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Discovery Tops Q1 Earnings Forecasts Despite Continued Cord-Cutting, Lower TV Ratings

Pricing and rate increases help, but company misses mark on revenue estimates

Discovery, Inc. reported mixed financial results for the first quarter of 2020, though even a split on analyst estimates feels like a win in the coronavirus-changed landscape.

Wall Street had forecast earnings per share (EPS) of 84 cents on $2.72 billion in revenue, according to a consensus compiled by Yahoo Finance. Discovery reported an adjusted EPS of 87 cents on revenue of $2.683 billion.

All told, revenues decreased 1% from the comparable quarter last year. Net income of $377 million was down 2%.

On a per-share basis, the company’s earnings were up a few pennies from Q1 2019.

Stateside, advertising revenues were flat year over year. Higher pricing there offset lower TV ratings. Cord-cutting also impacted domestic revenue, but rate increases more than offset those declines.

Overseas, ad sales dropped 4%.

“The world is facing an unprecedented challenge and I want to express our profound gratitude to the medical workers and front-line responders who are risking their personal safety every day during this fight with COVID-19,” David Zaslav, president and CEO of Discovery, said in a prepared statement. “I am also enormously proud of Discovery’s employees who have pulled together and stepped up with resilience, heart and creativity. They continue to nourish our viewers at a time when our trusted brands and beloved personalities are a unique source of comfort and familiarity. As we navigate through the remainder of 2020, our priority remains on the well-being of our employees, clients, customers, and production partners. Furthermore, we will continue to focus on maintaining a healthy balance sheet with robust liquidity and investing in our businesses to position ourselves for long-term growth amid the changes in the pay-TV landscape.”

Discovery stock (DISCA) closed Monday at $21.24 per share. The regular U.S. stock markets trading day opens at 9:30 a.m. ET.

Zaslav (pictured above) and his senior executive team will hold a conference call at 8 a.m. ET to discuss the quarter in greater detail.