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By Michael Tobin and Benjamin Mullin
Discovery Inc. said second-quarter earnings grew more than fourfold, boosted by a tax benefit, higher operating results and strong advertising revenue growth, prompting its chief executive to say that the TV industry was "far from dead."
Net profit at Discovery, whose channels include TLC, Animal Planet and Discovery Channel, was $947 million for the quarter ended June 30, compared with $216 million a year earlier. The dramatic increase resulted from the $455 million tax benefit, which was triggered by a reorganization across its international networks segment. The company reported $2.89 billion in revenue, up slightly from $2.85 billion a year earlier.
U.S. advertising revenue grew by 5.8% to $1.15 billion, and U.S. distribution revenue -- the money that pay-TV operators and other companies pay to license Discovery programming -- grew by 5.2% to $688 million.
Ad revenue for Discovery's International Networks unit, whose channels include Eurosport, DMAX and TVN, decreased by 1.5% to $466 million.
On an earnings conference call Tuesday, Discovery Chief Executive David Zaslav said the company's advertising revenue growth was driven in part by a strong demand during the annual "upfront" period, where marketers buy spots in bulk for the coming months.
"The television industry is far from dead here or abroad," Mr. Zaslav said. "Contrary to what many believe, we are getting real, meaningful growth from the core TV business around the world."
Discovery last year closed its acquisition of Scripps Networks Interactive, a lifestyle-TV colossus that turned Discovery into the king of evergreen TV content among its peer networks.
Discovery has intensified its focus in recent months on developing direct-to-consumer video-streaming services aimed at viewers who are interested in sports, home improvement, the natural world, sports, cars and cooking.
Mr. Zaslav said the company's planned joint venture with home-improvement stars Chip and Joanna Gaines, which will include a direct-to-consumer streaming service, will launch sometime next year. The company will rebrand its DIY Network as "Magnolia," Mr. Zaslav said, and Discovery is exploring options that will allow streaming subscribers to make purchases on its video services.
He added that the growing slate of streaming services are looking to buy original content from TV programmers but said Discovery is focused on owning its intellectual property.
"They need more and more," Mr. Zaslav said. "And they're talking to us about giving them more. But we're not doing any of that right now."
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Michael Tobin at Michael.Tobin@wsj.com
(END) Dow Jones Newswires
August 06, 2019 16:09 ET (20:09 GMT)
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