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Discovery, Inc. Reports Second-Quarter 2020 Results

Cision
Cision

SILVER SPRING, Md. , Aug. 5, 2020 /PRNewswire/ -- Discovery, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the quarter ended June 30, 2020.

David Zaslav , President and Chief Executive Officer of Discovery said, "Our top priority is the health and safety of our employees as global economies and our offices begin to reopen. I want to thank all of our teams for the exceptional focus and dedication even during these turbulent times that continued to drive outstanding progress for our business, including renewals with four of our largest distribution partners and meaningful cost containment. We generated significant free cash flows in Q2, demonstrating the durability of our business, especially against the backdrop of a historic disruption to the global advertising market due to the impacts of the pandemic. With our significant liquidity cushion and the initial signs of stabilization that we're seeing in many of our key markets around the world, we are pleased to announce our intention to resume returning capital to shareholders through share repurchases. We are cautiously optimistic about the global outlook for the rest of the year and firmly believe that the long-term prospects for Discovery remain as vibrant as ever."

Second-Quarter 2020 Financial Highlights

  • Total revenues of $2,541 million decreased 12% compared to the prior year quarter, or decreased 11% ex-FX. (1)

  • Net income available to Discovery was $271 million and diluted EPS was $0.40 per share.

  • Total Adjusted OIBDA (2) decreased 12% to $1,127 million , or decreased 11% ex-FX.

  • Adjusted EPS (3) was $0.77 per diluted share.

  • Free cash flow (4) was $879 million .

 



Three Months Ended June 30,


Six Months Ended June 30,

Dollars in millions, except per share amounts


2020


2019


%
Change

Ex-FX (1)


2020


2019


%
Change

Ex-FX (1)

Total revenue


$

2,541



$

2,885



(12)

%

(11)

%


$

5,224



$

5,592



(7)

%

(5)

%

Net income available to Discovery, Inc.


$

271



$

947



(71)

%



$

648



$

1,331



(51)

%


U.S. Networks Adjusted OIBDA


1,062



1,126



(6)

%



2,078



2,187



(5)

%


International Networks Adjusted OIBDA


193



286



(33)

%

(29)

%


400



505



(21)

%

(18)

%

Total Adjusted OIBDA (5)


$

1,127



$

1,281



(12)

%

(11)

%


$

2,240



$

2,440



(8)

%

(7)

%

Diluted EPS


$

0.40



$

1.33



(70)

%



$

0.95



$

1.86



(49)

%


Adjusted EPS


$

0.77



$

0.98



(21)

%



$

1.64



$

1.83



(10)

%


Free cash flow


$

879



$

596



47

%



$

1,109



$

1,094



1

%


 

Operational Highlights

  • Total share of viewing across the international portfolio in the second quarter of 2020 improved 4% on average, with strong share growth in India , UK and Italy . (6)

  • In the second quarter, Discovery's portfolio of networks in the U.S. gained more share in primetime than any other TV portfolio in each of our target demos. (7)

  • TLC delivered its best quarter in network history and was the top network across all of TV on Sunday nights among W25-54, P25-54 and W18-49, driven by the performance of the '90 Day Fiancé' franchise. The network also continues to be the No. 1 destination for women on cable TV in 2020. (8)

 

Segment Results
U.S. Networks



Three Months Ended June 30,


Six Months Ended June 30,

Dollars in millions

2020


2019


% Change


2020


2019


% Change

Advertising

$

997



$

1,153



(14)

%


$

2,023



$

2,175



(7)

%

Distribution

739



688



7

%


1,447



1,385



4

%

Other

20



22



(9)

%


42



55



(24)

%

Total revenues

$

1,756



$

1,863



(6)

%


$

3,512



$

3,615



(3)

%

Costs of revenues, excluding depreciation & amortization

442



441



%


889



863



3

%

Selling, general & administrative (9)

252



296



(15)

%


545



565



(4)

%

Adjusted OIBDA

$

1,062



$

1,126



(6)

%


$

2,078



$

2,187



(5)

%

Second-Quarter 2020 Highlights

  • Revenues of $1,756 million decreased 6% compared to the prior year quarter.

  • Total operating expenses of $694 million decreased 6%.

  • Adjusted OIBDA decreased 6% to $1,062 million .

