Discovery Q3 Profit Rises 15% Despite Decline in Ad Sales

Parent to HGTV, TLC and Discovery Channel tops Wall Street’s expectations in summer quarter

TLC

Discovery, Inc. impressed with its third-quarter 2020 financials — especially considering the COVID environment. Thank goodness for TLC’s hit “90 Day Fiancé” franchise, which was dominant in primetime TV ratings on both Sundays and Mondays this summer.

Wall Street had forecast earnings of 65 cents per share on $2.49 billion in revenue, according to a Yahoo Finance compilation of estimates. On Thursday morning, Discovery reported Q3 adjusted EPS (earnings per share) of 81 cents on $2.561 billion in revenue.

Net income for the quarter was $300 million, up 15% from the comparable quarter last year. On a per-share basis, however, those adjusted earnings decreased 7%.

Total revenues were down 4% as ad sales decreased (-8% in the U.S. and -9% internationally) more than U.S. distribution rose (+2%). Abroad, distribution revenue declined 4%.

Stateside, Discovery’s portfolio lost 6% of the subscribers it had at this time last year.

“Discovery delivered improving financial results in the third quarter, a testament to the powerful appeal of our content and brands, led in the U.S. by TLC, which beat top-rated sports and news networks in coveted primetime demos, even in a record year for cable news,” David Zaslav, president and CEO of Discovery, said in prepared remarks accompanying the financials. “And as promised, our healthy liquidity position and another robust quarter of free cash flow generation allowed us to return $228 million to shareholders through share repurchases.”

“In the midst of macroeconomic uncertainty with the ongoing COVID pandemic, as well as the continuing evolution of our industry, we remain focused on positioning Discovery for long-term growth and shareholder value creation through the execution of our strategic priorities, including our next generation initiatives,” Zaslav concluded.

Discovery stock (DISCA) closed Wednesday at $20.53 per share. The U.S. stock markets will reopen for regular trading at 9:30 a.m. ET.

Zaslav and other Discovery executives are set to host a conference call at 8 a.m. ET to discuss the quarter in greater detail.

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