Discovery, Inc. Reports First Quarter 2019 Results

Posted by Discovery

Discovery reported financial results for the quarter ended March 31, 2019.

Operational Highlights

• Announced a 10-year global partnership with the BBC for factual SVOD content as well as a resolution of the UKTV joint venture;
• Delivered the top-four cable networks for women 25-54 in the U.S. with ID, HGTV, Food Network and TLC, for the first quarter of 2019;
• Successfully launched digital streaming video platform GOLFTV internationally;
• Announced a multi-platform media joint venture with Chip and Joanna Gaines that will rebrand DIY Network, with the new brand expected to be unveiled in Summer 2020;
• Acquired a controlling interest in digital cycling platform Play Sports Group; and
• Secured a new distribution agreement in the U.S. with YouTube TV, adding to broad inclusion across virtual MVPD services.

“In the first quarter we delivered a solid start to 2019, as we continue to power people’s passions through our loved brands and our owned global IP in genres that nourish audiences around the world,” said David Zaslav, President and Chief Executive Officer for Discovery. “We are a differentiated media company and have the right strategy, assets, brands, and management team necessary to drive additional shareholder value.”

First Quarter 2019 Financial Results

First quarter revenues of $2,707 million increased 17% on a reported basis compared with the prior year’s quarter. Excluding the impact of foreign currency fluctuations, revenues increased 21%. On a pro forma combined basis, excluding the impact of foreign currency fluctuations, total company revenues decreased 5%, as a 3% increase in U.S. Networks was more than offset by a 15% decrease in International Networks primarily due to revenues from the Olympics in the first quarter of 2018 and a significant decrease in Other due to the sale of the education business.

First quarter Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) of $1,159 million increased 63% on a reported basis compared with the prior year’s quarter. Excluding the impact of foreign currency fluctuations, Adjusted AOIBDA increased 67%. On a pro forma combined basis, excluding the impact of foreign currency fluctuations, total company Adjusted OIBDA increased 21%, as U.S. Networks increased 17% and International Networks increased 46%, primarily due to the Olympics in the first quarter of 2018.

First quarter net income available to Discovery, Inc. was $384 million, compared with a loss of $8 million in the prior year’s quarter. The improvement in net income was a result of higher operating results primarily driven by the integration of Scripps Networks and to a lesser extent income from equity investments versus a loss in the first quarter of 2018, partially offset by higher tax expenses versus a tax benefit in the first quarter of 2018. Diluted earnings per share increased to $0.53 due to higher net income. Adjusted Earnings Per Share (“Adjusted EPS”), which excludes the impact of amortization of acquisition-related intangible assets, net of tax was $0.87. Adjusted EPS excluding $10 million, or $0.01 per share, of after-tax restructuring and other charges, and $(22) million, or $(0.03) per share, from a one-time settlement of a withholding tax claim, net of tax was $0.85.

Free cash flow increased to $498 million for the first quarter of 2019 as cash flow from operations increased to $542 million while capital expenditures of $44 million were consistent with the prior year’s quarter. Cash flow from operations increased primarily due to the full quarter impact from the integration of Scripps Networks as well as lower cash restructuring charges.―BCS Bureau