Discovery Q1 Profit Rises on Distribution Revenue Growth

SILVER SPRING: Discovery Communications reported an increase in first-quarter profit of 9 percent, with growth in distribution revenue at its U.S. and international networks.

Discovery posted Q1 revenues of $1.5 billion, led by 10 percent growth at its international networks and 6 percent growth at its U.S. networks. Net income of $250 million increased 9 percent compared to Q1 2014.

U.S. networks’ revenues in the first quarter of the year increased 6 percent to $749 million, led by 13 percent distribution growth and 1 percent advertising growth. The 13 percent distribution revenue growth was primarily driven by higher rates and the consolidation of Discovery Family. Ad revenues increased 1 percent, as higher pricing was partially offset by lower delivery. Excluding the consolidation of Discovery Family, distribution revenues grew 8 percent and total revenues grew 3 percent compared to the year-ago period.

International networks’ revenues for the first quarter increased 10 percent to $735 million, with growth in distribution and other revenues partially offset by a slight decline in ad revenues. Changes in foreign currency exchange rates reduced Q1 international revenue growth by 17 percent and reduced adjusted OIBDA growth by 13 percent. Excluding currency effects and Eurosport, total revenues were up 9 percent. Ad revenues, excluding Eurosport, were up 12 percent in local currency terms, thanks to increased pricing and volume in Northern Europe and volume in Southern Europe. Distribution revenues, excluding Eurosport, increased 6 percent in local currency terms, mainly from increased subs and higher rates in Latin America.

For the full year ending December 31, 2015, Discovery expects total revenue (excluding currency) to grow in the high single- to low double-digit range, adjusted OIBDA (excluding currency) to grow in the low to mid single-digit range and adjusted EPS (excluding currency) to grow in the high single- to low double-digit range.

"2015 is off to a great start, as our strategy of investing in and owning world-class content to leverage across our unparalleled global distribution platform continues to drive operating momentum and strong financial results,” said David Zaslav, the president and CEO of Discovery Communications. “Despite facing a challenging U.S. marketplace and foreign currency headwinds, Discovery is successfully building market share, expanding our distribution and developing programming that resonates with audiences around the world. I’m extremely pleased with our strong performance this quarter and the numerous opportunities Discovery has in the months and years ahead."