• by Wayne Friedman , February 10, 2010

Discovery Communications posted 36% higher income for its fourth-quarter earnings with positive results coming from its international networks, as well as cost-cutting contributions.

Net income was at $156 million, with revenues climbing 7% to $964 million. Revenue growth was 22% at its international networks to $358 million. A majority of the international networks' revenue comes from affiliate fees -- $191 million to $130 million for advertising sales.

A 3% revenue growth at U.S. Networks hitting $554 million also helped fuel the results.

But Discovery's commerce, education and other businesses declined $21 million or 30% decline because of the transition to a new commerce licensing model.

Discovery's U.S. networks' advertising revenues inched up 2% during the period to $287 million. Overall, U.S. networks' revenue increased 3% to $554 million, with distribution revenues rising 4% during the period.

While the company experiences mid-teens-to-mid-20%-range CPM price increases in the fourth quarter -- improving also over its third-quarter period -- Discovery had tough comparisons to fourth-quarter 2008 results, which also grabbed similar 20% increases in scatter pricing.

Discovery also noted that its fourth-quarter 2009 premiums were under broadcast networks' scatter pricing at 20% to 30%. In the first quarter of 2010, overall U.S. advertising revenues are pacing at mid-single-digit revenue growth.

With its joint venture deals, Discovery removed some networks' revenue from its financial results. For example, following the Discovery Kids deal with Hasbro in May 2009, $10 million in revenue was removed from the network, now known as The Hub. For the joint venture of the upcoming Oprah Winfrey Network (formerly Discovery Health), Discovery had $5 million in expenses.

David Zaslav, president and CEO of Discovery Communications, expects the new Oprah Winfrey Network will have just under 80 million subscribers at launch.

Discovery does not release its full-length shows digitally on the Internet and other platforms, and it doesn't expect to change its plans much. Zaslav says: "We haven't put out much long-form content. We have been holding back for a business model that works -- our cable channels."

However, Zaslav says Discovery has been pushing its social media efforts through the characters and on-air talents platforms on Facebook and Twitter. "We are always looking for different ways to reach consumers," says Zaslav. "We want to make sure we get paid meaningful value for our content."