Discovery Exceeds 11M Streaming Users, U.S. Ad Revenue Stabilizes

Discovery, Inc. surpassed 11 million total paid D2C users globally by the end of 2020, and is projecting 12 million by the end of February, the company reported during its Q4 earnings call this morning.

The 11 million total — which includes subscribers/signups to existing international services that are now being rebranded as Discovery+, subscribers to the U.S. Discovery+ launched Jan. 4, and U.S. services including Food Network Kitchen and MotorTrend OnDemand — already exceeds analysts’ consensus of 10.5 million by the end of Q1 2021.

The company didn’t break the numbers out by service (or by U.S. versus international), but CEO David Zaslav said that the “vast majority” of new subscribers in Q4 were for Discovery+.

He also said that more than half of new users are paid. Discovery+ costs $4.99 per month with ads and $6.99 without ads.

In December, prior to the U.S. launch, the company reported 5.2 million paid D2C subscribers.

Q4 total revenue of $2.89 billion was flat with the year-ago period.

U.S. advertising revenue, which had seen declines during the year, gained momentum in Q4 to reach $1.05 billion, ending about flat with Q4 2019 and on target with analysts’ projections.

"Advertising was flat as higher pricing and the continued monetization of content offerings on our next-generation platforms were offset by secular declines in the pay-TV ecosystem and lower ratings," the company stated.

U.S. distribution revenue increased 5% in Q4.

International advertising revenues rose 1% and distribution revenues declined 4%.

Increased expenses related to the Discovery+ rollout contributed to a net income decline of 43% to $271 million or 42 cents per share, down from $476 million, or 67 cents per share, in Q4 2019.

CFO Gunnar Widenfels said the company is likely to increase marketing and other spending to continue Discovery+’s growth, which could result in losses that are “a couple of hundred million” higher in 2021 than previously projected.

“2020 was a year of change, challenge and opportunity, and our company has shown incredible resilience, creativity and focus as one global team,” Zaslav said. “Our unmatched global scale and ability to serve consumers everywhere with a truly differentiated offering across platforms, as well as our robust cash flows, even amidst the significant investments in our next generation initiatives and the ongoing COVID-19 pandemic, position us to achieve sustainable long-term growth and drive long-term shareholder value.”

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