Discovery Communications has reported a year-on-year revenue increase of 22% for the first quarter of 2014 – lead by 51% growth in its international networks division and 3% growth among its U.S. networks – alongside a 0.43% drop in net income.
First quarter revenues of US$1.41 billion were up by $255 million from the same period a year ago, while the media giant reported a net income of $230 million, or 66 cents per share, which fell short of analyst expectations for growth, and slipped slightly from last year’s net income of $231 million, or 63 cents a share, in the first quarter.
Reasons for the drop in net income are likely due to expenses incurred from the SBS acquisition as well as high marketing costs from the quarter, which saw Discovery rebranding the Military Channel into the American Heroes Channel.
Discovery says its net income is “in line” with last year’s figures, and points to a strong operating performance this year, gains in 2013 from the consolidation of Discovery Japan, and lower stock based compensation expenses offset by increased amortization from the SBS Nordic acquisition.
The 51% rise in revenue for the international networks division, from $444 million in Q1 2013 to $671 million this quarter, is due to a 108% rise in advertising revenues and a 23% increase in distribution revenues, the company said.
Elsewhere, revenue growth in the U.S. networks division – which saw a 3% increase from $686 million in Q1 2013 to $708 million this quarter – were driven by increased advertising revenues, which grew 5% due to higher pricing; and distribution revenues, which increased 4% as higher rates were partially offset by additional revenues from licensing agreements in Q1 2013.
In its full-year outlook, the company expects revenues between $6.45 billion and $6.63 billion, and net income between $1.2 billion and $1.3 billion.
“Discovery’s strong organic growth continued during the first quarter as our unparalleled global reach and sustained investment in diverse and engaging content allowed us to capitalize on the growing demand for pay-TV programming worldwide,” said David Zaslav, president and CEO of Discovery Communications, in a statement.
“The larger audiences and consistent market share gains we are delivering are driving sustained financial results, even as we further invest in our platforms and integrate strategic acquisitions that will enhance our long-term growth prospects,” he added.
“As we look to the remainder of 2014, leveraging the significant opportunities across our existing asset portfolio remains our priority so we can maintain our financial momentum while further building long-term shareholder value.”