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Discovery Forecasts Higher Profit for Next Three Years

Discovery Communications raised its profit forecasts for both 2016 and for the next three-year period.

On its call with analysts to discuss second-quarter earnings on Tuesday (Aug. 2), the company said that recent renewals with distributors locked in solid revenue growth, particularly in Europe where Discovery will have rights to Olympic coverage. Discovery announced a renewal of its distribution deal with Liberty Global covering 12 European markets Tuesday.

Discovery CFO Andrew Warren told analysts that the company was packing ahead of its profit expectations and was raising its guidance for 2016 earnings per share growth from high teens to at least 20%.

Warren also said that over the next three years, in constant currency, the company expected to generate earnings per share growth in the low teens or better, compared with earlier guidance of low double digits.

The increases come despite what will be a difficult third quarter in terms of ad revenue. Because of the Olympics and the decision to air Discovery Channel's popular Shark Week earlier in the summer, ad revenue is likely to be down in the low single-digit range from last year but should rebound to positive in the fourth quarter, Warren said.

Discovery CEO David Zaslav called the move of Shark Week a mistake.