 

International Networks



Three Months Ended June 30,


Six Months Ended June 30,

Dollars in millions

2020


2019


%
Change

Ex-FX


2020


2019


%
Change

Ex-FX

Advertising

$

276



$

466



(41)

%

(37)

%


$

652



$

859



(24)

%

(20)

%

Distribution

486



518



(6)

%

(2)

%


1,001



1,045



(4)

%

(1)

%

Other

21



36



(42)

%

(43)

%


53



68



(22)

%

(22)

%

Total revenues

$

783



$

1,020



(23)

%

(20)

%


$

1,706



$

1,972



(13)

%

(10)

%

Costs of revenues, excluding
depreciation & amortization

365



497



(27)

%

(23)

%


835



1,004



(17)

%

(14)

%

Selling, general & administrative (9)

225



237



(5)

%

(1)

%


471



463



2

%

6

%

Adjusted OIBDA

$

193



$

286



(33)

%

(29)

%


$

400



$

505



(21)

%

(18)

%

Second-Quarter 2020 Highlights

  • Revenues of $783 million decreased 23%, or decreased 20% ex-FX, compared to the prior year quarter.

  • Total operating expenses of $590 million decreased 20%, or decreased 16% ex-FX.

  • Adjusted OIBDA of $193 million decreased 33%, or decreased 29% ex-FX.

Corporate, Inter-segment Eliminations, and Other

  • For the second quarter of 2020, Corporate Adjusted OIBDA improved by $3 million compared to the prior year quarter.

Free Cash Flow

  • Cash provided by operating activities increased to $991 million from $674 million in the prior year quarter. Free cash flow increased to $879 million from $596 million , primarily due to the timing of working capital, partially offset by higher capital expenditures. Capital expenditures increased due to investments in technology infrastructure, software development, and facilities.

Other Items
Share Buyback
In February 2020 , the Company's Board of Directors authorized common stock repurchases of up to $2 billion . Under the stock repurchase authorization, management is authorized to purchase shares from time to time through open market purchases at prevailing prices or privately negotiated purchases subject to market conditions and other factors.

During the three months ended June 30, 2020 , the Company did not repurchase any shares under its $2 billion repurchase authorization, which has $1.8 billion remaining. We expect to resume repurchasing shares in the open market once the blackout period ends on August 6, 2020 .

2020 Outlook (10)
Discovery may provide forward-looking commentary in connection with this earnings announcement on its quarterly earnings conference call. Details on how to access the audio webcast are included below.

Conference Call Information
Discovery will host a conference call today, August 5, 2020 at 8:00 a.m. ET to discuss its second quarter 2020 results. To listen to the audio webcast of the call, please visit https://corporate.discovery.com .

Cautionary Statement Concerning Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties and on information available to the Company as of the date hereof. The Company's actual results could differ materially from those stated or implied, due to risks and uncertainties associated with its business, which include the risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on February 27, 2020 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, expected to be filed today.

Forward-looking statements include statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. Forward-looking statements in this release include, without limitation, statements regarding investing in the Company's programming, strategic growth initiatives, changes in the pay TV ecosystem, and the impact of COVID-19. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Discovery
Discovery, Inc. (Nasdaq: DISCA, DISCB, DISCK) is a global leader in real life entertainment, serving a passionate audience of superfans around the world with content that inspires, informs and entertains. Discovery delivers over 8,000 hours of original programming each year and has category leadership across deeply loved content genres around the world. Available in 220 countries and territories and in nearly 50 languages, Discovery is a platform innovator, reaching viewers on all screens, including TV Everywhere products such as the GO portfolio of apps; direct-to-consumer streaming services such as Eurosport Player, Food Network Kitchen and MotorTrend OnDemand; digital-first and social content from Group Nine Media; a landmark natural history and factual content partnership with the BBC; and a strategic alliance with PGA TOUR to create the international home of golf. Discovery's portfolio of premium brands includes Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, and the forthcoming multi-platform JV with Chip and Joanna Gaines , Magnolia, as well as OWN: Oprah Winfrey Network in the U.S., Discovery Kids in Latin America , and Eurosport, the leading provider of locally relevant, premium sports and Home of the Olympic Games across Europe . For more information, please visit corporate.discovery.com and follow @DiscoveryIncTV across social platforms.

 

DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share amounts)