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Discovery posts revenue rise, profit dip for Q2; Amazon exec to oversee direct-to-consumer business

Discovery, Inc. has boosted its revenue by 63% (US$2.85 billion) in the second quarter compared with the prior year quarter, ending on June 30, 2018. Excluding the impact of foreign currency ...
August 7, 2018

Discovery, Inc. has boosted its revenue by 63% (US$2.85 billion) in the second quarter compared with the prior year quarter, ending on June 30, 2018.

Excluding the impact of foreign currency fluctuations and the Scripps Networks Interactive, Motor Trend Group, and the Oprah Winfrey Network transactions, revenues remained consistent, with a 5% increase in International Networks, offset by a 1% decrease in U.S. networks and the sale of the education business on April 30, 2018.

U.S. Networks’ revenue for the second quarter of 2018 increased to $1.78 billion compared with the prior-year quarter. However, revenues decreased 1% even as distribution and advertising revenues both remained consistent, due to a 33% decrease from other revenue from lower program and merchandising sales.

Still, the costs associated with the merger with Scripps Networks Interactive hit the company’s profits for the quarter. Second quarter net income was $216 million, compared with $374 million in the prior year quarter, as “improved operating results were more than offset by higher restructuring and other charges associated with the integration of Scripps Networks, higher interest expense and a gain related to the sale of the education business versus a small loss last year related to the sale of the Raw and Betty production studios,” the company said in its earning release.

On a pro forma combined basis, total portfolio subscribers declined 5%, while subscribers to Discovery’s fully distributed networks declined 3%.

Meanwhile, International Networks’ revenue for the second quarter of this year increased by 30% ($1.05 billion) compared with the prior-year quarter. Excluding the impact of the acquisition of Scripps Networks and foreign currency fluctuations, International Networks’ earnings increased 5%, driven by a 6% increase in distribution revenues and a 60% increase in other revenues, while advertising revenues remained flat.

In addition, Discovery has also hired former Amazon exec Peter Faricy to the newly created role of CEO, global direct-to-consumer.

Starting his new role on September 12, Faricy (pictured) will oversee the company’s global digital and direct-to-consumer business compromising of U.S. Digital, including Discovery’s Go TV Everywhere products, Motor Trend, Eurosport Player, Discovery Kids, Dplay, and Discovery’s alliance with PGA Tour. Faricy reports to David Zaslav, president and CEO of Discovery Communications.

Faricy joins Discovery from Amazon, where he led the expansion of the Amazon Marketplace, the company’s third-party seller business, and previously led Amazon’s music and movies categories. Faricy previously held leadership positions at Borders Group, Ford, and McKinsey.

JB Perrette, president and CEO of Discovery Networks International, will continue to lead the overall Eurosport business and will team with Faricy on direct-to-consumer product rollouts across international markets.

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