Taxes Push Discovery Q4 Earnings Lower - Broadcasting & Cable

Taxes Push Discovery Q4 Earnings Lower

Revenues up 8%
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Discovery Communications reported lower fourth quarter
earnings because of increased taxes and higher stock compensation costs.

Fourth-quarter net income fell to $224 million, or 61 cents
a share, from $336 million, or 86 cents a share, partly because of higher
taxes. Income from continuing operations before taxes was $405 million, up from
$346 million.

Revenues rose 8% to $1.2 billion in the quarter.

Analysts said revenue was on target and that special items
seemed to be the reason why earnings were lower than expected.

For 2013, the company said that it expects total revenue to
be between $5.575 billion and $5.7 billion. Revenues totaled $4.487 billion in
2012. Adjusted operating income is expected to be between $2.425 billion and
$2.525 billion and guidance puts net income between $1.2 billion and $1.3
billion. The guidance assumes the acquisition of the SBS Nordic operations
closed during the first quarter.

"Discovery's commitment to investing in our brands and
developing new and diverse growth opportunities produced another year of strong
operating momentum and financial results in 2012," David Zaslav, CEO of
Discovery, said in a statement. "We head into 2013 with significant momentum,
having just delivered the highest fourth quarter domestic viewership in our
history, and will continue to invest in strategic growth initiatives so that we
can deliver sustained long-term financial results and shareholder value."

Fourth-quarter operating income at Discovery's U.S. networks
rose 7% to $415 million. Higher content amortization was offset by additional
content costs in the fourth quarter of 2011 from a change in amortization rates
at certain networks and higher content impairment charges, the company said.

Revenues were up 4% to $703 million.

Advertising revenues rose 9% to $397 million. Distribution
revenue rose 2% to $288 million. Excluding non-recurring advertising revenue
items from the prior year's quarter, advertising revenue grew 10% and excluding
the impact from licensing revenue, distribution revenue grew 5%, compared to
the fourth quarter a year ago.

For the international networks, operating income rose 17% to
$201 million as revenue rose 15% to $462 million.

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