SILVER SPRING, Md.,
Aug. 6, 2019 /PRNewswire/ -- Discovery, Inc. ("Discovery"
or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported
financial results for the quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- No. 1 most watched TV portfolio for women 25-54 in the U.S. in
June 2019(1);
- Concluded a robust and record advertising Upfront, delivering
pricing and volume increases across the portfolio;
- Completed the UKTV Lifestyle Business joint venture unwind
transaction in which the Company formally received control of
lifestyle channels Really, Home and Good Food; and
- Launched nine additional networks on YouTube TV in the U.S. and
signed a multi-year live and on demand carriage agreement with
fuboTV.
"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," said David Zaslav, President and Chief Executive
Officer of Discovery. "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."
Second Quarter 2019 Financial Results
Second quarter
revenues of $2,885 million increased
1% compared with the prior year's quarter, as a 5% increase in U.S.
Networks revenues was partially offset by a 3% decrease in
International Networks revenues and a significant decrease in Other
revenues due to the sale of the education business(2).
Excluding the impact of foreign currency
fluctuations(3), total Company revenues in the quarter
increased 4% and International Networks revenues increased 3%.
Second quarter net income available to Discovery, Inc. was
$947 million, or $1.33 per diluted share(4), compared
with $216 million, or $0.30 per diluted share, in the prior year's
quarter. The increase in net income was a result of higher
operating results and a one-time, non-cash tax benefit recognized
in the quarter. The Company carried out a number of internal
restructurings across several jurisdictions within the
International Networks segment. The net effect of these
restructuring activities was a one-time, non-cash income tax
benefit of $455 million from the
recognition of a deferred tax asset.
Adjusted Operating Income Before Depreciation and Amortization
("Adjusted OIBDA")(5) of $1,281
million increased 5%, as a 15% increase in U.S. Networks
Adjusted OIBDA was partially offset by a 15% decrease in
International Networks Adjusted OIBDA. Excluding the impact of
foreign currency fluctuations, total Adjusted AOIBDA increased 7%
and International Networks Adjusted OIBDA decreased 7%.
Adjusted Earnings Per Share ("Adjusted EPS")(4,6),
which excludes the impact of amortization of acquisition-related
intangible assets, net of tax, was $1.61. Adjusted EPS excluding the previously
mentioned tax benefit of $455
million, or a decrease of $0.64 per share, and, after-tax restructuring and
other charges of $8 million, or
$0.01 per share, was $0.98.
(1)
|
Source: Nielsen, June
2019 (5/27/19 – 6/30/19), Total Day Mon-Sun 6a-6a, Women 25-54,
L+7, Duration-Weighted Delivery: "Most Watched", Among Total TV
portfolios.
|
(2)
|
The Company sold a
majority stake in the education business on April 30,
2018.
|
(3)
|
Refer to pages 5-6
for the methodology for calculating growth rates excluding the
impact of currency effects for the International Networks segment
and Total Company.
|
(4)
|
All per share amounts
are calculated using net income. Refer to table on page 13 for the
full EPS schedule.
|
(5)
|
See full definition
of Adjusted OIBDA on page 5.
|
(6)
|
See full definition
of Adjusted EPS on page 6.
|
Cash provided by operating activities increased 21% to
$674 million compared with the prior
year's quarter, primarily reflecting lower restructuring expenses
and favorable working capital, partially offset by higher cash
taxes due to the absence of acquisition-related charges. Capital
expenditures increased $44 million to
$78 million, primarily due to
transformation projects related to technology infrastructure and
software development, and expenses related to real estate
consolidation. Free cash flow(1) for the second quarter
increased 14% to $596 million.
SEGMENT RESULTS
Total
Company
|
|
|
|
|
|
(dollars in
millions)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
Ex-FX(2)
|
|
2019
|
|
2018
|
|
Change(3)
|
|
Ex-FX(2,3)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,863
|
|
|
$
|
1,780
|
|
|
5
|
%
|
|
|
|
$
|
3,615
|
|
|
$
|
2,954
|
|
|
22
|
%
|
|
|
International
Networks
|
|
1,020
|
|
|
1,051
|
|
|
(3)
|
%
|
|
3
|
%
|
|
1,972
|
|
|
2,149
|
|
|
(8)
|
%
|
|
(1)
|
%
|
Other
|
|
2
|
|
|
14
|
|
|
(86)
|
%
|
|
|
|
5
|
|
|
49
|
|
|
(90)
|
%
|
|
|
Corporate and
Inter-Segment
Eliminations
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
|
Total
revenues
|
|
$
|
2,885
|
|
|
$
|
2,845
|
|
|
1
|
%
|
|
4
|
%
|
|
$
|
5,592
|
|
|
$
|
5,152
|
|
|
9
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
to
Discovery, Inc.
|
|
$
|
947
|
|
|
$
|
216
|
|
|
NM
|
|
|
|
$
|
1,331
|
|
|
$
|
208
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,126
|
|
|
$
|
983
|
|
|
15
|
%
|
|
|
|
$
|
2,187
|
|
|
$
|
1,635
|
|
|
34
|
%
|
|
|
International
Networks
|
|
286
|
|
|
336
|
|
|
(15)
|
%
|
|
(7)
|
%
|
|
505
|
|
|
473
|
|
|
7
|
%
|
|
18
|
%
|
Other
|
|
1
|
|
|
—
|
|
|
NM
|
|
|
|
2
|
|
|
3
|
|
|
(33)
|
%
|
|
|
Corporate and
Inter-Segment
Eliminations
|
|
(132)
|
|
|
(97)
|
|
|
(36)
|
%
|
|
|
|
(254)
|
|
|
(180)
|
|
|
(41)
|
%
|
|
|
Total Adjusted
OIBDA
|
|
$
|
1,281
|
|
|
$
|
1,222
|
|
|
5
|
%
|
|
7
|
%
|
|
$
|
2,440
|
|
|
$
|
1,931
|
|
|
26
|
%
|
|
29
|
%
|
U.S.
