Discovery Communications Inc. DISCA reported second-quarter 2015 financial results wherein both the top and the bottom line missed the Zacks Consensus Estimate.
Quarterly GAAP net income came in at $289 million or 44 cents per share compared with $384 million or 54 cents in the year-ago quarter. However, second-quarter adjusted earnings per share of 49 cents outpaced the Zacks Consensus Estimate of 47 cents.
On the other hand, quarterly total revenue of $1,654 million exhibited an improvement of 3% year over year but fell short of the Zacks Consensus Estimate of $1,692 million. The year-over-year upside was driven by strong U.S. sales.
Total Distribution revenue was $775 million, up 12% year over year. Total Advertising revenue stood at $814 million, down 3.6%. Other revenues grossed $65 million, down 12.2% year over year. Quarterly expenses (on a reported basis) totaled $1,097 million, 13.1% higher than the year-earlier quarter. Quarterly adjusted operating income before depreciation and amortization (OIBDA) was $680 million, down 2% year over year.
At the end of the first six months of 2015, Discovery generated $394 million of cash from operations compared with $473 million in the prior-year quarter. Free cash flow in the said quarter was $342 million versus $415 million a year ago.
At the end of the second quarter, Discovery had $232 million of cash and $6,856 million of debt outstanding (including current portion) compared with $367 million and $6,002 million, respectively, at the end of 2014. Meanwhile, the debt-to-capitalization ratio, at the end of the reported quarter, was 0.55 versus 0.52 at the end of 2014.
Segmental Details
U.S. Networks
Total revenue came in at $814 million, up 5% year over year. Within this, Distribution revenues were up 12% year over year while Advertising revenues remained flat. Meanwhile, Other revenues fell 9% year over year. Adjusted OIBDA was up 7% over year. Adjusted OIBDA margin stood at 61% in the reported quarter versus 60% a year ago.
International Networks
Total revenue came in at $801 million, up 1% year over year. Within this, Distribution climbed 12% year over year while Advertising revenues fell 8%. Other revenues dropped 30% year over year. Adjusted OIBDA decreased 11 % year over year. Adjusted OIBDA margin stood at 33% versus 38% in the prior-year quarter.
Education
Total revenue at this segment stood at $40 million, down 5% year over year.
Guidance
The company expects both revenue and adjusted earnings for fiscal 2015 (excluding currency impact) to increase in the high-single to low-double digit band. Likewise, adjusted OIBDA is likely to rise in the low to mid-single digit band while adjusted earnings will probably increase in low-double digits.
On Jun 29, 2015, Discovery announced plans to spend nearly €1.3 billion for gaining access to exclusive TV and multi-platform rights to Olympics between 2018 and 2024, across 50 European countries and territories. This will certainly drive the company’s advertising revenues, going forward.
Stocks to Consider
Discovery currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the same space include AMC Networks Inc. AMCX, Gray Television, Inc. GTN and Salem Media Group, Inc. SALM. All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment