Discovery: 6% Boost in Q4 Ad Dollars

After enjoying a strong 2008-’09 upfront, Discovery Communications’ U.S. networks division posted encouraging gains in the fourth quarter, boosting ad sales revenue 6 percent to $282 million, up from $265 million in the year-ago period.

For calendar-year 2008, the Discovery nets––which include the flagship cable channel, as well as TLC and Animal Planet––improved their overall advertising intake by 9 percent, bringing in $1.06 billion. Quarterly affiliate revenue rose 13 percent to $236 million; for the full year, distribution dollars grew 10 percent to $927 million.

Revenues at the networks division reached $536 million, up 8 percent versus the fourth quarter of 2007, while operating income soared 168 percent to $300 million. Much of the OIBDA increase reflects the $129 million impairment charge the Discovery nets took a year ago. Total-year revenue grew 10 percent to $2.06 billion.

Speaking to investors during the company’s earnings call Wednesday morning, Discovery president and CEO David Zaslav said that second-quarter cancellations were coming in at around 12 percent, a higher rate of pullback than the networks have seen since 2005. Scatter pricing remains up slightly over upfront rates, but down versus last year’s marketplace. Volume is also down.

Discovery’s cancellations put it in line with its peers. Earlier this month, Scripps Interactive reported that Q2 pullback was in “the low teens,” and News Corp. said that it was anticipating an 11 percent recidivism rate.

Zaslav attributed much of the ad sales growth to improved ratings at Discovery Channel and TLC. In Q4 ‘08, Discovery grew its average prime-time delivery by 6 percent, drawing 713,000 viewers, while adults 25-54 improved 7 percent to 348,000. In the previous quarter, Discovery had fallen 11 percent in total viewers, while the demo plummeted 38 percent.

Having foundered during the brief reign of former president Angela Shapiro-Mathes, TLC began showing signs of a turnaround in Q4, growing its nightly audience by 7 percent to 484,000 viewers versus the prior-year period, while improving its standing among viewers 18-49 by 8 percent (268,000). In the third quarter of 2008, TLC had dropped 14 percent in prime, per Nielsen ratings data. The 18-49 demo also slumped, falling 19 percent.

Zaslav offered little in the way of guidance for 2009, saying only that revenue should come in between $3.38 billion and $3.5 billion. If that projection holds true, revenue will be flat versus last year’s $3.44 billion. The guidance excludes the impact of the launch of OWN: The Oprah Winfrey Network, for which the company expects to invest $70 million to $80 million in 2009.