Discovery Communications said third quarter profit declined as the company grappled with to performance shortfalls in its international operations and suffered a $50 million impairment charge related to its decision to acquire a minority stake in Lionsgate late last year.
The Silver Spring, Md. owner of the Discovery Channel, TLC and Discovery ID, said net income fell 22% to $219 million compared to $279 million in the year-earlier period. Revenue in the period was basically flat, totaling $1.556 million. The company said a 2% revenue increase at its U.S. operations and a 19% increase at its education unit were offset by a revenue decline of 3% a tits international holdings, largely due to the effects of currency fluctuations.
Discovery “faced challenging but expected headwinds this quarter,” noted David Zaslav, the company’s chief executive, in a prepared statement.
The company said its U.S networks saw ad sales revenue fall 3% during the third quarter. Revenue rose 2% to $793 million., owing to rate hikes passed on to cable and satellite distributors, despite what Discovery said was a “slight decline” in the homes it reaches. Difficulty was more pronounced at the company’s international networks, where revenue fell 3% to $720 million. Ad sales fell 6%.
In a research note issued Tuesday, media analyst Michael Nathanson called some of the company’s performance “ominous,” suggesting investors might see other media companies show similar issues with advertising and affiliate revenue.