The loss of Silver Spring-based Discovery Communications Inc.’s global headquarters to New York City “diminishes” the Washington region’s business brand and hurts its efforts to recruit companies that diversify its economy, according to a local economist.
“It sends a message to potential investors in the Washington metropolitan area that something is amiss,” said Stephen Fuller, a regional economist and head of the Stephen S. Fuller Institute at the George Mason University. “It raises a question mark. Is it high cost? Is it congestion? You begin to think of the negatives. It diminishes our brand.”
The cable company (NASDAQ: DISCA) announced Tuesday that it would move its global headquarters to New York City and reduce its 545,420-square-foot footprint in downtown Silver Spring over a period of time. The decision comes a few months after Discovery announced its pending $14.6 billion acquisition of Knoxville, Tennessee-based Scripps Network Interactive (NASDAQ: SNI).
Fuller said Discovery’s decision flies in the face of work by local economic developers to rebrand the Washington area from just a “government town” to an ideal place for companies across industries to grow operations, thanks to the region’s highly talented work force, quality of life, multiple transit options and range of cultural amenities. Though, it should be noted, Discovery’s plans to leave Maryland for the Big Apple also runs counter to Nestle’s announcement, for instance, to relocate its headquarters to Arlington and add more than 700 jobs.
“This is a power center — we don’t manufacture. We administer. We manage,” Fuller said. “Ever since 2010, the governors and the mayors have been focusing on diversification of the economy and what’s good about it. If all of that is true, why would they leave? They didn’t do this without a lot of thought. It’s expensive to relocate a headquarters. They are not going to a cheaper environment, so maybe it is something else about us.”
The implications could reach further than Discovery’s headquarters into potential headquarters projects for other major industry brands — such as Amazon’s plans to build a second headquarters, HQ2, in North America. The Washington region has submitted several plans for those coveted headquarters. But a departure on the scale of Discovery “sends a message that doesn’t necessarily strengthen our position relative to competing for Amazon,” Fuller said.
It wasn’t for lack of trying to keep Discovery, according to Montgomery County economic development officials.
The cable giant had indicated it was evaluating options to relocate after its announcement that it would purchase Scripps, said David Petr, president and CEO for the Montgomery County Economic Development Corp., in an interview. From there, it was “all hands on deck” across the county to incentivize the company to stay, he said.
That pitch, which the county worked on with the state, included not only financial incentives but also more intangible reasons to stay, including the quality of Montgomery County’s workforce, cultural offerings and proximity to three international airports that can easily get company officials to New York City and other cities around the world, he said.
“They informed us that they would be evaluating options — they had some duplication of roles,” said Petr, describing the end result as “disappointing.” “It really came down to a financial and business decision.”
Conversations had occurred with state leaders as well. “Throughout the process, Governor [Larry] Hogan had multiple conversations with Discovery CEO David Zaslav and Commerce worked closely with the Discovery team,” said Allison Skipper Mayer, a spokeswoman with the Maryland Department of Commerce. “While disappointing, the news that the state was able to secure a commitment to create a network hub and retain hundreds of employees in Maryland is welcome.”
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Copyright Washington Business Journal, reprinted with permission