Discovery Communications’ full year and fourth quarter 2009 financial results, released today, reported revenue increases of 2% for the full year over 2008, and 7% over Q4 2008.
Full year 2009 revenues of $3.52 billion increased $73 million over 2008 revenues, mainly driven by 4% growth at U.S. Networks and 3% growth at International Networks. Adjusted Operating Income Before Depreciation and Amortization (OIBDA) increased 12% to $1.46 billion led by 8% growth at U.S. Networks and 16% growth at International Networks, while adjusted OIBDA margin for the full year increased to 42% from 38% in 2008.
According to the company, the increased results reflect the higher adjusted OIBDA as well as a net of tax gain on the sale of the Discovery Kids channel and an increase in other non-operating income.
‘The strength of Discovery’s performance throughout 2009 reflected the quality of our distribution platform and content assets and our focus on delivering real operating leverage,’ said Discovery Communications’ president and CEO David Zaslav. ‘The affiliate fees we generate across the globe provided consistent resiliency throughout this past year, while the ratings growth across our networks and the value of our unique content enabled advertising to grow despite the weak environment.’
For the full year, U.S. Networks’ revenue increased 4% to $2.14 billion mainly driven by distribution and advertising revenue growth. Distribution revenue grew 6% mainly as a result of higher rates, subscriber growth primarily from networks carried on the digital tier and lower launch-support amortization. The increase was partly offset by the absence of $20 million due to the removal of Discovery Kids from the consolidated results as well an $8 million one-time revenue item recorded in the second quarter of 2008. Adjusting for these items, distribution revenue grew 9% compared with 2008. Advertising revenue also notched up an increase for the full year of 2%, a result of higher ratings and increased pricing.
International Networks also racked up increases for the full year, with revenue increasing 3% to $1.18 billion, despite a $69 million unfavorable impact from foreign currency fluctuations, as distribution and advertising revenue each grew 3%. Excluding the foreign currency fluctuations, revenues for the full year increased 10%, driven by 9% distribution revenue growth, mainly thanks to to increased subscribers in Latin America, EMEA and Asia-Pacific.
For Q4 ’09, U.S. Networks’ revenue increased 3% to $554 million. Distribution revenue grew 4% largely from higher rates and subscriber growth mainly from networks on the digital tier. That growth was partially offset by the absence of $10 million due to the removal of Discovery Kids following the sale of 50% of that entity last May. Adjusted OIBDA reported a 4% decrease to to $289 million from $300 million, with the 3% revenue growth offset by 11% higher operating expenses mostly due to content impairment charges of $22 million in the current quarter.
International Networks boasted a revenue increase of 22% to $358 million in the fourth quarter of 2009, with $19 million of favorable impact from foreign currency fluctuations contributing to ad revenue growth of 33% and distribution revenue growth of 16%. Excluding the impact of foreign currency fluctuations, revenues increased 16%, led by 24% advertising revenue growth primarily in the U.K., EMEA (Europe excluding U.K., Middle East and Africa) and Latin America from higher viewership and a larger subscriber base. Adjusted OIBDA for the division rose 42% over Q4 2008.
‘As we look to 2010, we remain focused on further monetizing our ratings momentum in an improving advertising environment, continuing to strengthen our distribution platforms and relationships and, most importantly, delivering high quality content to our viewers,’ said Zaslav.