Discovery Communications Q2 Profit Falls 25%

David Zaslav Discovery
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Discovery Communications said second-quarter profit fell about 25% as the company reconciled one-time items and grappled with tougher conditions in both in the U.S. and abroad.

The Silver Spring, Md., owner of Discovery Channel and TLC said net income in the second quarter came to $286 million, or 44 cents a share, compared with $379 million, or 54 cents a share in the year-earlier period. The company cited higher losses in foreign currency compared with the earlier period, one-time items related to consolidation of assets and restructuring charges and charges taken to write off certain programming as the factors behind the decline.

Revenue increased 3% to $1.65 billion compared with $1.61 billion in the year-earlier period.

At the company’s U.S. networks, revenue rose 5% to $814 million, owing to 12% growth in distribution revenue. But ad revenue was largely flat, due to lower ratings, the company said.

At the company’s overseas TV operations, revenue rose just 1% to $801 million. Distribution revenue rose 7% driven by increased subscribers and higher rates in Latin America. Ad revenue rose 7%, again owing to Latin America business activity.

Discovery has in recent months placed more emphasis on its international business. It recently struck a deal to televise the Olympics Games in Europe and agreed to take over Eurosport, the European sports media outlet. Discovery also agreed to extend a carriage deal with Comcast, a pact that was closely watched by investors as Discovery management had pushed against Comcast’s recent effort to buy Time Warner Cable.