Discovery’s fourth-quarter earnings report beat forecasts early Monday, as the company also revealed numbers for its subscription streaming service.
The company reported earnings of 76 cents per share and revenue of $2.889 billion, vs. Street projections for per-share earnings of 72 cents on revenue of $2.83 billion.
During Q4, Discovery officially entered the streaming wars with the announced launch of a standalone streaming service of its own, Discovery Plus, which debuted on Jan. 4 in the current Q1 for $4.99 to $6.99 a month. Execs there have preciously said they expect the service to have an addressable market of 70 million domestically and 400 million globally.
In the company’s Q4 earnings release Monday, Discover CEO David Zaslav said that Discovery has surpassed 11 million paying subscription-video subscribers since the Discovery Plus launch, and is “on pace to be at 12 million by the end of the month.”
RBC Capital analyst Kutgun Maral called the Q4 results “strong,” highlighting “advertising strength across both U.S. and international, continued deceleration in the rate of U.S. sub declines, and margin upside.” The company’s sub forecasts are “solidly ahead” of RBC’s forecast for 11 million by the end of Q1 in March and the ex-RBC consensus of 8 million, wrote the analyst in a note to clients.
In a conference call with analysts Monday, Zaslav claimed that most of the 7 million direct-to-consumer subscribers that Discovery added were U.S. Discovery Plus customers. Zaslav also said that 93% of the company’s entire 55,000-episode television library has been watched since the streamer’s launch. He added that retention was high, and churn much lower than what the company had expected.
The streamer debuted during the company’s current fiscal Q1 with over 50 original programs and a library of over 55,000 previously aired episodes in its library from Discovery-owned channels such as HGTV, Food Network, TLC, Animal Planet and others.
While Discovery Plus joins a crowded market of newbies such as Apple TV Plus, HBO Max and the formidable Disney Plus, it has sought to differentiate itself with a focus on unscripted programming. As Variety previously reported, Discovery’s joint venture with home improvement gurus Chip and Joanna Gaines, Magnolia Network, will debut digitally first on Discovery Plus on July 15 before taking over the linear DIY Network in Jan. 2022.
Discovery also increased its stake in Oprah Winfrey’s OWN to 95%, up from its prior holding of 73% during Q4.
Shares of Discovery were trading at a new 52-week high going into its earnings report, with the stock up around 66% year to date, even amid the ongoing coronavirus pandemic that brought television and film production to a standstill for months and set the industry on edge.
Zaslav said Monday that Discovery’s push early in the pandemic into remote production on many of its shows brought the brand “closer to real” and provided “a great boost of adrenaline across the company.”