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Discovery profit falls by 33%

Revenue rose 8% to $1.2 billion

Advertising jumped but profit fell as Discovery Communications cited higher taxes and equity-based exec compensation and the cost of a big overseas deal.

Income dropped 33% to $224 million from $366 million. Revenue rose 8% to $1.2 billion with U.S. networks up 4% to $703 million and international sales surging 15% to $462 million last quarter.

Stateside, advertising was up 9%. Distribution revenue rose 2% as the parent of Discovery Channel, TLC and in part Oprah Winfrey’s OWN network cited tough comps with an inflow of digital revenue a year earlier.

U.S. operating profit rose 7%.

Overseas, ad revenue surged by 16%, distribution by 12% on subscriber boosts in Latin America and CEEMEA (Central and Eastern Europe, the Middle East and Africa.)

International profit rose 17%.

Discovery is fresh off a duo of international deals, both in December. It acquired SBS, the Nordic radio and TV biz of Germany’s ProSiebenSat.1 Group for $1.7 billion, and agreed to buy 20% of pan-European network Eurosport and a group of pay TV channels from France’s TF1 for $264 million.

“We’re always opportunistic,” Discovery CEO David Zaslav told analysts Thursday about the possibility of more acquisitions. “We were looking for the past six years, and it took us six years to find Eurosport and SBS and (Italian channel) Switchover … our No. 1 priority is to continue to grow market share.”

Zaslav also discussed TV Everywhere, saying there was a “good chance” that Discovery would do some TV Everywhere deals “over the next few months.”

One reason why Discovery hasn’t yet made those deals?

“We couldn’t determine what the value was,” the exec said.

“The good news is there is no distributor in the U.S. that has TV Everywhere rights for our content. Given that we are almost 10% of viewership on cable, I think that that is a very valuable opportunity,” Zaslav said, adding that Discovery may “feather in” certain deals over the next couple of years.

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