Discovery Communications Inc. DISCA reported third-quarter 2015 financial numbers wherein the bottom line outpaced the Zacks Consensus Estimate while the top line missed the same.
Quarterly GAAP net income came in at $279 million or 43 cents per share compared with $280 million or 41 cents in the year-ago quarter. Also, third-quarter adjusted earnings per share of 47 cents outpaced the Zacks Consensus Estimate of 39 cents. On the other hand, quarterly total revenue of $1,557 million exhibited an improvement of 3% year over year but fell short of the Zacks Consensus Estimate of $1,560 million.
Total Distribution revenue was $776 million, up 3.7% year over year. Total Advertising revenue stood at $699 million, down 3.6%. Other revenues grossed $82 million, down 13.7% year over year. Quarterly expenses (on a reported basis) totaled $1,052 million, down 0.5% from the year-earlier quarter. Quarterly adjusted operating income before depreciation and amortization (OIBDA) was $576 million, down 9% year over year.
At the end of the first nine months of 2015, Discovery generated $652 million of cash from operations compared with $893 million in the prior-year quarter. Free cash flow in the said quarter was $576 million versus $808 million a year ago.
At the end of the third quarter, Discovery had $262 million of cash and $6,941 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 $781 million, up 8% year over year. Within this, Distribution revenues were up 12% year over year while Advertising revenues inched up 6% from the last-year quarter. Meanwhile, Other revenues fell 18% year over year. Adjusted OIBDA was up 4% year over year. Adjusted OIBDA margin stood at 57% in the reported quarter versus 59% a year ago.
International Networks
Total revenue came in at $740 million, down 9% year over year. Within this, Distribution revenues dropped 3% year over year while Advertising revenues fell 14%. Other revenues deteriorated 30% year over year. Further, adjusted OIBDA decreased 21% year over year. Adjusted OIBDA margin stood at 29% versus 34% in the prior-year quarter.
Education
Total revenue at this segment came in at $36 million, up 3% year over year.
Guidance
The company provided guidance for fiscal 2015 with revenues expected to grow in between 9% and 10% while adjusted earnings are likely to increase in low double-digits. Likewise, adjusted OIBDA is projected to increase in the mid-single digit range.
Zacks Rank & Stocks to Consider
Discovery currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include AMC Networks Inc. AMCX, Gray Television, Inc. GTN and Scripps Networks Interactive, Inc. SNI. AMC Networks and Gray Television sport a Zacks Rank #1 (Strong Buy) while Scripps Networks carries a Zacks Rank #2 (Buy).
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