Discovery said profit tumbled in the fourth quarter as the owner of Food Network, Discovery Channel and Eurosport contended with expenses related to the Discovery Plus streaming hub and a group of one-time items related to expenses. Even so, the company saw revenue increase as its streaming efforts helped boost advertising and distribution revenue.
Discovery said fourth quarter net income fell to $38 million, or 8 cents a share, compared with $271 million, or 42 cents a share, in the year-earlier period.
The company released details of its performance as it prepares to acquire WarnerMedia, a move that will elevate its standing in the media sector. Discovery said the merger is on track to take place in the second quarter, and executives are said to expect the transaction to take place in mid-April.
Revenue rose 10% to nearly $3.19 billion, thanks largely to advertising and distribution gains related to Discovery’s streaming efforts.
“We grew our global DTC paying subscribers to 22 million, a tailwind for our strong distribution revenue growth of 11%, while global advertising revenues grew 10% due to continued strength in our key markets and share gain,” said David Zaslav, Discovery’s chief executive, in a prepared statement.
But the company had to grapple with a series of one-time expenses. Discovery noted a loss of $108 million during the period related to interest rate derivative contracts executed in advance of the WarnerMedia merger; $196 million in amortization expenses related to change in how it recognizes revenue; and an impairment of $85 million related to the merger of Group Nine Media, in which Discovery is an investor, and Vox Media.