Networks
|
|
(dollars in
millions)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change(3)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,153
|
|
|
$
|
1,090
|
|
|
6
|
%
|
|
$
|
2,175
|
|
|
$
|
1,717
|
|
|
27
|
%
|
Distribution
|
|
688
|
|
|
654
|
|
|
5
|
%
|
|
1,385
|
|
|
1,168
|
|
|
19
|
%
|
Other
|
|
22
|
|
|
36
|
|
|
(39)
|
%
|
|
55
|
|
|
69
|
|
|
(20)
|
%
|
Total
revenues
|
|
$
|
1,863
|
|
|
$
|
1,780
|
|
|
5
|
%
|
|
$
|
3,615
|
|
|
$
|
2,954
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
$
|
1,126
|
|
|
$
|
983
|
|
|
15
|
%
|
|
$
|
2,187
|
|
|
$
|
1,635
|
|
|
34
|
%
|
U.S. Networks' revenues for the second quarter of 2019 increased
5% to $1,863 million compared with
the prior year's quarter, as advertising revenues increased 6% and
distribution revenues increased 5%, partially offset by a
$14 million decrease in other
revenues. The increase in advertising revenues was primarily driven
by increases in pricing and, to a lesser extent, inventory, as well
as the continued monetization of digital content offerings,
partially offset by lower overall ratings and the impact of
audience declines in the aggregate on our linear networks.
(1)
|
Free cash flow is
defined as cash provided by operating activities less purchases of
property and equipment.
|
(2)
|
Refer to pages 5-6
for the methodology for calculating growth rates excluding the
impact of currency effects for the International Networks segment
and Total Company.
|
(3)
|
The Company acquired
Scripps Networks on March 6, 2018, resulting in material
comparability differences for the six months ended
periods.
|
NM: Not
Meaningful
|
The increase in distribution revenues was primarily driven by
increases in contractual affiliate rates and additional carriage on
streaming platforms, partially offset by a decline in overall
subscribers. Total portfolio subscribers for June 2019 were 3% lower than June 2018, while subscribers to our fully
distributed networks were flat.
U.S. Networks' operating expenses decreased 8% to $737 million compared with the prior year's
quarter, as costs of revenues decreased 10% and SG&A expenses
decreased 4%. The decrease in costs of revenues was primarily
attributable to content synergies related to the integration of
Scripps Networks while the decrease in SG&A was primarily due
to lower personnel costs from restructuring and the integration of
Scripps Networks.
U.S. Networks' Adjusted OIBDA increased 15% to $1,126 million compared with $983 million in the prior year's quarter, driven
by the previously mentioned increase in revenues combined with the
decrease in operating expenses.
International
Networks
|
|
(dollars in
millions)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
Ex-FX(1)
|
|
2019
|
|
2018
|
|
Change(2)
|
|
Ex-FX(1,2)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
466
|
|
|
$
|
473
|
|
|
(1)
|
%
|
|
5
|
%
|
|
$
|
859
|
|
|
$
|
858
|
|
|
—
|
%
|
|
8
|
%
|
Distribution
|
|
518
|
|
|
532
|
|
|
(3)
|
%
|
|
3
|
%
|
|
1,045
|
|
|
1,069
|
|
|
(2)
|
%
|
|
4
|
%
|
Other
|
|
36
|
|
|
46
|
|
|
(22)
|
%
|
|
(18)
|
%
|
|
68
|
|
|
222
|
|
|
(69)
|
%
|
|
(67)
|
%
|
Total
revenues
|
|
$
|
1,020
|
|
|
$
|
1,051
|
|
|
(3)
|
%
|
|
3
|
%
|
|
$
|
1,972
|
|
|
$
|
2,149
|
|
|
(8)
|
%
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
$
|
286
|
|
|
$
|
336
|
|
|
(15)
|
%
|
|
(7)
|
%
|
|
$
|
505
|
|
|
$
|
473
|
|
|
7
|
%
|
|
18
|
%
|
International Networks' revenues for the second quarter of 2019
decreased 3% to $1,020 million
compared with the prior year's quarter. Excluding the impact of
foreign currency fluctuations, revenues increased 3%, as
advertising revenues increased 5% and distribution revenues
increased 3%, partially offset by an $8
million decrease in other revenues. The increase in
advertising revenues was primarily driven by higher pricing in
certain markets in Europe and to a
lesser extent, the consolidation of the UKTV Lifestyle Business and
expanded digital content offerings. The increase in distribution
revenues was driven by growth in Latin
America, primarily due to contractual price increases and
subscriber growth related in part to new channel launches along
with the timing of certain content licensing arrangements, and
subscriber growth in certain European markets.
International Networks' operating expenses increased 3% to
$734 million compared with the prior
year's quarter. Excluding the impact of foreign currency
fluctuations, operating expenses increased 8%. Costs of revenues
increased 4%, primarily attributable to higher expenses associated
with expanded digital content offerings and to a lesser extent, the
consolidation of the UKTV Lifestyle Business. SG&A increased
16%, primarily due to higher professional service fees, technology
costs and personnel expenses as a result of expanded digital
content offerings.
International Networks' Adjusted OIBDA decreased 15% to
$286 million compared with the prior
year's quarter. Excluding the impact of foreign currency
fluctuations, Adjusted OIBDA decreased 7%, primarily driven by the
increase in total operating expenses.
Other
|
|
(dollars in
millions)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Revenues
|
|
$
|
2
|
|
|
$
|
14
|
|
|
(86)
|
%
|
|
$
|
5
|
|
|
$
|
49
|
|
|
(90)
|
%
|
Adjusted
OIBDA
|
|
$
|
1
|
|
|
$
|
—
|
|
|
NM
|
|
$
|
2
|
|
|
$
|
3
|
|
|
(33)
|
%
|
(1)
|
Refer to pages 5-6
for the methodology for calculating growth rates excluding the
impact of currency effects for the International Networks
segment.
|
(2)
|
The Company acquired
Scripps Networks on March 6, 2018, resulting in material
comparability differences for the six months ended
periods.
|
The Other segment saw a significant decrease in revenues for the
second quarter of 2019 primarily due to the sale of the education
business. Adjusted OIBDA was consistent with the prior year
quarter.
