Discovery, Inc. reported its second-quarter 2020 earnings Wednesday morning, revealing that its profit had sunk 71% versus the comparable year-ago period. However, the David Zaslav-led company did beat analysts’ forecasts for both its earnings and revenue in the COVID-plagued Q2.
Wall Street forecast earnings per share (EPS) of 70 cents on $2.51 billion in revenue, according to a consensus estimate compiled by Yahoo Finance. Discovery reported adjusted earnings of 77 cents per share on $2.54 in revenue.
All told, revenues for the TLC, Food Network, HGTV and Discovery parent company decreased 12% from the same quarter in 2019. Net income of $271 million was down the above-mentioned 71%.
Stateside, ad revenue dropped 14%, a decline Discovery says was “primarily driven by a decline in demand stemming from the COVID-19 pandemic and, to a lesser extent, secular declines in the pay-TV ecosystem and lower inventory, partially offset by higher overall ratings and pricing.”
Despite the double-digit decline, Discovery beat projections for U.S. ad sales. Internationally, the decline matched media analyst expectations.
Overseas, the ad sales drop was 37%. Despite that revenue decrease, Discovery says the “total share of viewing across the international portfolio in the second quarter of 2020 improved 4% on average, with strong share growth in India, UK and Italy.”
During Q2, which is the when the greatest impact (thus far, at least) of the coronavirus shutdown was felt, Discovery says TLC “delivered its best quarter in network history and was the top network across all of TV on Sunday nights among W25-54, P25-54 and W18-49,” thanks to the success of “90 Day Fiancé” franchise.
The company says that Discovery’s “portfolio of networks in the U.S. gained more share in primetime than any other TV portfolio in each of our target demos,” during the second quarter of 2020.
Discovery posted a second-quarter record in terms of free cash flow delivery.
“Our top priority is the health and safety of our employees as global economies and our offices begin to reopen,” Discovery president and CEO David Zaslav said in a statement prepared to accompany the financials. “I want to thank all of our teams for the exceptional focus and dedication even during these turbulent times that continued to drive outstanding progress for our business, including renewals with four of our largest distribution partners and meaningful cost containment.”
“We generated significant free cash flows in Q2, demonstrating the durability of our business, especially against the backdrop of a historic disruption to the global advertising market due to the impacts of the pandemic,” he continued. “With our significant liquidity cushion and the initial signs of stabilization that we’re seeing in many of our key markets around the world, we are pleased to announce our intention to resume returning capital to shareholders through share repurchases. We are cautiously optimistic about the global outlook for the rest of the year and firmly believe that the long-term prospects for Discovery remain as vibrant as ever.”
Shares in Discovery (DISCA) closed at $22.01 on Tuesday. The stock market officially reopens at 9:30 a.m. ET.
Zaslav and other Discovery executives will host a conference call at 8 a.m. ET to discuss the quarter in greater detail.