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Discovery Communications Q3 revenue falls flat

Discovery Communications third quarter revenues fell flat in 2016 compared to the previous year, coming in at approximately US$1.5 billion. The U.S. cable network group’s Q3 2016 financial results stand in ...
November 1, 2016

Discovery Communications third quarter revenues fell flat in 2016 compared to the previous year, coming in at approximately US$1.5 billion.

The U.S. cable network group’s Q3 2016 financial results stand in contrast to its performance in the last quarter, where total revenue was up 3% to $1.7 billion compared with $1.65 billion one year ago.

According to the Discovery Channel, TLC and Investigation Discovery mothership, the third quarter net income available decreased by 22% to $219 million compared to $279 million in Q3 2015. The company cited a $50 million after-tax impairment charge related to the company’s 2015 investment in Lionsgate and higher equity-based compensation for the drop.

Discovery, led by president and CEO David Zaslav (pictured), also saw the company’s earnings per share decrease from last year by 16% to $0.36, while adjusted earnings shrank by 15% to $0.40 per share. (Third quarter results a year ago saw $0.43 earnings per share, and $0.47 on an adjusted basis.)

Zaslav acknowledged the challenging “headwinds” in a statement, but added, “Discovery is well positioned for long-term growth driven by our well-defined global brands, differentiated content and favorable distribution agreements.”

“We have continued to strengthen and maximize our traditional pay-TV offering with robust new programming while aggressively exploiting new opportunities to leverage our content across numerous digital platforms around the world,” he continued. “Amid an ever shifting global media ecosystem, Discovery is evolving to reach more consumers on more screens and platforms than ever before.”

Also down were revenues for the International Networks division in Q3, falling 16% year-over-year to $183 million on adjusted operating income before depreciation and amortization (OIBDA). Revenues declined 3% to $720 million. Changes in foreign currency exchange rates reduced third quarter revenues and Adjusted OIBDA growth by 5% and 7%, respectively.

Without fluctuations in foreign currency exchange rates, Discovery says its third quarter total revenues would have expanded by 2%.

The U.S. Networks division, meanwhile, saw third-quarter revenues swell by 2% to $793 million. The numbers were powered by distribution growth that surged to 7% thanks in part to higher distribution  rates, partially offset by a “slight decline” in its subscriber base. Despite higher pricing and inventory management, ad sales dropped 3% due in part to Discovery’s “expected ratings declines.”

Elsewhere, the network group secured a long-term partnership with Major League Baseball’s streaming technology provider BAMTech to launch the service in Europe, with Discovery’s sports channel group Eurosport as its first client.

BAMTech is a JV between Baseball Advanced Media, The Walt Disney Company and the National Hockey League, and handles streaming capabilities for HBO, MLB, NHL and the WWE in North America.

Disney most recently acquired a 33% stake in BAMTech for US$1 billion, with the option to acquire majority ownership in the coming years.

with files from Daniele Alcinii

 

About The Author
Managing editor with realscreen publication, an international print and online magazine that covers the non-fiction film and television industries. Darah is an award-winning journalist who has spent over two decades covering a wide range of issues from real estate and urban development to immigration, politics and human rights, primarily with The Vancouver Sun. Prior to joining realscreen, she was editor of Stream Daily, realscreen's sister publication covering the dynamic global digital video industry. She also served a stint as a war reporter in Afghanistan for television and print, and was a national business blogger with Yahoo Canada.

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