Discovery Revs Up, OWN Making Money

Discovery Communications says the OWN network, of which it is a partner, is now making money.

"I am proud to report that, when combined with the long-term affiliate fees that the channel has previously secured, [with advertising revenue], OWN is now cash flow positive and starting to pay down the investment Discovery has made in the venture," said David Zaslav, president/chief executive officer of Discovery Communications, during its second-quarter earnings call.
 
Discovery is a 50-50 partner with Oprah Winfrey’s Harpo Productions.

OWN has been receiving higher carriage fees and has seen advertising growth this year -- especially during the upfront. Its key viewing group -- women ages 25-54 -- witnessed nearly a 40% rise in the second quarter.

Discovery also said its U.S. networks climbed 13% in overall revenues to $793 million in the second quarter -- with advertising revenues up 10% due to increased pricing to $426 million, and distribution revenue up 17% to $348 million.

Distribution gains were made largely due to $37 million of additional revenue from licensing agreements versus last year’s second quarter. This also was due to higher rates and subscriber growth from networks carried on the digital tier. Taking out the licensing revenues, distribution revenues grew 5%.

Stock market analysts say U.S. distribution fees grew less than expected. Midday trading of Discovery’s stock was down 1.4% to $83.25. Overall, revenues at Discovery grew 30% to $1.47 billion, with net income virtually the same at $300 million versus $294 million.

International business grew at an overall much faster pace than in the U.S. -- 61% to $652 million. Advertising revenues were up 119% to $322 million; and distribution revenues were up 29% to $314 million. Advertising revenues, excluding newly acquired businesses, were up 21% in local currency terms, primarily due to strong pricing and delivery results in Latin America and increased viewership and higher pricing in Western Europe

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