Discovery Returns to Profitability in First Q4 After HGTV, Food Network Acquisition

Tony Maglio

Discovery is back in the black for its year-ending quarter. The new(-ish) TLC and HGTV parent reported a profit of $269 million for the fourth quarter of 2018. Wall Street will compare that to the $1.1 billion it lost in Q4 2017.

Sounds like the company’s nearly $15 billion acquisition of Scripps last year is working out — at least, on an operational basis. Discovery did miss media analysts’ expectations for the three months ended December 31, 2018.

Wall Street had forecast earnings per share (EPS) of 79 cents on $2.84 billion in revenue, per a consensus compiled by Yahoo Finance. Discovery actually reported adjusted EPS of 74 cents on revenue of $2.81 billion. Excluding some after-tax restructuring charges, the reported earnings number adjusts to 82 cents per share, which is the version that will make investors happy.

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Inclusive of its splashy acquisition, revenues grew by 51 percent versus the comparable quarter. Peeling the deal and some currency fluctuations out, Discovery revenue would have slipped 2 percent from Q4 2017.

With those new channels also comes increased expenses, of course. For one way to look at that, operating expenses for the U.S. networks rose from $1.4 billion across all of 2017 to $2.9 billion over the entirety of 2018.

Discovery purchased Scripps Networks in March for almost $15 billion. The acquisition led the combined company to full-year net income of $594 million, which compares with a $337 million loss the prior year.

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“2018 was a transformational year for Discovery, highlighted by our operational accomplishments, our strong progress in synergy generation and our overall solid financial performance, as we continued powering people’s passions around the world,” said David Zaslav, president and CEO of Discovery. “Discovery is a differentiated global content company, and we are optimistic that we will continue to build on all of our operating momentum to drive additional shareholder value into the future.”

DISCA stock closed Monday at $29.21 per share, flat for the day. The U.S. stock markets reopen today at 9:30 a.m. ET.

Discovery executives will host a conference call at 8:30 a.m. ET to discuss the full year and fourth quarter in greater detail.

Read original story Discovery Returns to Profitability in First Q4 After HGTV, Food Network Acquisition At TheWrap