DOW JONES NEWSWIRES
Discovery Communications Inc.'s (DISCA, DISCB, DISCK)
fourth-quarter earnings jumped 34% on higher ad sales and pricing,
especially in the U.S., but fell short of analysts'
expectations.
Cable network owners such as Discovery have benefited over the
past year from tens of billions of dollars in yearly subscription
fees as well as healthy advertising revenue. Its Oprah Winfrey
Network launched last month represented a bet on the continued
stability of cable TV, which hasn't suffered the steep advertising
declines other media have experienced of late.
Discovery's sales in the U.S. rose 9%, driven by a 13% increase
in ad revenue and a 7% boost to distribution revenue. The increases
reflected increases in volume as well as higher ad prices and
distribution fees.
The company's international networks posted a 4% sales increase
on 7% higher distribution revenue and 5% higher ad sales.
The company spent more than $100 million to start up the Oprah
Winfrey Network, a replacement for its Discovery Health channel
that broadcast to more than 80 million U.S. homes on its launch.
Despite the costs incurred in the fourth quarter, the company said
last month it expects the channel to add to earnings for the full
year. The company's FitTV channel was rebranded this month as
Discovery Fit & Health.
Last year, the company also rebranded its Discovery Kids network
as "The Hub," a joint venture with toy maker Hasbro Inc. (HAS).
Discovery reported a fourth-quarter profit of $202 million, or
47 cents a share, up from $151 million, or 35 cents a share, a year
earlier. Both periods included a penny per-share loss from
discontinued operations. Revenue increased 6.8% to $1.02
billion.
Analysts polled by Thomson Reuters had most recently expected
earnings of 51 cents on revenue of $1.03 billion.
Operating margin jumped to 38.8% from 32.1%.
Discovery forecast 2011 revenue of $4 billion to $4.1 billion.
Analysts polled by Thomson Reuters expected $4.05 billion.
Discovery Communications' largest shareholder is John Malone,
chairman of Liberty Media Corp. (LCAPA, LINTA, LSTZA), with about a
4.7% stake in the company.
Discovery's channel lineup includes Discovery Channel, TLC and
Animal Planet.
Class A shares of Discovery closed Thursday at $43.25 and were
inactive premarket. The stock hit an all-time high of $45.42 in
October.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com