Discovery Posts Higher Q2 Earnings

SILVER SPRING: Second-quarter revenues at Discovery Communications were up 3 percent year-on-year to $1.7 billion, with growth at the U.S. networks helping to offset declines within its international networks.

Second quarter net income increased 43 percent to $408 million, primarily due to improved operating results, currency-related transactional gains, a decrease in taxes and lower equity-based compensation, partially offset by a decline in income from equity investees, higher restructuring charges and higher interest expense.

U.S. networks’ revenues in Q2 increased 7 percent to $873 million, with 8 percent distribution growth and 5 percent advertising growth. Distribution revenue growth was primarily driven by higher rates, partially offset by slight declines in subscribers. The growth in ad revenues was thanks in part to higher pricing and inventory management, partially offset by lower delivery. Adjusted OIBDA increased 10 percent to $544 million, as higher revenues were partially offset by higher operating expenses.

For the international networks, revenues were down 1 percent to $790 million and adjusted OIBDA decreased 6 percent to $249 million. Changes in foreign currency exchange rates reduced Q2 international revenues and adjusted OIBDA growth by 4 percent and 10 percent, respectively. Without the currency effects and the impact of SBS Radio, total revenues were up 8 percent. Distribution revenues, excluding the impact of currency effects, grew 10 percent, mostly due to higher affiliate rates in Northern Europe and CEEMEA as well as increased affiliate rates and subscribers in Latin America. Advertising revenues, excluding the impact of SBS Radio and currency effects, were up 5 percent, primarily due to higher volume and ratings in Southern Europe as well as higher pricing, ratings and volume in CEEMEA, partially offset by a decline in Northern Europe due to the impact of Brexit and lower ratings.

David Zaslav, the president and CEO of Discovery Communications, said: “Discovery posted a solid quarter of growth and financial results by investing in premium and diversified content that fuels the passion of superfans on pay-TV, free-to-air, direct-to-consumer and digital platforms. Our differentiated portfolio of nonfiction, sports and children’s content in more than 220 markets positions Discovery for continued growth and shareholder value creation in the months and years to come.”