Discovery reported lower third-quarter earnings because of about $224 million in charges associated with restructuring following its acquisition of Scripps Networks Interactive.
Net income fell to $117 million, or 16 cents a share, from $218 million, or 38 a share. On a pro-forma basis, as if Scripps Networks was part of Discovery a year ago, excluding foreign currency fluctuations, operating income increased 18%, with U.S. networks up 13%.
Revenue rose 57% to $2.592 million, thanks to the transactions involving Scripps Networks, OWN and Motor Trend. Excluding those deals and currency fluctuations, revenue was up 1%, including a 2% gain at its U.S. networks.
“Our solid third quarter results demonstrate the strength of our brands and unmatched multi-platform distribution network, as we continue to position our broad suite of IP to maximize value and extend our global presence,” said CEO David Zaslav.
"We are very pleased with how far we've come in the eight months since we closed our merger with Scripps Networks, highlighted by the acceleration of synergy generation and strong adjusted OIBDA growth in the third quarter,” Zaslav said. “Additionally, we continue to drive organic growth opportunities across our diverse portfolio, further positioning us for continued cash flow generation and additional value creation. We remain increasingly optimistic about the roadmap ahead of us as we drive forward with our plan to transform our company.”
Operating income at Discovery’s U.S. Networks rose 88% to 901 million with the acquisition of Scripps Networks. Excluding the impact of the acquisition, revenue was up 2% with an 8% gain in advertising offset by a 2% drop in distribution revenue. Other revenue was down 29%.
On a pro-forma basis calculated as if the Scripps networks had been part of Discovery a year ago, revenue was up 4%, ad revenue was up 5% and distribution revenue was flat.
Ad revenue growth was driven by an increase in prices and volume plus continue monetization of digital viewership, offset by lower audiences at the linear networks.
On a pro-forma basis, subscribers were down 5% and subscribers to the company’s fully distributed networks was down 2%.
Discovery acquired Scripps Networks in March and bought a controlling interest in OWN in Nov. 2017. The Motor Trend Group was incorporated in September 2017.