Discovery Communications Earnings: Strong Quarter As Advertising Sales Expand

S&P 500 (NYSE:SPY) component Discovery Communications, Inc (NASDAQ:DISCA) reported net income above Wall Street’s expectations for the first quarter. Discovery Communications, Inc. is a global media and entertainment company that offers programming across multiple distribution platforms in more than 170 other countries.

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Discovery Communications, Inc Earnings Cheat Sheet for the First Quarter

Results: Net income for Discovery Communications, Inc rose to $305 million (74 cents/share) vs. $169 million (39 cents/share) in the same quarter a year earlier. A rise of 80.5% from the year earlier quarter.

Revenue: Rose 8.2% to $951 million YoY.

Actual vs. Wall St. Expectations: DISCA beat the mean analyst estimate of 47 cents/share. Estimates ranged from 42 cents per share to 50 cents per share.

Quoting Management: David Zaslav, Discovery’s President and Chief Executive Officer said, “Discovery’s strong first quarter results reflect the operating momentum we are generating across our global portfolio in a continued favorable economic climate. Our consistent investment in content over the past four years, along with a drive to expand our subscriber base domestically and internationally, has enabled Discovery to grow our audiences across the globe. Once again this quarter, we recognized the value of our increased viewership through double digit advertising gains that further built upon the strength we demonstrated throughout 2010. Moving forward, with advertising revenues expanding and predictable distribution revenues continuing to grow, we remain focused on delivering sustained operating leverage and free cash flow growth, while also continuing to invest in Discovery’s diverse set of brands and platforms around the world.”

Key Stats: Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 1.9 percentage points to 71.3% from the year earlier quarter. Over that span, margins have grown on average 1.7 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three-straight quarters. In the fourth quarter of the last fiscal year, net income rose 23.2% and in the third quarter of the last fiscal year, the figure rose 84.2%.

Over the last five quarters, revenue has increased 7.8% on average year over year. The biggest increase came in the second quarter of the last fiscal year, when revenue rose 9.3% from the year earlier quarter.

Competitors to Watch: Scripps Networks Interactive, Inc. (NYSE:SNI), CBS Corporation (NYSE:CBS), Outdoor Channel Hldgs., Inc. (NASDAQ:OUTD), Liberty Media Corp (NASDAQ:LINTA), The Walt Disney Company (NYSE:DIS), News Corporation (NASDAQ:NWSA), AOL (NYSE:AOL), Comcast (NASDAQ:CMCSA), Madison Square Garden, Inc. (NASDAQ:MSG), Time Warner Inc. (NYSE:TWX), and Point.360 (NASDAQ:PTSX).

Today’s Performance: Shares of DISCA are trading at $42.39 as of April 28, 2011 at 8:55 AM ET, unchanged from the previous close.


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