Discovery Posted Strong Gains In 3Q

David Zaslav of DiscoveryWhile bigger media companies have been taking it on the chin in recent days, Discovery Communications offered up strong numbers for its third-quarter results, and investors responded. In midday trading, Discovery stock gained over 10% to $13.32.

Discovery said adjusted operating income climbed 23% to $311 million on 11% revenue gains, to $845 million. On a net income basis, the company rose to $134 million from $7 million in the period before.

Advertising revenue was 5% improved, but could have gone higher if not for lower ratings at TLC and Discovery Channel. Overall U.S. networks' revenue in the third quarter increased 6% to $498 million, primarily driven by distribution and advertising revenue growth. Distribution revenue climbed 8%, largely from higher rates.

Concerning the slowing advertising market, David Zaslav, chief executive officer of Discovery Communications, said: "The scatter market is slowing down. In the first quarter, we have seen some take back [in terms of upfront cancellations]. Internationally, we have already felt the pinch in Europe. But we haven't really felt the [full] punch of it yet."

International networks' revenue for the third quarter increased 16% to $300 million--with 22% distribution revenue growth, primarily from subscriber increases.

Digital revenue for Discovery is expected to be in the $50 million range for the year. Company officials say the business is not profitable right now.

 

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