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Discovery Delivers In Q4

Bucking industry trends, Discovery Communications posted earnings growth last year.

The Silver Springs, Maryland-based programmer reported today that ad revenue at its U.S. networks defied industry norms, climbing 6% in the fourth quarter and 9% for the full year. Distribution revenue also grew 13% in the fourth quarter and 10% in 2008, at the U.S. unit.
Overall, Discovery posted fourth-quarter profits of $105 million for the quarter period, compared to a loss of $8 million for the final period of 2007. Full-year profit totaled $274 million, compared with $151 million in 2007, when the company recorded a content impairment charge of $139 million.
Lehman Brothers analyst Anthony DiClemente praised the company this morning for providing some insight about how the rest of the year might look.
"Discovery is the only company in our coverage universe to have provided revenue, adjusted operating income (OIBDA) and net income guidance for the full calendar year 2009, and the only company where we expect OIBDA and earnings per share to actually grow in 2009," he wrote.
Revenue at Discovery Communications, owned by Discovery Holdings and Advance/Newhouse Programming Partnership, was $904 million in the quarter and for the year was $3.44 billion, a 10% increase over 2007. Discovery's free cash flow was $467 million.
Speaking on earnings call with analysts this morning, Discovery president and CEO David Zaslav was asked about whether the company might look to make acquisitions. Discovery's name has been linked to two major cable assets: Scripps Networks Interactive channels which include Food Network and HGTV and A&E Television Networks which is backed by Hearst, Disney-ABC and NBC Universal.
Although he said Discovery's first mission is to focus on growing ratings he did note: "There are opportunities for acquisitions, we're always looking. In a difficult market, opportunities do present themselves. We do look at we are open to opportunities."