Discovery Boosts Q2 Ad Revs 13%

Discovery Communications continues to reap the benefits of a resurgent advertising market, as the media conglomerate’s U.S. cable networks posted double-digit Q2 revenue gains. Home to Discovery Channel, TLC, Animal Planet and a host of other ad-supported cable nets, Discovery’s stateside programming division raised its Q2 revenue 10 percent to $620 million, on ad sales gains of 13 percent versus the year-ago period. The Discovery nets took in $329 million in ad sales revenue during the three-month period ended June 30, up from $290 million. For the first half of 2010, Discovery took in $595 million in ad sales revenue, an improvement of 11 percent from the prior-year period ($534 million). The cable unit also saw a lift in distribution dollars, as carriage fees were up 6 percent to $263 million. Through the first sixth months of the year, Discovery upped its affiliate revenue 5 percent to $522 million. While Wall Street seems to put little stock in such comparisons, it’s still worth noting that Discovery’s Q2 ad sales haul marked a sequential gain as well. The company’s $329 million in sales revenue represents a 24 percent increase from the first quarter’s $266 million. Discovery president and CEO David Zaslav told investors that the 13 domestic networks enjoyed a stellar upfront season, selling approximately 50 percent of its inventory, while securing CPM increases in the high single digits over 2009-10 pricing. “The market still feels quite strong,” Zaslav said, adding that scatter is selling at around “15 percent or more above our upfront pricing.” Zaslav also continued to demonstrate his enthusiasm for the upcoming OWN: The Oprah Winfrey Network, although the start-up costs associated with launching the service will exceed initial expectations. According to chief financial officer Brad Singer, Discovery’s contribution to OWN will add up to north of the projected $100 million; thus far, the company has invested $75 million in the project. After some delays, OWN is now set to launch in January 2011, replacing Discovery Health. While Oprah Winfrey won’t be making daily appearances on the network that bears her name until her syndicated program goes off the air next fall, the media maven will pop up in occasional episodes of the series Master Class. She’ll also be seen in specially produced interstitials. Also new to the Discovery fold is The Hub, a refresh of Discovery Kids. A joint venture between Discovery and toymaker Hasbro, the new network bows October 10, or 10/10/10. Animal Planet enjoyed the strongest growth in the quarter, increasing its prime time deliveries by 10 percent versus Q2 2009, with an average nightly draw of 634,000 viewers. The channel also grew its 25-54 demo by 10 percent, averaging 287,000 viewers. Zaslav noted that Discovery ID has put up impressive numbers as well, boosting its prime time deliveries by 59 percent to 306,000 viewers, while adults 25-54 improved 60 percent. As ratings expanded, so did the networks’ respective ad sales hauls. Per Discovery, Animal Planet and ID both grew their ad sales volume by 25 percent from a year ago. All told, the conglomerate boosted overall revenue 11 percent to $963 million. After a $138 million charge toward an early repayment of debt and a $75 million tax payment, net income fell 40 percent to $106 million, or 25 cents a share, down from $177 million, or 42 cents a share. Comparisons also suffered against a one-time from last year’s sale of 50 percent of the Discovery Kids property. Excluding all one-time line items, Discovery grew its net income by $80 million in Q2.

Convergent TV

Discovery Boosts Q2 Ad Revs 13%

Anthony Crupi

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Anthony Crupi