Corporate and Inter-Segment Eliminations
Adjusted
OIBDA for the second quarter of 2019 decreased 36% compared with
the prior year's quarter, primarily due to higher technology costs
and professional service fees.
OTHER ITEMS
Share Buyback Authorization and Transactions
In
April 2019, the Company's Board of
Directors authorized additional common stock repurchases of up to
$1 billion. In May 2019, the
Company made an upfront cash payment of $96
million to enter into two prepaid common stock repurchase
contracts for the Company's Series C common stock. Under these
contracts, if the price of Discovery's Series C common stock is
below the strike price at expiration, the Company will receive a
fixed number of shares of its Series C common stock. If the price
of Discovery's Series C common stock is above the strike price at
expiration, the Company can elect to receive $50 million of cash per contract or that number
of shares of Series C common stock at the then-current market price
equal to $50 million. The first
contract settled in cash for $50
million during the period of June 26
to June 28, 2019 as the price of Discovery's Series C common
stock during that period was above the strike price. The second
contract is scheduled to settle during the quarter ending
September 30, 2019. The contracts are
accounted for as equity transactions.
Debt - Senior Notes
In May
2019, Discovery Communications, LLC ("DCL"), a wholly-owned
subsidiary of the Company, issued $750
million aggregate principal amount of 4.125% Senior Notes
due 2029 and $750 million aggregate
principal amount of 5.300% Senior Notes due 2049. Net proceeds to
DCL were $1.48 billion, net of
underwriting discounts, debt issuance costs and other expenses. DCL
used the proceeds from the offering to redeem or repurchase
approximately $1.3 billion aggregate
principal amount of DCL's 2.750% Senior Notes due 2019 and 5.050%
Senior Notes due 2020 and to pay accrued and unpaid interest,
premiums, fees and expenses in connection with the redemptions.
UKTV Lifestyle Business
In June 2019, the Company
and BBC dissolved their 50/50 joint venture, UKTV, a British
multi-channel broadcaster, with the Company taking full control of
UKTV's three lifestyle channels and BBC taking full control of
UKTV's seven entertainment channels.
FULL YEAR 2019 OUTLOOK(1)
Discovery will
provide forward-looking guidance in connection with this quarterly
earnings announcement on its quarterly earnings conference call and
webcast referenced below.
CONFERENCE CALL INFORMATION
Discovery will host a
conference call today, August 6, 2019 at 8:30 a.m. ET to discuss its second quarter
results. To listen to the call, visit
https://corporate.discovery.com or dial 1-844-452-2811 inside the
U.S. and 1-574-990-9832 outside of the U.S., using conference
passcode: DISCA.
(1)
|
Discovery does not
expect to be able to provide a reconciliation of the non-GAAP
forward-looking guidance to comparable GAAP measures as, at this
time, the Company cannot determine the occurrence or impact of the
adjustments, such as the effect of future changes in foreign
currency exchange rates or future acquisitions or divestitures that
would be excluded from such GAAP measures.
|
NON-GAAP FINANCIAL MEASURES
In addition to the results
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") provided in this release, the Company has
presented Adjusted OIBDA, Adjusted EPS and free cash flow. These
non-GAAP measures should be considered in addition to, but not as a
substitute for, operating income, net income, earnings per diluted
share and other measures of financial performance reported in
accordance with GAAP. Please review the supplemental
financial schedules beginning on page 11 for reconciliations to the
most comparable GAAP measures.
Adjusted OIBDA and Adjusted OIBDA Excluding the Impact of
Currency Effects
The Company evaluates the operating
performance of its segments based on financial measures such as
revenues and Adjusted OIBDA. Adjusted OIBDA is defined as operating
income excluding: (i) share-based compensation, (ii) depreciation
and amortization, (iii) restructuring and other charges, (iv)
certain impairment charges, (v) gains and losses on business and
asset dispositions, (vi) certain inter-segment eliminations related
to production studios, (vii) third-party transaction costs directly
related to the acquisition and integration of Scripps Networks, and
(viii) other items impacting comparability, such as the non-cash
settlement of a withholding tax claim.
The Company uses this measure to assess the operating results
and performance of its segments, perform analytical comparisons,
identify strategies to improve performance and allocate resources
to each segment. The Company believes Adjusted OIBDA is relevant to
investors because it allows them to analyze the operating
performance of each segment using the same metric management uses.
The Company excludes share-based compensation, restructuring and
other charges, certain impairment charges, gains and losses on
business and asset dispositions and Scripps Networks transaction
and integration costs from the calculation of Adjusted OIBDA due to
their impact on comparability between periods. The Company also
excludes depreciation of fixed assets and amortization of
intangible assets, as these amounts do not represent cash payments
in the current reporting period. Certain corporate expenses are
excluded from segment results to enable executive management to
evaluate segment performance based upon the decisions of segment
executives. Adjusted OIBDA should be considered in addition to, but
not a substitute for, operating income, net income and other
measures of financial performance reported in accordance with
GAAP. Refer to the comments that follow for the methodology
to calculate growth rates excluding foreign currency effects.
Effective January 1, 2019, our
definition of Adjusted OIBDA was modified to exclude all
share-based compensation, whereas only mark-to-market share-based
compensation was excluded previously. Over time, the Company has
moved to a higher percentage of equity-classified awards (in lieu
of liability-classified awards, which require mark-to-market
accounting) under its stock incentive plans and expects to continue
this action in future periods. Since most equity classified awards
are non-cash expenses not entirely under management control, the
Company has elected to exclude all share-based compensation from
Adjusted OIBDA beginning in 2019. The revised definition of
Adjusted OIBDA will be used by our chief operating decision maker
in evaluating segment performance in 2019. Accordingly, prior
period amounts have been recast to reflect the current
definition.
