Grim Discovery
Earnings hit blamed on Scripps blip
Shares of Discovery fell 5.1 percent on Tuesday after the parent of cable networks TLC and Animal Planet reported second-quarter profits that missed Wall Street expectations.
The David Zaslav-helmed media company attributed the shortfall to higher-thanexpected costs of integrating Scripps Networks into its operation — which pushed investors to drop the shares to $25.55.
Discovery closed its $14.6 billion acquisition of Scripps — which owned HGTV, Travel Channel and the Food Network — in March.
In the quarter, Discovery reported profits fell 42 percent, to $216 million, or 30 cents a diluted share. Excluding non-recurring items, adjusted EPS totaled 66 cents. Wall Street was looking for 86 cents a share.
Strong sales from its US networks division boosted the cable giant’s total revenues by 63 percent, matching analysts’ predictions of $2.85 billion for the period.
“We delivered solid financial results in our first full quarter as a combined com- pany and continued to make great progress with our integration of Scripps Networks Interactive and our pivot to digital, mobile and direct-toconsumer products and services,” Zaslav, Discovery’s president and CEO, said in a statement.
The 58-year-old executive said that excluding currency fluctuations and transactions relating to Scripps and the Oprah Winfrey Network — in which Discovery increased its stake late last year — revenues remained consistent, with a 5 percent increase in International Networks. That was offset by a 1 percent decline in US Networks and the sale of the education business in April.
Calling Discovery’s growth trends “tepid,” Pivotal Research Group analyst Brian Wieser expressed his concerns about the TV business overall.
“We continue to see the television business as a ‘melting iceberg’ with gently declining ad revenues, slightly increasing distribution revenues and gradually worsening underlying margins,” Wieser said.