Discovery Q1 Earnings Top Estimates Thanks in Part to Global Distribution Growth

Company hits sales forecasts pretty much right on the nose

Last Updated: May 5, 2015 @ 6:32 PM

Discovery Communications realized better-than-expected first quarter 2015 earnings on the back of a 17 percent increase in global distribution sales and a 10 percent increase in revenue at International Networks.

“2015 is off to a great start,” President and CEO David Zaslav said, “as our strategy of investing in and owning world-class content to leverage across our unparalleled global distribution platform continues to drive operating momentum and strong financial results.”

 

Discovery released financials on Tuesday morning just before the U.S. stock markets opened, reporting earnings per share of 37 cents on net income of $250 million and $1.54 billion in revenue.

Wall Street had forecast EPS of 35 cents on $1.54 billion in revenue, according to numbers compiled by Yahoo Finance. Zacks estimated EPS at a penny higher; therefore, Discovery topped earnings expectations by a penny or two, and made its revenue target thanks to rounding.

Revenue was up nine percent over the first quarter a year ago, led by 10 percent growth at International Networks and six percent growth domestically. At the U.S. networks, that rise came from 13 percent distribution growth and 1 percent advertising growth, which were partially offset by losses elsewhere. The increase under the former line item came about primarily due to higher rates and the consolidation of Discovery Family. Abroad, distribution sales leapt 17 percent.

Net income a year ago was $230 million, leading to earnings at the time of 33 cents per share.

“Despite facing a challenging U.S. marketplace and foreign currency headwinds, Discovery is successfully building market share, expanding our distribution and developing programming that resonates with audiences around the world,” Zaslav continued. “I’m extremely pleased with our strong performance this quarter and the numerous opportunities Discovery has in the months and years ahead.”

The company’s earnings conference call occurred later at 8:30 a.m. ET on Tuesday, when Zaslav accidentally let slip the company’s planned expansion into Turkey.

“It’s really one market in Eastern Europe –and we’ll announce in the next few weeks which one it is — we’ve got from a pay-only to pay and over-the-air,” Zaslav told analysts and reporters on the conference call. “I think it’s going to be quite effective for us. I think it’s going to be a very good deal.

“Turkey is a market that doesn’t have — oops,” he said before pausing and then laughing. “It doesn’t have enough pay-TV, so that’s a market where we’re going free-to-air as well as pay.”

Discovery stock (DISCA) closed on Tuesday at $33.37 per share, up 63 cents or 1.92 percent. The company spent $317 million on share repurchases during 2015’s initial quarter.

On the final day of Q1, Discovery Channel unveiled its coming slate of programming. It later renewed hit “Naked and Afraid” (pictured above), as exclusively reported by TheWrap.

Earlier in the quarter, longtime executive Eileen O’Neill announced her departure from the company.