Discovery Sees Slight U.S. Ad Gains, But Continues To Lose Network Subscribers

Discovery Communications’ third-quarter advertising rose by modest single-digit percentage hikes, as expected -- but this came amid further loss of U.S. subscribers compared to previous periods.

Total U.S. Discovery channel subscribers were down 5% in the period, versus a 4% drop in the the second quarter and a 3% decline in the first quarter.

“This suggests an acceleration in the skinny bundle trend,” wrote Barton Crockett, media analyst at FBR & Co.

Mid-day trading of Discovery stock was sharply down 6% to $18.02.

There was a slim silver lining here -- these drops came mostly with Discovery’s “niche” networks. Discovery's bigger, more fully distributed networks sank 3% -- the same as in earlier periods.

U.S. advertising grew 2.8% to $407 million, with core U.S. advertising revenues gaining 6% -- in line with analysts estimates. International networks were up 9.2% to $298 million. Total advertising for the period rose 5.4% to $705 million.



Overall distribution revenues from pay TV providers were up 9.3% to $881 million, while U.S. fees 5.5% were higher to $402 million and international gained 12.7% to $479 million.

In the U.S., this came against slight total audience gains -- up 2% in all viewers, but with a 4% drop in the narrower 18-49 demographic, a key metric for many national TV advertisers.

Discovery's total quarterly revenues improved 6% to $1.7 billion, with net income the same as the period a year before, at $223 million.

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