• by Wayne Friedman , November 5, 2020

Discovery Inc.'s U.S. TV networks said its third-quarter advertising witnessed a mid-single-digit percentage drop of 8% -- better than the 14% decline in the previous period.

The company points to continued problems for advertising due to COVID-19 pandemic issues -- on top of existing overall industry issues, “secular declines in the pay-TV ecosystem” and lower ratings.

Discovery's Q3 U.S. advertising revenue declined to $941 million. The company added that it benefitted from higher individual pricing. For the nine-month period starting in January, Discovery declined 7% in U.S. advertising to $2.9 billion.

Results have been a bit worse for Discovery's international networks -- with advertising revenue down 17% to $1.02 billion over that nine-month period, and more recent third-quarter business 7% lower to $365 million.

Discovery's stock was up 4% in Thursday morning trading to $21.25.

Concerns for Discovery -- and other cable TV network groups -- are focused on streaming business.

Todd Juenger, media analyst for Bernstein Research says: “Discovery's especially terse third quarter press release stands out to us what it doesn't say about streaming. We can find no mention or disclosure whatsoever. Nothing on subs. Nothing on revenue. Nothing on level of investment.”

He says this is contrast to Walt Disney, Viacom and AMC Networks, which talk up their streaming business platform efforts

The traditional pay TV system has seen sharply lower subscribers, which affects all virtually TV networks -- with many losing 3% to 4% per year. As a result, companies have upped their efforts to start up streaming platforms, or get carriage of live, linear TV networks on virtual pay TV platforms.

Discovery has seen a 4% decline in its subscribers for its top networks and 6% lower for all its networks. Third-quarter total viewer ratings were down 6% in the period, according to Bernstein Research.

Long-term affiliate fee deals have offset some losses for Discovery and others. U.S. distribution revenues were up 2% to $696 million in the third quarter, and were 4% higher over the last nine months to $2.1 billion.

Overall revenues were down 4% to $2.6 billion, with net income 15% more at $300 million.

Discovery touts that it has four of the top five cable networks -- HGTV, ID, TLC and Food Network -- in the demographic of women in total day viewing.