Discovery Communications Q3 Profit Up 10%, But Lowers 2014 Outlook

(RTTNews) - Media and entertainment company Discovery Communications, Inc. (DISCA, DISCB, DISCK) on Tuesday reported a 10 percent increase in profit for the third quarter from last year, reflecting strong revenue growth at its International Networks segment. Looking ahead, the company lowered its financial outlook for fiscal 2014.

David Zaslav, president and CEO of Discovery Communications said, "Discovery's strong global organic growth and reach coupled with increasing contributions from our recent strategic acquisitions led to another quarter of solid results. Our expansive content portfolio drove audience gains and boosted our market share around the world as we continued to benefit from the ongoing development of the global pay-TV market."

The Silver Spring, Maryland-based provider of Discovery Channel, TLC, Animal Planet, and Science Channel reported net income for the third quarter of $280 million or $0.41 per share, up from $255 million or $0.35 per share in the prior-year quarter.

The company noted that the increase in earnings for the quarter were primarily due to improved operating performance in the current quarter, as well as an increase in equity earnings and lower mark-to-market equity-based compensation. These were partially offset by higher restructuring costs this quarter and a gain on disposition in the prior year's quarter.

The results for both the quarters include amortization of acquisition-related intangible assets of $0.05 per share.

Excluding these items, adjusted net income for the quarter was $0.46 per share, compared to $0.40 per share in the year-ago quarter. On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.42 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 14 percent to $1.57 billion from $1.34 billion in the same quarter last year. Analysts were looking for revenue of $1.59 billion for the quarter.

The increase in revenues for the quarter was led by 32 percent growth at International Networks on higher distribution and advertising revenues. This was partly offset by a 1 percent decline at U.S. networks due to additional revenues from licensing agreements in the prior year.

Looking ahead to fiscal 2014, Discovery Communications now forecasts net income in a range of $1.150 billion to $1.175 billion, adjusted net income of $1.275 billion to $1.305 billion, and revenues between $6.3 billion and $6.35 billion.

Earlier, the company forecast net income available to the company between $1.225 billion and $1.275 billion, adjusted net income between $1.34 billion and $1.40 billion, and revenue between $6.45 billion and $6.525 billion.

Street is currently looking for full-year 2014 earnings of $1.84 per share on revenues of $6.43 billion.

The company noted that the revised outlook incorporates current foreign exchange rates for revenues as well as expenses and the current share price for mark-to-market equity-based compensation calculations.

DISCA closed Monday's trading at $35.67, up $0.32 or 0.91 percent on a volume of 3.74 million shares.