Discovery reports earnings increases for Q3

Growth at U.S. and international networks propels revenue increases for company; plans for further international roll-out for TLC announced.
November 3, 2010

Discovery Communications has announced its third quarter earnings for 2010, reporting revenues of US$926 million, an increase of $89 million, or 11%, over the third quarter a year ago.

The Silver Springs-based company says the revenue growth for the third quarter ending September 30, 2010 was led by 11% growth at its U.S. networks (with revenues at $585 million for the quarter) and 10% growth at its international networks. Adjusted Operating Income Before Depreciation and Amortization (‘OIBDA’) grew 14% to $418 million, driven by a 12% increase at its U.S. networks and an 23% increase at its international networks.

Third quarter net income from continuing operations rose to $161 million ($0.37 per diluted share), an increase of $68 million compared to $93 million ($0.22 per diluted share) for Q3 2009.

Ad revenues for the U.S. networks were up 16%, from $261 million in 2009 to $304 million in Q3 2010, an increase the company says was the result of higher ratings, sellouts and increased pricing. Distribution for the U.S. networks reported a 9% increase from third quarter 2009.

On the international networks front, revenues for the third quarter increased 10% to $304 million from $276 million in Q3 2009. The company attributed the rise to a 23% jump in ad revenue growth and distribution growth of 4%.

‘Discovery continues to enjoy strong operational momentum across our businesses,’ said Discovery Communications president and CEO David Zaslav. ‘Our ability to execute, combined with a robust advertising environment, enabled us to deliver third quarter results that exceeded our expectations… We are committed to building the next generation of growth drivers and are producing real returns from additional investments in Animal Planet, ID and our international networks, while launching our joint ventures, The Hub and OWN.’

In a conference call, responding to a question about how success for the soon-to-launch Oprah Winfrey Network (OWN) will be measured, Zaslav said Discovery Communications will be ‘listening to viewers… We have which is one of the top sites in America for women. That’s the way for us to hear what they like and what they don’t like.’ Chief operating officer Peter Liguori said the company ‘clearly’ expects OWN to rack up higher ratings than Discovery Health (the net OWN will replace come 1/1/11) and that there have been ‘deep commitments’ from OWN’s blue-chip advertisers that ‘go beyond just spots and dots to full integrations.’ In terms of OWN programming, Zaslav said the ‘great personalities’ coming to the net with shows are being ‘feathered in,’ with Rosie O’Donnell coming in the summer or fall of 2011 and Winfrey herself to have a ‘significant presence’ via her upcoming nighttime series, Oprah’s Next Chapter and other programming after her broadcast run ends. Winfrey will also have a presence within some of the programming airing in OWN’s launch month.

Further plans for TLC’s international roll-out were also discussed, with Liguori saying Discovery is looking ahead to Russia and Romania in January, Sweden in February and Denmark in the second quarter of 2011.

About The Author
Daniele Alcinii is a news reporter at realscreen, the leading international publisher of non-fiction film and television industry news and content. He joins the rs team with journalism experience following a stint out west with Sun Media in Edmonton's Capital Region, and communications work in Melbourne, Australia and Toronto. You can follow him on Twitter at @danielealcinii.