Discovery Q3 profit more than doubles to $262 mn

MUMBAI: US and global infotainment, lifestyle, kids and sports broadcaster Discovery’s third-quarter net income increased to $262 million primarily due to higher operating results, lower restructuring, and other charges and to a lesser extent, lower interest expense. This was partially offset by the impact of a non-cash goodwill impairment charge in the Asia-Pacific region. For the same period last year net income was $117 million.

Revenues increased by 3% to $2.6 billion, or increased 5% excluding the impact of foreign currency fluctuations (ex-FX), compared with the prior year’s quarter.

International revenues increased by 4% to $950 million. Ex-FX, revenues increased by 9%. Ex-FX, growth in advertising was primarily driven by the consolidation of the UKTV Lifestyle Business, expansion of digital content offerings and to a lesser extent, higher pricing in certain markets in Europe.

Ex-FX, growth in distribution was driven by certain content licensing arrangements, contractual price increases and new channel launches in our Latin America region, increases in digital licensing revenues and growth in Europe related to increases in pricing and monetization of digital content offerings.

Operating expenses increased 8% to $713 million. Ex-FX, operating expenses increased by 10%. Ex-FX, costs of revenues increased primarily due to higher expenses associated with expanded digital content offerings and to a lesser extent, consolidation of the UKTV Lifestyle Business.

Adjusted OIBDA decreased 7% to $237 million. Ex-FX, Adjusted OIBDA increased 5%.

In US, revenues increased 3% to $1,725 million. Adjusted OIBDA increased 12% to $1,005 million. Operating expenses decreased 7% to $720 million. Costs of revenues decreased primarily due to content synergies related to the integration of Scripps Networks.

Growth in advertising was primarily driven by increases in pricing and to a lesser extent, the continued monetisation of digital content offerings and inventory, and partially offset by lower overall ratings and the impact of audience declines on the linear networks.

Growth in distribution was primarily driven by increases in contractual affiliate rates and additional carriage on streaming platforms, partially offset by the impact from a decline in overall subscribers.

Total portfolio subscribers for September 2019 were 4% lower than September 2018, while subscribers to the fully distributed networks were 1% lower.

Selling, General and Administrative Expenses (SG&A) was flat as reductions in technology, professional services fees and personnel costs due to restructuring and the integration of Scripps Networks were offset by higher marketing expenses.

Discovery president, CEO David Zaslav said, “Discovery once again delivered strong financial results across our portfolio, generating healthy revenue growth in the US and internationally, and significant operational efficiencies from our ongoing transformation efforts. We also made progress in the build-out of our digital ecosystems that leverage our owned programming and brand strength. With a solid financial profile and strong balance sheet, we are able to invest meaningfully in our business and create additional value for shareholders.”

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