Discovery Scores Q4 Profit, Expects Flat 2009

Feb 25, 2009  •  Post A Comment

Discovery Communications reported a profit in the fourth quarter after recording a loss in the year-ago quarter. The company expects revenues and earnings to be flat next year.
“This past year was one of significant accomplishment for Discovery, as we delivered strong operating performances across our businesses and successfully transitioned to a fully public company,” said David Zaslav, Discovery’s president-CEO.
“As we execute our 2009 operating plan in a difficult economic climate, our stable
foundation of contracted and growing subscription revenues, diversified international expansion and stringent focus on costs give us confidence that we will outperform the marketplace and continue to grow moving forward,” he added.
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Fourth-quarter net income was $106 million, or 25 cents a share, versus a loss of $170 million, or 60 cents, a year ago.
Revenues were $904 million, up slightly from a year ago, as an 8% gain in the company’s U.S. networks group offset declines in the international networks, commerce, education and other groups.
Operating income for Discovery’s U.S. networks was $300 million in the fourth quarter, up 168% from a year ago, when an impairment charge of $129 million was taken
Advertising revenue was up 6% to $282 million and distribution revenue rose 13% to $236 million.
The company attributed the ad revenue gains to higher ratings at Discovery Channel and TLC, which had previously been giving advertisers make-goods to satisfy ratings shortfalls.
Mr. Zaslav said second-quarter ’09 ad cancellations of expected upfront buys were about 12%. That’s higher than the company has seen for the last three or four years, he said, but still “manageable for us,” he said.
Scatter advertising prices are up from upfront levels, but down from a year ago.
Mr. Zaslav said it was too early to predict the scope of the upcoming upfront ad market, but with ratings on the upswing, “we’ll be there with a good story and a great sales team.”
Discovery said it expected revenues to be between $3.4 billion and $3.5 billion in 2009, compared with $3.4 billion in 2008. It projects operating income to be between $1.3 billion and $1.4 billion, versus $1.3 billion in 2008, and income from continuing operations to be between $475 million and $575 million, compared with $274 million in 2008.
Discovery expects to invest between $70 million and $80 million on the launch of OWN: Oprah Winfrey Network.
The network is expected to launch late this year or early next year. Mr. Zaslav said new CEO Christina Norman had already made a presentation to Discovery’s board, that Ms. Winfrey is very involved and “we feel like we’re really on track.”

One Comment

  1. great news! must be saving tons of money doing those clip shows!

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