Earnings: Discovery Revenues Flat, Ad Revenues Up 6 Percent

This story was written by Rory Maher.
In another sign that cable advertising is holding up better than broadcast advertising, fourth-quarter revenues at Discovery (NSDQ: DISAB) Networks were flat versus the same period 2007, at $904 million, while ad revenues were up 6 percent. The results were boosted by growth at the U.S. networks, but weighed down by declines from its international networks.

Operating income before depreciation and amortization (or OIBDA), at $362 million, was largely flat versus 2007 when a one-time content impairment charge is taken into account. EPS was $0.25. The company's 2009 guidance was below what most analysts were expecting. Some of the other numbers:

U.S. networks revenue and OIBDA grew 8 percent and 44 percent, respectively. (OIBDA excludes a one-time content impairment charge in 2007.)  U.S. subscriber fee revenue grew 13 percent. U.S. Networks saw subscriber increases at its emerging channels and benefited from increased viewership at the Discovery Channel and TLC.
International networks revenue decreased 4 percent, while OIBDA was flat versus 2007 (excluding a one-time content impairment charge in 2007). Subscriber growth actually increased subscriber revenue on a local country level by 8 percent during the quarter, but currency changes dragged that number lower when reported in U.S. dollars.
The company didn't provide a lot of detail on how 2009 is shaping up, but did say it expected revenue to fall somewhere between $3.4 billion and $3.5 billion, which implies that revenue will be flat during 2009 versus 2008. No word on the company's efforts to reformat its entire TV library for web viewing

Earnings Release

By Rory Maher