Methodology for Calculating Growth Rates Excluding the Impact
of Currency Effects
The impact of exchange rates on our
business is an important factor in understanding period-to-period
comparisons of our results. For example, our international revenues
are favorably impacted as the U.S. dollar weakens relative to other
foreign currencies, and unfavorably impacted as the U.S. dollar
strengthens relative to other foreign currencies. We believe the
presentation of results on a constant currency basis (ex-FX), in
addition to results reported in accordance with GAAP, provides
useful information about our operating performance because the
presentation ex-FX excludes the effects of foreign currency
volatility and highlights our core operating results. The
presentation of results on a constant currency basis should be
considered in addition to, but not a substitute for, measures of
financial performance reported in accordance with GAAP.
The ex-FX change represents the percentage change on a
period-over-period basis adjusted for foreign currency impacts. The
ex-FX change is calculated as the difference between the current
year amounts translated at a baseline rate, which is a spot rate
for each of our currencies determined early in the fiscal year as
part of our forecasting process (the "2019 Baseline Rate"), and the
prior year amounts translated at the same 2019 Baseline Rate.
In addition, consistent with the assumption of a constant
currency environment, our ex-FX results exclude the impact of our
foreign currency hedging activities, as well as realized and
unrealized foreign currency transaction gains and losses. Results
on a constant currency basis, as we present them, may not be
comparable to similarly titled measures used by other
companies.
Selling, General and Administrative Expense
Selling,
general and administrative expenses, as defined for Adjusted OIBDA,
excludes share-based compensation and Scripps Networks transaction
and integration costs due to their impact on comparability between
periods.
Adjusted EPS
Adjusted EPS is defined as earnings
excluding the impact of amortization of acquisition-related
intangible assets per diluted share. The Company believes Adjusted
EPS is relevant to investors because this metric allows them to
evaluate the performance of the Company's operations exclusive of
the non-cash amortization of acquisition-related intangible assets
that impact the comparability of results from period to period.
Free Cash Flow
The Company defines free cash flow as
cash flow from operations less acquisitions of property and
equipment. The Company uses free cash flow as it believes it is an
important indicator for management and investors of the Company's
liquidity, including its ability to reduce debt, make strategic
investments and return capital to stockholders.
CAUTIONARY STATEMENT CONCERNING FORWARD_LOOKING
STATEMENTS
Certain statements in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements regarding our business, marketing and operating
strategies, integration of acquired businesses, new service
offerings, financial prospects, and anticipated sources and uses of
capital. Words such as "anticipates," "estimates," "expects,"
"projects," "intends," "plans," "believes," and terms of similar
substance used in connection with any discussion of future
operating or financial performance identify forward-looking
statements. Where, in any forward-looking statement, we express an
expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the
expectation or belief will result or be accomplished. The following
is a list of some, but not all, of the factors that could cause
actual results or events to differ materially from those
anticipated:
- Changes in the distribution and viewing of television
programming, including the expanded deployment of personal video
recorders, subscription video on demand ("SVOD"), internet protocol
television, mobile personal devices and personal tablets and their
impact on television advertising revenue;
- Uncertainties associated with product and service development
and market acceptance, including the development and provision of
programming for new television and telecommunications
technologies;
- Continued consolidation of distribution customers and
production studios;
- A failure to secure affiliate agreements or renewal of such
agreements on less favorable terms;
- Rapid technological changes;
- The inability of advertisers or affiliates to remit payment to
us in a timely manner or at all;
- General economic and business conditions;
- Industry trends, including the timing of, and spending on,
feature film, television and television commercial production;
- Spending on domestic and foreign television advertising;
- Disagreements with our distributors or other business partners
over contract interpretation;
- Fluctuations in foreign currency exchange rates, political
unrest and regulatory changes in international markets;
- Market demand for foreign first-run and existing content
libraries;
- The regulatory and competitive environment of the industries in
which we, and the entities in which we have interests,
operate;
- Uncertainties inherent in the development of new business lines
and business strategies;
- Uncertainties regarding the financial performance of our equity
method investees;
- Our ability to complete, integrate and obtain the anticipated
benefits and synergies from our proposed business combinations and
acquisitions, including our acquisition of Scripps Networks
Interactive, Inc., on a timely basis or at all;
- Future financial performance, including availability, terms,
and deployment of capital;
- The ability of suppliers and vendors to deliver products,
equipment, software, and services;
- Our ability to achieve the efficiencies, savings and other
benefits anticipated from our cost-reduction initiatives;
- The outcome of any pending or threatened litigation;
- Availability of qualified personnel;
- The possibility or duration of an industry-wide strike or other
job action affecting a major entertainment industry union;
- Changes in, or failure or inability to comply with, government
regulations, including, without limitation, regulations of the
Federal Communications Commission and adverse outcomes from
regulatory proceedings;
- Changes in income taxes due to regulatory changes or changes in
our corporate structure;
- Changes in the nature of key strategic relationships with
partners, distributors and equity method investee partners;
- Competitor responses to our products and services and the
products and services of the entities in which we have
interests;
- Threatened terrorist attacks and military action;
- Our level of debt;
- Reduced access to capital markets or significant increases in
costs to borrow; and
- A reduction of advertising revenue associated with unexpected
reductions in the number of subscribers.
These risks have the potential to impact the recoverability of
the assets recorded on our balance sheets, including goodwill or
other intangibles. For additional risk factors, refer to the "Risk
Factors" section in our 2018 Annual Report on Form 10-K and our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. These forward-looking statements
and such risks, uncertainties and other factors speak only as of
the date of this Press Release, and we expressly disclaim any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein, to reflect any
change in our expectations with regard thereto, or any other change
in events, conditions or circumstances on which any such statement
is based.
