Discovery chief David Zaslav and company shareholders are enjoying a breakout day on Wall Street on Thursday, with shares of the cable giant racing to a three-year high after the company reported strong Q3 advertising growth.
Shares jumped more than 4.5 percent in early morning trading on Thursday, hitting $34.62 per share. If the gains hold through the end of the day, it would mark the highest closing price for Discovery since July 17, 2015.
Investors are responding to the company increasing U.S. ad revenue by 5 percent year-over-year, despite declining linear ratings. Discovery’s acquisition of Scripps Networks, which closed in March, helped ad sales more than double to $991 million for the quarter. The deal brought channels like HGTV and Food Network under the same umbrella as TLC and Discovery Channel.
Discovery’s ad sales growth appears to have masked the company missing analyst earnings estimates, with Discovery reporting 52 cents earnings per share, compared to projections of 59 cents EPS. Revenue was in-line with estimates of $2.6 billion. Net income dropped 46 percent year-over-year to $117 million due to more than $200 million in spending related to bringing Scripps on board.
Zaslav, on the company’s earnings call on Thursday, said Discovery is “well-positioned” to capitalize on the growing demand for streaming, and said, despite a decline in ratings, the network’s performance has been a positive “outlier” in an “increasingly soft” cable landscape.