By Tess Stynes
Discovery Communications Inc.'s (DISCA, DISCB, DISCK)
third-quarter earnings fell 14% as the cable-network operator was
hurt by higher interest and other expenses.
Revenue declined slightly as growth in its international
business was offset by declines in the U.S.
The company lowerd its full-year outlook and now expects overall
earnings of $975 million to $1.03 billion on revenue of $4.48
billion to $4.53 billion, from its prior estimate for $1 billion to
$1.1 billion and revenue of $4.55 billion to $4.65 billion.
President and Chief Executive David Zaslav on Tuesday said the
company's U.S. segment saw expanded market share. In its
international business, the company increased its presence in
global pay television platforms.
Executives at the home of the Discovery Channel, TLC and Animal
Planet in July had expected some hurdles in the third quarter,
including a low number of premieres on the namesake channel because
of the Olympics. The company also has been striving to make the
Oprah Winfrey Network profitable, a goal it predicted would be
achieved in the back half of next year.
Discovery Communications reported a profit of $205 million, or
57 cents a share, down from $237 million, or 60 cents a share, a
year earlier.
Revenue decreased 0.4% to $1.08 billion. Analysts polled by
Thomson Reuters most recently projected earnings of 63 cents on
revenue of $1.09 billion.
Operating margin fell to 40.7% from 39.6%. Interest expenses
increased 21%, while overhead costs rose 7.2%
At the company's U.S. networks segment, revenue was down 4.5% to
$664 million, reflecting added revenue a year earlier related to
licensing agreements. Advertising revenue increased 7% but was more
than offset by a 14% decline in distribution revenue.
The company's international networks, meanwhile, saw revenue
grow 7.4% to $390 million amid growth in distribution revenue of 8%
and advertising revenue of 3%. Excluding currency impacts,
international revenue improved by 15%.
Warning signs from several big advertising companies late last
month about a significant slowdown in ad spending put the spotlight
on U.S. media companies reporting quarterly earnings this week. On
Monday, Time Warner Cable Inc. (TWC) reported strong third-quarter
earnings growth, mostly one-time gains, but missed analysts'
expectations as it lost more video subscribers than anticipated.
News Corp. (NWS, NWSA), which owns The Wall Street Journal and this
newswire, reports results after the bell on Tuesday, while CBS
Corp. (CBS, CBSA) reports Wednesday.
Discovery Communications Class A shares closed Monday at $59.45
and were inactive premarket. The stock is up 45% this year.
Write to Tess Stynes at tess.stynes@dowjones.com
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