ABOUT DISCOVERY
Discovery, Inc. (Nasdaq: DISCA, DISCB,
DISCK) is a global leader in real life entertainment, serving a
passionate audience of superfans around the world with content that
inspires, informs and entertains. Discovery delivers over 8,000
hours of original programming each year and has category leadership
across deeply loved content genres around the world. Available in
220 countries and territories and in nearly 50 languages, Discovery
is a platform innovator, reaching viewers on all screens, including
TV Everywhere products such as the GO portfolio of apps;
direct-to-consumer streaming services such as Eurosport Player and
MotorTrend OnDemand; digital-first and social content from Group
Nine Media; a landmark natural history and factual content
partnership with the BBC; and a strategic alliance with PGA TOUR to
create the international home of golf. Discovery's portfolio of
premium brands includes Discovery Channel, HGTV, Food Network, TLC,
Investigation Discovery, Travel Channel, MotorTrend, Animal Planet,
and Science Channel, as well as OWN: Oprah Winfrey Network in the
U.S., Discovery Kids in Latin
America, and Eurosport, the leading provider of locally
relevant, premium sports and Home of the Olympic Games across
Europe. For more information,
please visit https://corporate.discovery.com and follow
@DiscoveryIncTV across social platforms.
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited; in
millions, except per share amounts)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,619
|
|
|
$
|
1,563
|
|
|
$
|
3,034
|
|
|
$
|
2,575
|
|
Distribution
|
|
1,206
|
|
|
1,186
|
|
|
2,430
|
|
|
2,237
|
|
Other
|
|
60
|
|
|
96
|
|
|
128
|
|
|
340
|
|
Total
revenues
|
|
2,885
|
|
|
2,845
|
|
|
5,592
|
|
|
5,152
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Costs of revenues,
excluding depreciation and amortization
|
|
938
|
|
|
995
|
|
|
1,868
|
|
|
2,055
|
|
Selling, general and
administrative
|
|
709
|
|
|
687
|
|
|
1,335
|
|
|
1,296
|
|
Depreciation and
amortization
|
|
320
|
|
|
410
|
|
|
692
|
|
|
603
|
|
Restructuring and
other charges
|
|
7
|
|
|
187
|
|
|
12
|
|
|
428
|
|
Gain on
disposition
|
|
—
|
|
|
(84)
|
|
|
—
|
|
|
(84)
|
|
Total costs and
expenses
|
|
1,974
|
|
|
2,195
|
|
|
3,907
|
|
|
4,298
|
|
Operating
income
|
|
911
|
|
|
650
|
|
|
1,685
|
|
|
854
|
|
Interest expense,
net
|
|
(161)
|
|
|
(196)
|
|
|
(343)
|
|
|
(373)
|
|
Loss on
extinguishment of debt
|
|
(23)
|
|
|
—
|
|
|
(28)
|
|
|
—
|
|
Loss from equity
investees, net
|
|
(20)
|
|
|
(40)
|
|
|
(9)
|
|
|
(62)
|
|
Other income
(expense), net
|
|
9
|
|
|
(47)
|
|
|
(18)
|
|
|
(69)
|
|
Income before income
taxes
|
|
716
|
|
|
367
|
|
|
1,287
|
|
|
350
|
|
Income tax benefit
(expense)
|
|
271
|
|
|
(123)
|
|
|
118
|
|
|
(103)
|
|
Net income
|
|
987
|
|
|
244
|
|
|
1,405
|
|
|
247
|
|
Net income
attributable to noncontrolling interests
|
|
(36)
|
|
|
(23)
|
|
|
(65)
|
|
|
(28)
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(4)
|
|
|
(5)
|
|
|
(9)
|
|
|
(11)
|
|
Net income available
to Discovery, Inc.
|
|
$
|
947
|
|
|
$
|
216
|
|
|
$
|
1,331
|
|
|
$
|
208
|
|
Net income per share
allocated to Discovery, Inc. Series A, B and C
common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.33
|
|
|
$
|
0.30
|
|
|
$
|
1.86
|
|
|
$
|
0.31
|
|
Diluted(1)
|
|
$
|
1.33
|
|
|
$
|
0.30
|
|
|
$
|
1.86
|
|
|
$
|
0.31
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
528
|
|
|
523
|
|
|
526
|
|
|
473
|
|
Diluted(1)
|
|
716
|
|
|
712
|
|
|
715
|
|
|
661
|
|
(1)
|
|
Diluted shares adjust
for the potential dilution that would occur if common stock
equivalents, including convertible preferred stock and share-based
awards, were converted into common stock or exercised.
|
DISCOVERY,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited; in
millions, except par value)
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,321
|
|
|
$
|
986
|
|
Receivables,
net
|
2,854
|
|
|
2,620
|
|
Content rights,
net
|
330
|
|
|
313
|
|
Prepaid expenses and
other current assets
|
427
|
|
|
312
|
|
Total current
assets
|
4,932
|
|
|
4,231
|
|
Noncurrent content
rights, net
|
3,258
|
|
|
3,069
|
|
Property and
equipment, net
|
828
|
|
|
800
|
|
Goodwill,
net
|
13,222
|
|
|
13,006
|
|
Intangible assets,
net
|
9,172
|
|
|
9,674
|
|
Equity method
investments, including note receivable
|
542
|
|
|
935
|
|
Other noncurrent
assets
|
1,891
|
|
|
835
|
|
Total
assets
|
$
|
33,845
|
|
|
$
|
32,550
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
325
|
|
|
$
|
325
|
|
Accrued
liabilities
|
1,570
|
|
|
1,604
|
|
Deferred
revenues
|
293
|
|
|
249
|
|
Current portion of
debt
|
1,686
|
|
|
1,819
|
|
Total current
liabilities
|
3,874
|
|
|
3,997
|
|
Noncurrent portion of
debt
|
14,823
|
|
|
14,974
|
|
Deferred income
taxes
|
1,656
|
|
|
1,811
|
|
Other noncurrent
liabilities
|
1,827
|
|
|
1,251
|
|
Total
liabilities
|
22,180
|
|
|
22,033
|
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
444
|
|
|
415
|
|
Equity:
|
|
|
|
Discovery, Inc.
