• by Wayne Friedman , November 1, 2016

Discovery Communications' U.S. advertising dropped a bit more steeply than anticipated in the third quarter.

Advertising revenues sank 3.4% to $316 million. Big Rio Olympic spending and viewing on NBC, its stations and cable networks pulled money and viewers away from many TV networks and platforms.

Discovery blamed lower “expected ratings,” which Bernstein Research said amounted to a 13% drop. Still, Discovery’s affiliate fees were up 7% to $381 million, with overall U.S. revenues inching up 2% to $793 million.

Discovery’s international operations had a rougher time -- down 6% in advertising to $273 million, and up just 1% in affiliate fees to $425 million. Overall revenue slipped 3% to $720 million. Some of the blame could be attributed to unfavorable foreign currency exchange rates.

Advertising sank to due to lower ratings and pricing in Northern Europe. Leaving out currency issues, advertising declined by 2% with overall international revenue up 2%.

Total Discovery Communications revenues were flat at $1.6 billion versus a year ago -- but 3% higher when taking out the currency issues. Its net income dropped 22% to $219 million, down 23% leaving out the effects of foreign currency exchange rates.

Much of this was also affected by a $50 million after-tax impairment charge related to a Lionsgate investment.       

Discovery’s midday Tuesday stock price was down 3.5% to $25.23.

“Discovery faces the same domestic structural challenges as the rest of the industry, with more acute audience declines,” writes Todd Juenger, media analyst at Bernstein Research. “Discovery's growth driver has been its international distribution and content advantage, but revenue has been decelerating.”