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Discovery Misses Q3 Earnings Mark Despite Increased Ad Sales

These Scripps acquisition costs are starting to add up

Last Updated: November 2, 2017 @ 9:05 AM

Discovery Communications missed media analyst’s third-quarter 2017 mark for earnings, despite seeing increased advertising revenue both domestically (+3 percent) and internationally (+9 pecent).

The bundle-loving provider of cable channels unveiled its Q3 financials early Thursday morning, reporting adjusted earnings of 43 cents per share on $1.651 billion in revenue.

Wall Street had forecast earnings per share of 54 cents on $1.64 billion in revenue, per a Yahoo Finance compilation of media analysts. So, the Discovery Channel and TLC parent topped at the top line, but whiffed where it really counts — anticipated profit per share.

Still, David Zaslav seems undeterred.

“Advertising and global distribution revenue growth helped to drive solid third quarter results for Discovery,” the Discovery Communications president and CEO said. “We continued to focus on investments to strengthen our worldwide IP portfolio as well as strategic partnerships to nourish global superfans across every screen, platform and service. Additionally, we are excited by the prospects for a combined Discovery and Scripps as we continue to make progress on the transaction to create a global leader in real life entertainment.”

That distribution revenue is really what led the way in terms of overall growth from dollars coming in. Stateside, distribution revenue rose 6 percent; overseas and across borders it was up 13 percent.

Still, subscribers slipped 5 percent here and lessened in Latin America as well. That’s not so good.

Overall, profit was pretty much flat when compared with the same quarter last year.

Discovery, which is in the process of buying Scripps for nearly $15 billion, also clearly incurred increased costs this year as part of the acquisition process. Hey, M&A money doesn’t grow on trees, David.

DISCA stock closed Wednesday at 19.16 per share, up 28 cents. The U.S. stock markets re-open at 9:30 a.m. ET.

Discovery executives will host a conference call at 8:30 a.m. ET to discuss the quarter in greater detail.