stockholders' equity:
|
|
|
|
Series A-1
convertible preferred stock: $0.01 par value; 8 shares authorized,
issued and
outstanding
|
—
|
|
|
—
|
|
Series C-1
convertible preferred stock: $0.01 par value; 6 shares authorized;
5 and 6
shares issued and outstanding
|
—
|
|
|
—
|
|
Series A common
stock: $0.01 par value; 1,700 shares authorized; 161 and 160
shares
issued; and 158 and 157 shares outstanding
|
2
|
|
|
2
|
|
Series B
convertible common stock: $0.01 par value; 100 shares authorized; 7
shares
issued and outstanding
|
—
|
|
|
—
|
|
Series C common
stock: $0.01 par value; 2,000 shares authorized; 537 and 524
shares
issued; and 373 and 360 shares outstanding
|
5
|
|
|
5
|
|
Additional paid-in
capital
|
10,648
|
|
|
10,647
|
|
Treasury stock, at
cost: 167 shares
|
(6,737)
|
|
|
(6,737)
|
|
Retained
earnings
|
6,616
|
|
|
5,254
|
|
Accumulated other
comprehensive loss
|
(913)
|
|
|
(785)
|
|
Total Discovery, Inc.
stockholders' equity
|
9,621
|
|
|
8,386
|
|
Noncontrolling
interests
|
1,600
|
|
|
1,716
|
|
Total
equity
|
11,221
|
|
|
10,102
|
|
Total liabilities and
equity
|
$
|
33,845
|
|
|
$
|
32,550
|
|
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; in
millions)
|
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
Operating
Activities
|
|
|
|
Net income
|
$
|
1,405
|
|
|
$
|
247
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Share-based
compensation expense
|
69
|
|
|
49
|
|
Depreciation and
amortization
|
692
|
|
|
603
|
|
Content rights
amortization and impairment
|
1,378
|
|
|
1,660
|
|
Gain on
disposition
|
—
|
|
|
(84)
|
|
Remeasurement gain on
previously held equity interest
|
(14)
|
|
|
—
|
|
Equity in earnings of
equity method investee companies, net of cash
distributions
|
37
|
|
|
95
|
|
Deferred income
taxes
|
(554)
|
|
|
(80)
|
|
Loss on
extinguishment of debt
|
28
|
|
|
—
|
|
Other, net
|
50
|
|
|
25
|
|
Changes in operating
assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
Receivables,
net
|
(231)
|
|
|
(176)
|
|
Content rights and
payables, net
|
(1,570)
|
|
|
(1,583)
|
|
Accounts payable and
accrued liabilities
|
(132)
|
|
|
(68)
|
|
Prepaid income taxes
and income taxes receivable
|
(3)
|
|
|
(42)
|
|
Foreign currency and
other, net
|
61
|
|
|
70
|
|
Cash provided by
operating activities
|
1,216
|
|
|
716
|
|
Investing
Activities
|
|
|
|
Business
acquisitions, net of cash acquired
|
(60)
|
|
|
(8,565)
|
|
Investments in and
advances to equity investments
|
(147)
|
|
|
(48)
|
|
Proceeds from
dispositions, net of cash disposed
|
—
|
|
|
107
|
|
Proceeds from
dissolution of joint venture
|
105
|
|
|
—
|
|
Purchases of property
and equipment
|
(122)
|
|
|
(82)
|
|
Other investing
activities, net
|
4
|
|
|
5
|
|
Cash used in
investing activities
|
(220)
|
|
|
(8,583)
|
|
Financing
Activities
|
|
|
|
Commercial paper
borrowings, net
|
173
|
|
|
579
|
|
Principal repayments
of revolving credit facility
|
(225)
|
|
|
(50)
|
|
Borrowings under term
loan facilities
|
—
|
|
|
2,000
|
|
Principal repayments
of term loans
|
—
|
|
|
(1,500)
|
|
Borrowings from debt,
net of discount and including premiums
|
1,482
|
|
|
—
|
|
Principal repayments
of debt, including discount payment
|
(1,740)
|
|
|
—
|
|
Principal repayments
of finance lease obligations
|
(26)
|
|
|
(25)
|
|
Cash prepayments for
common stock repurchase contracts, net
|
(79)
|
|
|
—
|
|
Distributions to
noncontrolling interests and redeemable noncontrolling
interests
|
(191)
|
|
|
(59)
|
|
Share-based plan
(payments) proceeds, net
|
(11)
|
|
|
26
|
|
(Repayments)
borrowings under program financing line of credit, net
|
(6)
|
|
|
23
|
|
Payments for hedging
instruments
|
(18)
|
|
|
—
|
|
Other financing
activities, net
|
(2)
|
|
|
(17)
|
|
Cash (used in)
provided by financing activities
|
(643)
|
|
|
977
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(18)
|
|
|
(27)
|
|
Net change in cash
and cash equivalents
|
335
|
|
|
(6,917)
|
|
Cash and cash
equivalents, beginning of period
|
986
|
|
|
7,309
|
|
Cash and cash
equivalents, end of period
|
$
|
1,321
|
|
|
$
|
392
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
Three Months Ended
June 30, 2019
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
$
|
947
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
4
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
36
|
|
Income tax
(benefit)
|
|
|
|
|
|
|
|
|
(271)
|
|
Other (income),
net
|
|
|
|
|
|
|
|
|
(9)
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
20
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
23
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
161
|
|
Operating income
(loss)
|
$
|
898
|
|
|
$
|
180
|
|
|
$
|
5
|
|
|
$
|
(172)
|
|
|
$
|
911
|
|
Restructuring and
other charges
|
3
|
|
|
6
|
|
|
—
|
|
|
(2)
|
|
|
7
|
|
Depreciation and
amortization
|
222
|
|
|
82
|
|
|
—
|
|
|
16
|
|
|
320
|
|
Share-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
39
|
|
Scripps Networks
transaction and integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Inter-segment eliminations
|
3
|
|
|
18
|
|
|
(4)
|
|
|
(17)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
$
|
1,126
|
|
|
$
|
286
|
|
|
$
|
1
|
|
|
$
|
(132)
|
|
|
$
|
1,281
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2018
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
$
|
216
