Discovery Stock Climbs on Q2 Revenue Growth Despite Lower Ratings
The television industry is “far from dead,” Discovery chief David Zaslav proclaims
Sean Burch | August 6, 2019 @ 7:52 AM
Last Updated: August 6, 2019 @ 7:55 AM
Despite a drop in ratings, Discovery edged past Wall Street’s expectations when it reported its second quarter earnings on Tuesday — sending its stock price about 2% higher in early trading.
Discovery posted revenue of $2.89 billion for the quarter, representing a 1% year-over-year increase and narrowly surpassing analyst estimates of $2.85 billion; Discovery’s earnings of $1.33 per share also surpassed analyst estimates of $1.22 per share, thanks to a one-time tax credit of $455 million. Without the credit, Discovery’s earnings would have been slightly less than a dollar per share.
Discovery, in its financial release, acknowledged “lower overall ratings” and the “impact of audience declines in the aggregate on our linear networks,” but said its advertising revenue climbed thanks to price increases and the “continued monetization of digital contenting offerings.”
CEO David Zaslav, in a conference call with analysts on Monday morning, didn’t sound like someone that’s scared of cord-cutting and said the TV industry was “far from dead.”
“Contrary to what many believe, we’re getting real meaningful growth from the core TV business around the world, and it feels sustainable,” he added.
Earlier, Discovery said it was connecting especially well with women, saying in its financial release it was the “No. 1 most watched TV portfolio for women 25-54 in the U.S. in June 2019.” Discovery — which includes Food Network, Investigation Discovery, HGTV, and OWN: Oprah Winfrey Network under its banner — said it has four of the top five channels when it comes to total female viewing, with ID taking the top spot.
Investors signed off, at least at first, with Discovery shares increasing nearly 2% in early trading on Tuesday, hitting $29.68 per share.
“We delivered another quarter of strong operating and financial performance, with the benefits of the Scripps Networks acquisition flowing through all areas of our global business, while also accelerating our pivot to digital and direct-to-consumer offerings with IP that powers people’s passions,” Zaslav said in a statement accompanying earnings. “With an exceptional team in place, strong top-line performance and a healthy balance sheet, we are confident in our ability to continue executing on our strategic priorities to drive long-term growth and shareholder value.”
10 Best and Worst Shark Week Specials, From 'Air Jaws' to 'Megalodon' (Videos)
When Discovery Channel started Shark Week back in 1988, it was designed to take the craze started 13 years prior by "Jaws" and use it to dispel movie myths and encourage people to understand sharks. But in recent years, the channel came under fire from scientists for using junk science to increase ratings. In response, Discovery has steadily moved back to fact-based docs, but some skepticism remains.
Insightful: "Jaws Strikes Back" - This special follows biologist Greg Skomal and his team as they head to the Pacific to tag the largest great whites in the world with a drone cam that allows them to study their hunting patterns. Things take an unexpected turn, however, when one of the sharks attacks the camera.
Idiotic: "Shark of Darkness - Wrath of Submarine": Great whites can grow to be 23 feet long, but this show claimed that a 30-foot shark off the coast of South Africa called Submarine was responsible for multiple attacks. It opens with a dramatization disclaimer and gets even worse from there, using dubious sources to play into the fear that Shark Week once sought to overcome.
Insightful: "Alien Sharks of the Deep" - Beyond your usual great whites and hammerheads, there's also sharks that have been able to adapt to the extreme conditions of deep sea environments. "Alien Sharks" takes a look at these bizarre-looking creatures, including the filter-feeding Megamouth.
Idiotic: "Shark After Dark" - Discovery once decided to cash in on Shark Week's mainstream popularity with a late-night after show. The cringeworthy fare included obnoxious celebrities, drinking games built around shark trivia, and comedy bits featuring dudes in shark suits. Oh, and it was hosted by the guy who made "Hostel."
Insightful: "Air Jaws" - This has become one of Shark Week's finest series, using extreme slow motion cameras to show great whites soaring out of the water to feed. Yes, it's terrifying, but unlike "Wrath of Submarine," it's the kind of terrifying that also evokes respect and awe.
Idiotic: "Monster Hammerhead" - Discovery has been accused of lying to scientists about the true nature of what they wanted to film. A member of the research team at Shedd Aquarium told IO9 that a film crew had come to them claiming they wanted to document their work on studying hammerheads. Instead, the footage was used for "Monster Hammerhead," a sensationalist lie that claimed the team was searching for a mythical hammerhead that had been seen off Florida's coast for 60 years.
Insightful: "Tiger Beach" -- The title of this doc refers to a shallow-water area of the Bahamas that is teeming with tiger sharks, which are known for eating almost anything. This results in some of the most gorgeous underwater cinematography Shark Week has ever put on TV.
Idiotic: "Great White Serial Killer" -- The title should make it clear why this is idiotic, but interviews with "experts" who aren't scientists and hyperbolic narration seal the deal. "It isn't a frivolous comparison to call a shark a serial killer," says the voiceover. Actually, it is beyond frivolous.
Insightful: "Mythbusters" -- When it comes to cool, interesting science, no one brings the goods better than Adam and Jamie. "Mythbusters" cooked up a few shark-related tests for Shark Week during its run, including a test to see what can truly keep people from being attacked by sharks.
Idiotic: "Megalodon: The New Evidence" -- This was the sequel to "Megalodon: The Monster Shark Lives," the docufiction special that kicked the crusade against Shark Week into overdrive, yet Discovery decided to respond the the controversy by doubling down with this follow-up. For many fans, this was the last straw, which finally forced the channel to clean up the chum.