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Discovery Reports Gain in Third-Quarter Earnings

Discovery
(Image credit: Discovery)

Discovery reported higher third-quarter earnings despite a decline in revenue.

Net income rose 15% to $300 million, or 44 cents a share, from $262 million or 35 cents a share.

Revenue fell 5% to $2.561 billion.

On the company's earnings call with analysts CEO David Zaslav said the Discovery's long-awaited direct-to-consumer plan has reached a "clear focus. He told analysts that the company would show off its aggregated direct-to-consumer app--likely to be called Discovery Plus--and a product road map, go-to-market strategy, along with its global streaming strategy in early December.

Related: Discovery in Dispute with T-Mobile over TVision

The company rolled out a Discovery Plus product in the U.K., working with Sky.

At Discovery’s U.S. networks, adjusted operating income before depreciation and amortization fell 5% to $951 million on a 4% decline in revenue to $1.659 billion.

Distribution revenue increased 2% to $696 million as affiliate rates increased, offset by a decline in linear subscribers. The number of subscribers for Discovery's entire portfolio of networks was down 6% but its fully distributed networks--which account for 80% of distribution revenues--were down 4%.

Advertising revenue was down 8% to $941 million, despite higher pricing as the pandemic softened demand.

On the earnings call, CFO Gunnar Wiedenfels said October ad sales have been flat, which is "strong by this year's standards." But he warned that flat might not be the trend for the entire quarter because of tailwinds from political advertising and rising COVID case numbers.

"Discovery delivered improving financial results in the third quarter, a testament to the powerful appeal of our content and brands, led in the U.S. by TLC, which beat top-rated sports and news networks in coveted prime time demos, even in a record year for cable news,” said CEO Zaslav. 

“In the midst of macroeconomic uncertainty with the ongoing COVID pandemic, as well as the continuing evolution of our industry, we remain focused on positioning Discovery for long-term growth and shareholder value creation through the execution of our strategic priorities, including our next generation initiatives,” Zaslav said.