “We still need to do that.”
Scripps employees about 1,000 people at its Knoxville headquarters, according to Discovery.
Leavy said Discovery chose New York City as its new headquarters location because the city is home to the advertisers, investors and creative leaders that are important to the company’s current and future business. He said Knoxville was chosen for the operations center because of Scripps’ current facilities there and its lower cost-of-living.
He said the Maryland office that Discovery plans to maintain in the area will house “several hundred jobs,” although the company does not yet know what roles those employees will have or where the office will be located.
He noted that the company “loves Silver Spring,” but that the media and television industry “is being roiled” and the company ultimately had to make the decision to move its headquarters for its future viability.
“We’re in this massive disruption,” Leavy said. “We’re trying to do what we can to grow our portfolio.”
Discovery, by building is headquarters downtown, is often credited with being a major part of the revitalization of downtown Silver Spring over the past two decades. Leavy said the company will put its building on the market for sale.
The building was the scene of one of Montgomery County’s most dramatic news events in 2010, when a gunman stormed the headquarters and took hostages. Police rescued three unharmed hostages from the building and shot and killed the gunman.