Discovery’s Q2 Profits Shrink on Pricey Scripps Acquisition

Net income dropped more than 40 percent year-over-year

A major increase in revenue, spurred by its recent acquisition of Scripps Networks, couldn’t offset a sharp decline in profits for Discovery Inc., with the company’s stock dropping 5 percent after posting its underwhelming Q2 earnings report on Tuesday morning.

Discovery reported earnings per share of 66 cents and $2.85 billion in revenue — falling below the 86 cents EPS analysts had projected and in-line with consensus on sales. Revenue increased 63 percent year-over-year, but excluding its Scripps, Motor Trend Group, and Oprah Winfrey Network transactions, it only increased 1 percent year-over-year.

The deals ate into the company’s quarterly profit, with a net income of $216 million falling well below the $374 million it posted for the same quarter last year. The drop was attributed to costs incurred from its nearly $15 billion buyout of Scripps earlier this year, with $140 million in restructuring charges during Q2.

“We delivered solid financial results in our first full quarter as a combined company and continued to make great progress with our integration of Scripps Networks Interactive and our pivot to digital, mobile and direct to consumer products and services,” said David Zaslav, president and CEO for Discovery, in a statement. “As the global leader in real life entertainment, we are uniquely positioned in the media marketplace to deliver long-term value for our passionate superfans, shareholders and business partners around the world.”

Discovery dropped more than 5 percent after its Q2 earnings (via Google)

Discovery took a hit on Wall Street after posting its earnings, with shares down more than 5 percent in early trading on Tuesday. Another red flag for investors, beyond the drop in earnings, was Discovery’s pay-TV subscribers declining 5 percent during Q2.

HGTV, one of Discovery’s several channels, was revealed as the mystery buyer of the “Brady Bunch” house on the company’s Q2 earnings call, with Zaslav saying the channel will “tell safe, fun stories” with the house moving forward.