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Discovery Communications, the company behind such cable networks as the Discovery Channel, TLC and OWN, on Wednesday reported lower second-quarter earnings.
Discovery said the profit drop came “primarily due to higher foreign currency losses, a lower gain on disposition, a gain on the consolidation of Eurosport in the prior year and higher restructuring and other charges due to content impairments, partially offset by lower income tax expense.”
Amid a strong dollar, foreign results have translated into fewer dollars, affecting the financials of companies with strong operations abroad.The content impairments are believed to be related to the cancelation of TLC’s 19 Kids and Counting.
The company, led by CEO David Zaslav, reported earnings of $286 million, compared with $379 million in the year-ago period. Earnings per share of 44 cents, or 49 percents after some adjustments, compared with 54 cents in the year-ago period. Adjusted EPS fell 16 percent. But adjusted EPS increased 4 percent when excluding currency effects “as changes in foreign currency exchange rates reduced second quarter adjusted EPS by 20 percent,” Discovery said.
The earnings decline came despite a revenue gain of 3 percent to $1.65 billion in the second quarter, or up 11 percent when excluding currency effects. Wall Street had on average projected earnings of $313 million, or 48 cents per share.
Revenue growth was led by a 5 percent gain at U.S. networks, driven by a 12 percent jump in distribution revenue amid unchanged advertising revenue, and 1 percent growth at the company’s international networks. Adjusted operating income before depreciation and amortization dropped 2 percent to $680 million as a 7 percent gain at the U.S. networks was more than offset by an 11 percent decline at international channels.
Excluding currency effects, the impact of Eurosport and the consolidation of Discovery Family, total company revenues increased 4 percent and adjusted OIBDA rose 3 percent.
Zaslav said Discovery carried momentum into the third quarter and signed “three landmark deals – the historic agreement for the Olympic Games in Europe, our agreement to acquire full ownership of Eurosport and our comprehensive long-term renewal with Comcast – that will bolster Discovery’s position and market share for years to come.”
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