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
5
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
23
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
123
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
47
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
40
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
196
|
|
Operating income
(loss)
|
$
|
667
|
|
|
$
|
102
|
|
|
$
|
85
|
|
|
$
|
(204)
|
|
|
$
|
650
|
|
Restructuring and
other charges
|
19
|
|
|
146
|
|
|
1
|
|
|
21
|
|
|
187
|
|
Depreciation and
amortization
|
295
|
|
|
83
|
|
|
1
|
|
|
31
|
|
|
410
|
|
Share-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
Scripps Networks
transaction and integration costs
|
4
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
25
|
|
Gain on
disposition
|
—
|
|
|
—
|
|
|
(84)
|
|
|
—
|
|
|
(84)
|
|
Inter-segment eliminations
|
(2)
|
|
|
5
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
$
|
983
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
$
|
(97)
|
|
|
$
|
1,222
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
Six Months Ended
June 30, 2019
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
$
|
1,331
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
9
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
65
|
|
Income tax
(benefit)
|
|
|
|
|
|
|
|
|
(118)
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
18
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
9
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
28
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
343
|
|
Operating
income
|
$
|
1,685
|
|
|
$
|
339
|
|
|
$
|
8
|
|
|
$
|
(347)
|
|
|
$
|
1,685
|
|
Restructuring and
other charges
|
7
|
|
|
10
|
|
|
—
|
|
|
(5)
|
|
|
12
|
|
Depreciation and
amortization
|
495
|
|
|
164
|
|
|
—
|
|
|
33
|
|
|
692
|
|
Share-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
Scripps Networks
transaction and integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
11
|
|
Settlement of a
withholding tax claim
|
—
|
|
|
(29)
|
|
|
—
|
|
|
—
|
|
|
(29)
|
|
Inter-segment
eliminations
|
—
|
|
|
21
|
|
|
(6)
|
|
|
(15)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
$
|
2,187
|
|
|
$
|
505
|
|
|
$
|
2
|
|
|
$
|
(254)
|
|
|
$
|
2,440
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2018
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
$
|
208
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
11
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
28
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
103
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
69
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
62
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
373
|
|
Operating
income
|
$
|
1,182
|
|
|
$
|
71
|
|
|
$
|
90
|
|
|
$
|
(489)
|
|
|
$
|
854
|
|
Restructuring and
other charges
|
53
|
|
|
246
|
|
|
1
|
|
|
128
|
|
|
428
|
|
Depreciation and
amortization
|
395
|
|
|
150
|
|
|
3
|
|
|
55
|
|
|
603
|
|
Share-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
49
|
|
Scripps Networks
transaction and integration costs
|
4
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
81
|
|
Gain on
disposition
|
—
|
|
|
—
|
|
|
(84)
|
|
|
—
|
|
|
(84)
|
|
Inter-segment
eliminations
|
1
|
|
|
6
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
$
|
1,635
|
|
|
$
|
473
|
|
|
$
|
3
|
|
|
$
|
(180)
|
|
|
$
|
1,931
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
EARNINGS PER
SHARE
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income
|
|
987
|
|
|
244
|
|
|
1,405
|
|
|
247
|
|
Less:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible
preferred stock
|
|
(94)
|
|
|
(21)
|
|
|
(132)
|
|
|
(22)
|
|
Net income
attributable to noncontrolling interests
|
|
(36)
|
|
|
(23)
|
|
|
(65)
|
|
|
(28)
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(4)
|
|
|
(5)
|
|
|
(9)
|
|
|
(11)
|
|
Redeemable
noncontrolling interest adjustments to redemption value
|
|
1
|
|
|
(6)
|
|
|
(4)
|
|
|
(6)
|
|
Net income allocated
to Discovery, Inc. Series A, B and C common
and Series C-1 convertible preferred stockholders for basic net
income
per share
|
|
854
|
|
|
189
|
|
|
1,195
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
Allocation of net
income to Discovery, Inc. Series A, B and C
common stockholders and Series C-1 convertible preferred
stockholders for basic net income per share:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
702
|
|
|
155
|
|
|
980
|
|
|
145
|
|
Series C-1
convertible preferred stockholders
|
|
152
|
|
|
34
|
|
|
215
|
|
|
35
|
|
Total
|
|
854
|
|
|
189
|
|
|
1,195
|
|
|
180
|
|
Add:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible
preferred stockholders
|
|
94
|
|
|
21
|
|
|
132
|
|
|
22
|
|
Net income allocated
to Discovery, Inc. Series A, B and C common
stockholders for diluted net income
per share
|
|
$
|
948
|
|
|
$
|
210
|
|
|
$
|
1,327
|
|
|
$
|
202
|
|
|
|
|
|
|
|
|
|
|
Denominator —
weighted average:
|
|
|
|
|
|
|
|
|
Series A, B and C
common shares outstanding — basic
|
|
528
|
|
|
523
|
|
|
526
|
|
|
473
|
|
Impact of assumed
preferred stock conversion
|
|
185
|
|
|
187
|
|
|
186
|
|
|
187
|
|
Dilutive effect of
share-based awards
|
|
3
|
|
|
2
|
|
|
3
|
|
|
1
|
|
Series A, B and C
common shares outstanding — diluted
|
|
716
|
|
|
712
|
|
|
715
|
|
