Discovery Reports 7% Rev Gain


Discovery Communications will throw in another $50 million into OWN -- The Oprah Winfrey Network -- on top of a $46 million added investment made in the fourth quarter. 

Originally, Discovery put in $190 million into the partnership it has with Harpo Studios in OWN.

During an earnings conference call, David Zaslav, president/CEO of Discovery Communications, said that despite reports of sinking ratings at OWN, which started up in January, viewership is 30% higher than Discovery Health was a year ago.

Zaslav says he continues to expect OWN to break even in 2011. The new revenue contributions to OWN will be for new programming. Ratings should grow in the fall, he added, when Winfrey ends the run of her syndicated show and Rosie O'Donnell's show begins.

Overall, Discovery Communications continued to have strong financial results for its fourth quarter.



The period witnessed a 7% gain to $1.01 billion in worldwide revenue, with a 9% hike in U.S. results to $612 million. Operating income (before depreciation and amortization) gained 16% to $461 million with the U.S. contributing the bulk of that gain -- $347 million, also a 16% improvement.

Advertising in the U.S. grew 13% to $323 million, due to higher inventory sales and increased pricing -- benefits of the strong TV advertising market. Distribution fees from cable, satellite and telco video retailers improved 7% to $261 million.

International channel revenues grew more slowly -- up 5% to $136 million in ad revenues and 7% higher to $200 million for distribution fees.

Discovery expects better results in 2011. Full-year revenue is expected to be at $4 billion to $4.1 billion for 2011 -- up from $3.77 billion this year. Operating income is pegged to be at $1.8 billion to $1.9 billion -- a bit higher than 2010's $1.7 billion. "We generated significant advertising and distribution revenue growth while thoughtfully managing our cost base," stated Zaslav. "As a result, we were able to increase our margins and free cash flow growth while continuing to invest in content across our existing portfolio of assets and joint ventures."

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