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Discovery Stock Climbs on Q2 Revenue Growth Despite Lower Ratings

The television industry is ”far from dead,“ Discovery chief David Zaslav proclaims

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.”