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Discovery Communications Profit Rises - Broadcasting & Cable

Discovery Communications Profit Rises

CEO Zaslav "open to opportunities"
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Discovery Communications president and CEO, David Zaslav, is fast becoming the media industry's hottest executive, achieving what few others have in 2008: earnings growth.

The Silver Springs, Maryland-based outfit reported today that ad revenue at its U.S. networks defied industry norms rising 6% in the fourth quarter, and 9% for the full year. Distribution revenue also grew 13% in the fourth quarter and 10% in 2008, at the U.S. unit.

Overall, fourth quarter profit rose to $105 million for the quarter period, versus a loss of $8 million for the same quarter last year. Full year profit was $274 million up by $123 million. The company recorded a content impairment charge of $139 million in 2007.

Lehman Brothers analyst, Anthony DiClemente praised the company this morning for providing some insight about how the rest of the year might look. "Discovery is the only company in our coverage universe to have provided revenue, adjusted operating income (OIBDA) and net income guidance for the full calendar year 2009, and the only company where we expect OIBDA and earnings per share to actually grow in 2009."

Revenue at Discovery Communications Inc, which is owned by Discovery Holdings and Advance/Newhouse Programming Partnership, was $904 million and for the year was $3.44 billion, a 10% increase over 2007. Discovery's free cash flow was $467 million.

Speaking on an earnings call this morning, Zaslav was asked about whether the company might look to make acquisitions. Discovery's name has been linked to two major cable assets: Scripps Networks Interactive channels which include Food Network and HGTV and A&E Television Networks which is backed by Hearst, Disney-ABC and NBC Universal.

He said that Discovery's first mission was to focus on growing ratings but added, "There are opportunities for acquisitions, we're always looking. In a difficult market, opportunities do present themselves. We do look at we are open to opportunities."

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