|
661
|
|
Series C-1
convertible preferred stock outstanding — basic and
diluted
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share allocated to Discovery, Inc. Series A, B
and C common and Series C-1 convertible preferred
stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
1.33
|
|
|
$
|
0.30
|
|
|
$
|
1.86
|
|
|
$
|
0.31
|
|
Series C-1
convertible preferred stockholders
|
|
$
|
25.76
|
|
|
$
|
5.73
|
|
|
$
|
36.08
|
|
|
$
|
5.93
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share allocated to Discovery, Inc. Series A, B
and C common and Series C-1 convertible preferred
stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
1.33
|
|
|
$
|
0.30
|
|
|
$
|
1.86
|
|
|
$
|
0.31
|
|
Series C-1
convertible preferred stockholders
|
|
$
|
25.67
|
|
|
$
|
5.72
|
|
|
$
|
35.95
|
|
|
$
|
5.92
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
CALCULATION OF
ADJUSTED EARNINGS PER DILUTED SHARE
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Diluted net income
per share allocated to
Discovery, Inc. Series A, B and C common
and Series C-1 convertible preferred
stockholders:
|
|
$
|
1.33
|
|
|
$
|
0.30
|
|
|
$
|
1.03
|
|
|
$
|
1.86
|
|
|
$
|
0.31
|
|
|
$
|
1.55
|
|
Per share impact of
amortization of
acquisition-related intangible assets, net
of tax
|
|
0.28
|
|
|
0.36
|
|
|
(0.08)
|
|
|
0.62
|
|
|
0.53
|
|
|
0.09
|
|
Adjusted earnings per
diluted share
|
|
$
|
1.61
|
|
|
$
|
0.66
|
|
|
$
|
0.95
|
|
|
$
|
2.48
|
|
|
$
|
0.84
|
|
|
$
|
1.64
|
|
CALCULATION OF
FREE CASH FLOW
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
Change
|
|
%
Change
|
|
2019
|
|
2018
|
|
Change
|
|
%
Change
|
Cash provided by
operating
activities
|
|
$
|
674
|
|
|
$
|
556
|
|
|
$
|
118
|
|
|
21
|
%
|
|
$
|
1,216
|
|
|
$
|
716
|
|
|
$
|
500
|
|
|
70
|
%
|
Purchases of property
and
equipment
|
|
(78)
|
|
|
(34)
|
|
|
(44)
|
|
|
NM
|
|
(122)
|
|
|
(82)
|
|
|
(40)
|
|
|
(49)
|
%
|
Free cash
flow
|
|
$
|
596
|
|
|
$
|
522
|
|
|
$
|
74
|
|
|
14
|
%
|
|
$
|
1,094
|
|
|
$
|
634
|
|
|
$
|
460
|
|
|
73
|
%
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions)
|
|
BORROWINGS
|
|
|
June 30,
2019
|
|
December 31,
2018
|
5.625% Senior notes,
semi-annual interest, due August 2019
|
$
|
—
|
|
|
$
|
411
|
|
2.200% Senior notes,
semi-annual interest, due September 2019
|
500
|
|
|
500
|
|
Floating rate notes,
quarterly interest, due September 2019
|
400
|
|
|
400
|
|
2.750% Senior notes,
semi-annual interest, due November 2019
|
—
|
|
|
500
|
|
2.800% Senior notes,
semi-annual interest, due June 2020
|
600
|
|
|
600
|
|
5.050% Senior notes,
semi-annual interest, due June 2020
|
—
|
|
|
789
|
|
4.375% Senior notes,
semi-annual interest, due June 2021
|
640
|
|
|
650
|
|
2.375% Senior notes,
euro denominated, annual interest, due March 2022
|
341
|
|
|
344
|
|
3.300% Senior notes,
semi-annual interest, due May 2022
|
496
|
|
|
500
|
|
3.500% Senior notes,
semi-annual interest, due June 2022
|
400
|
|
|
400
|
|
2.950% Senior notes,
semi-annual interest, due March 2023
|
1,185
|
|
|
1,185
|
|
3.250% Senior notes,
semi-annual interest, due April 2023
|
350
|
|
|
350
|
|
3.800% Senior notes,
semi-annual interest, due March 2024
|
450
|
|
|
450
|
|
2.500% Senior notes,
sterling denominated, annual interest, due September
2024
|
508
|
|
|
507
|
|
3.900% Senior notes,
semi-annual interest, due November 2024
|
497
|
|
|
497
|
|
3.450% Senior notes,
semi-annual interest, due March 2025
|
300
|
|
|
300
|
|
3.950% Senior notes,
semi-annual interest, due June 2025
|
500
|
|
|
500
|
|
4.900% Senior notes,
semi-annual interest, due March 2026
|
700
|
|
|
700
|
|
1.900% Senior notes,
euro denominated, annual interest, due March 2027
|
682
|
|
|
688
|
|
3.950% Senior notes,
semi-annual interest, due March 2028
|
1,700
|
|
|
1,700
|
|
4.125% Senior notes,
semi-annual interest, due May 2029
|
750
|
|
|
—
|
|
5.000% Senior notes,
semi-annual interest, due September 2037
|
1,250
|
|
|
1,250
|
|
6.350% Senior notes,
semi-annual interest, due June 2040
|
850
|
|
|
850
|
|
4.950% Senior notes,
semi-annual interest, due May 2042
|
500
|
|
|
500
|
|
4.875% Senior notes,
semi-annual interest, due April 2043
|
850
|
|
|
850
|
|
5.200% Senior notes,
semi-annual interest, due September 2047
|
1,250
|
|
|
1,250
|
|
5.300% Senior notes,
semi-annual interest, due May 2049
|
750
|
|
|
—
|
|
Revolving credit
facility
|
—
|
|
|
225
|
|
Program financing
line of credit
|
16
|
|
|
22
|
|
Commercial
paper
|
176
|
|
|
—
|
|
Total
debt(1)
|
16,641
|
|
|
16,918
|
|
Unamortized discount,
premium and debt issuance costs, net
|
(132)
|
|
|
(125)
|
|
Debt, net of
unamortized discount, premium and debt issuance costs
|
16,509
|
|
|
16,793
|
|
Current portion of
debt
|
(1,686)
|
|
|
(1,819)
|
|
Noncurrent portion of
debt
|
$
|
14,823
|
|
|
$
|
14,974
|
|
(1)
|
As a result of the
adoption of ASU 2016-02, capital lease obligations totaling $252
million as of December 31, 2018 (known as finance lease liabilities
effective January 1, 2019) were reclassified to components of
"Accrued liabilities" and "Other noncurrent liabilities" on the
consolidated balance sheet to conform with the new
presentation.
|
View original
content:http://www.prnewswire.com/news-releases/discovery-inc-reports-second-quarter-2019-results-300897036.html
SOURCE Discovery, Inc.