Discovery Posts Q4 Revenue Gains, Cleared by DOJ to Buy Scripps

Discovery Communications, which has now been cleared by the Department of Justice (DOJ) to acquire Scripps Networks Interactive, saw an 11-percent rise in its fourth-quarter revenues to $1.9 billion.

The 11-percent gain compared to the prior year was driven by 13-percent growth at the international networks, 10-percent growth at U.S. networks and slight growth at education and other. Adjusted OIBDA was up 10 percent to $636 million, with 9-percent growth at the international networks, 7-percent growth at U.S. networks and a profit within education and other.

Net income fell to a loss of $1.14 billion, as improved operating results were more than offset by a non-cash $1.32 billion after-tax goodwill impairment charge, $59 million of after-tax Scripps Networks transaction-related costs and currency-related transactional losses compared to gains in the prior year.

Full-year revenues of $6.9 billion increased 6 percent, with 8-percent growth at the international networks and 5-percent growth at U.S. networks, partially offset by a dip within education and other.

David Zaslav, the president and CEO of Discovery Communications, commented: “2017 was an historic year for Discovery. We took significant steps to position ourselves for success in a changing industry while driving growth from our traditional linear business and accelerating our investments in new growth areas like digital and mobile in an effort to reach superfans on every screen. Solid global advertising and distribution revenue growth helped us achieve our 2017 strategic and financial objectives. Additionally, we remain excited by the prospects for a combined Discovery and Scripps Networks.”

Also, the DOJ has closed its investigation into Discovery’s proposed acquisition of Scripps. The closing of the proposed transaction remains subject to completion of review in Ireland and other customary conditions. The transaction is expected to officially close by the end of the first quarter this year.

“We are pleased to have passed this significant regulatory milestone on our path to acquire Scripps Networks Interactive,” said  Zaslav. “The conclusion of the Department of Justice’s investigation is an integral step toward closing our transaction. We look forward to combining these two great companies to the benefit of our enthusiast audiences around the world.”

Additionally, private equity firm Francisco Partners has agreed to acquire majority ownership of Discovery Education from Discovery Communications. Under the terms of the agreement, Francisco Partners will acquire a controlling equity stake in Discovery Education for cash consideration of $120 million. Discovery will retain a minority equity interest and license the Discovery Education brand to the business.

“This transaction represents an incredibly exciting opportunity for Discovery Education to accelerate its growth with Francisco Partners, while also maintaining its longstanding partnership with the Discovery Communications family,” said Bill Goodwyn, the president and chief executive of Discovery Education. “We are well positioned to continue investing in our market-leading products and services, and this investment allows us to further expand our reach and impact both domestically and around the world.”

“From its earliest days, education has been rooted in Discovery’s DNA and we are extremely proud of the world-class business that Bill and his team have built and the impact Discovery Education’s products and services have made in transforming student achievement,” said Bruce Campbell, the chief development, distribution and legal officer at Discovery Communications. “This transaction allows Discovery to focus on driving value and growth across our core media business while maintaining our strong commitment to Discovery Education and its mission to promote and inspire learning. We are excited for its next chapter with Francisco Partners.”