Discovery's Q1 Earnings Show Big Boost In Ad Revenue

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Discovery Communications again appeared to set the bar for top tier cablers, reporting a 9% increase in domestic ad revenue for the first quarter. Even against strong competition from NBC Universal's Winter Olympic Games, the company reported ad revenue at $266 million for the period. Subscription revenue rose domestically by 4%.

Losses at the company's tiny education unit and corporate expenses were the sole negatives in a strong set of earnings. Total network revenue from US operations was $546 million, a 5% increase.

Overall, first-quarter revenue at Discovery Communications was $879 million, up 8%, while adjusted operating income was $367 million, up 10%. The company also noted $13 million in content write-offs for the latest quarter.

Discovery raised its full year outlook, raising its year end total revenue number to $3.7 billion.

Questions about the joint venture Oprah Winfrey-fronted network, OWN, dominated the call with analysts looking for data on how ratings might perform to how much the company could command in affiliate fees. Discovery CEO David Zaslav and COO Peter Liguori told the Wall Street community that the idea of Oprah Winfrey coming to cable is a great value to the cable industry, and that they are sitting down with distributors about how best to represent that value.

Asked to predict how ratings for the new channel would compare to Discovery Health, which is being replaced by OWN, Liguori said: "It's very difficult to predict. Health is in the 0.2 and 0.3 range and some health programs will wind up on OWN. We expect the network to have a very solid slate but it's a brand new network and people will need to find it."

Read the full story at B&C here.

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