Discovery Communications said first quarter profit rose 5.2% owing to performance at the company’s U.S. cable networks, which saw revenue increases in both advertising and distribution fees
The company said net income in the period came to $263 million, or 42 cents per share,. compared with $250 million, or 37 cents per share, in the year-earlier period.
The Silver Spring, Md. owner of Discovery Channel, TLC and Investigation Discovery said revenues increased 2% to $1.56 billion. Revenue rose 8% growth at the company’s U.S. networks but fell 3% at its international holdings.
Discovery said Wednesday in a filing with the U.S. Securities and Exchange Commission that it had begun seeking voluntary reductions in its employee base and “expects to incur severance and other related expenses of between $40 and $60 million relating to all personnel adjustments.” During a conference call with investors Thursday, executives said they were interested in winnowing costs out of the company’s back-office operations and infrastructure to free up cash that could be invested in content, including sports, direct-to-consumer initiatives as well as video for mobile distribution.
The benefits of the corporate restructuring could result in “two x plus” the $40 million to $60 million in expenses, said Andrew Warren, the company’s chief financial officer, during the conference call.
Revenue at U.S. networks rose 8% to $807 million, due to 8% growth in revenue from distribution and 7% growth in ad revenue. Discovery said it was able to achieve higher pricing in both areas, even though it had to contend with lower ratings at some of its networks.
Revenue at the company’s international networks fell 3% to $711 million, owing to what Discovery said were fluctuations in foreign currency.