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Discovery Plus Grows But Discovery 1Q Earnings Drop

Discovery Plus
(Image credit: Discovery)

Discovery said it has 15 million paying streaming customers, but reported lower profits for the first quarter.

February, Discovery said it had 11 million total streaming subscribers

The bulk of its direct-to-consumer customers are Discovery Plus subscribers, the company said.

Discovery, like other companies in the TV business, is pivoting to streaming and how fast they add subscribers is a key metric for Wall Street.

Partly because of the cost of marketing its DTC business, Discovery’s net income dropped 63% to $140 million, or 21 cents a share, from $377 million, or 55 cents a share a year ago.

Revenue rose 4% to $2.792 billion. 

Adjusted operating income at Discovery’s U.S. Networks segment--which includes the domestic Discovery Plus business--fell 19% to $823 million as revenue rose 3%.

Domestic ad revenue was down 4%. Distribution revenue was up 12%, including subscriber fees from Discovery Plus. Discovery’s linear cable network had 2% fewer subscribers.

Expenses increased 89% as the company boosted spending to promote Discovery Plus.

Similarly international operating income was down 27% to $151 million. Revenue was up 7% to $38 million, but expenses rose 19%. 

"The global rollout of Discovery Plus is off to a fantastic start by any measure,” said CEO David Zaslav. “Key metrics, including subscriber additions, customer engagement, and retention, are exceeding our expectations and demonstrating sustained momentum into the second quarter.”

Zaslav said Discovery currently has 15 million total paying direct-to-consumer subscribers across its global portfolio, with the bulk of those Discovery Plus. It had more than 13 million total paying direct-to-consumer subscribers at the end of the quarter in March.

“Our strong direct-to-consumer performance underscores the outstanding value and appeal of our content, brands and personalities to both consumers and distribution partners alike. We continue to expand the reach of Discovery Plus with recent launches on Comcast Xfinity and Amazon Prime Video Channels,” he added. “At the same time, we continue to extend our overall engagement with viewers across screens, anchored by another quarter as the most-watched pay-TV portfolio in the U.S. and our seventh consecutive quarter of international share growth."