Discovery Communications Inc. (DISCA) offers original and purchased programming in the U.S. and more than 200 other countries with over 100 television networks.
In order to enhance its channel portfolio as well as drive value for distributors and advertisers, Discovery repositioned its The Hub Network in Oct 13. Discovery achieved viewership growth for the eight successive years. Over the last five years, the company launched seven new channels in the U.S.
Moreover, the company teamed up with low-cost video streaming company Hulu to offer select shows starting Jan 1, 2015. It also struck a content distribution deal with Sony. Per the contract, the audiences will able to watch the popular shows on Sony’s Playstation Vue starting from first quarter of 2015. Such strategic alliances will help Discovery generate strong viewership ratings for its channels along with generating healthy advertising revenues going ahead.
However, Discovery’s ad revenues are strongly dependent on viewership ratings, which tend to change with time. In order to register more viewers, the company needs to invest in new content to counter competition as well as cater to audience taste and preference. Moreover, mega sporting events like the FIFA World Cup and the Olympics will further result in rating downgrades for the company.
Currently, Discovery has a Zacks Rank #4 (Sell), but that could definitely change following its’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: Discovery beats on earnings. Our consensus earnings estimate called for EPS of 41 cents/share, and the company reported EPS of 43 cents instead. Investors should note that these figures take out stock option expenses.
Revenue: Discovery reported revenues of $1,676 million. This missed our consensus estimate of $1,715 million.
Key Stats to Note: Discovery reported quarterly adjusted operating income before depreciation and amortization (OIBDA) margins of 37% against 39% in the prior-year quarter.
Stock Price: Discovery shares were up almost 0.02%. Clearly, the initial reaction to the release is positive.
Check back later for our full write up on this Discovery earnings report later!
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