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Advertising rebounded strongly in the second quarter, enabling Discovery Communications to easily beat Wall Street’s estimates.
Total revenue climbed 21% over the prior-year quarter, reaching $3.06 billion, as earnings per share hit $1.01. Analysts had expected revenue of $2.97 billion and earnings of 85 cents.
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Ad revenue in the U.S. rose 12% from the Covid-19-hit 2020 period, and the company noted it completed a record-setting upfront process during the quarter. Distribution revenue also increased 12%.
International ad revenue rocketed 70%, with the UK, Italy, Germany and other markets surging ahead of 2019 levels.
Direct-to-consumer streaming, an increasing focus for the company since the launch of Discovery+ at the start of 2021, saw an increase to 17 million subscribers from 13 million the previous quarter. As of this week, the tally is 18 million, an increase from the June 30 end of the quarter. While Discovery+ is the flagship, the company has also launched more targeted services like Food Network Kitchen and offerings focused on golf and cycling.
The move into streaming is a calculated gamble for Discovery given its portfolio of cable networks, which continue to throw off sizable revenue but are diminishing as the pay-TV bundle shrinks.
Discovery, which has assembled a roster of top-rated unscripted TV networks, is poised to become a bigger media player when it merges with WarnerMedia. That deal is currently being reviewed by regulators, with the companies projecting a summer 2022 close.
Investors have not greeted the proposed transaction with great enthusiasm. Shares in both AT&T and Discovery have dropped more than 10% apiece since the deal was announced, shaving billions off of their market capitalizations.
Discovery hailed results from its Eurosport subsidiary’s carriage of the Tokyo Olympics in 50 markets in Europe featuring 11 national productions and coverage in 19 languages. Almost 750 million streaming minutes of Olympics content has been consumed on Discovery+ and Eurosport subscription services during the first week of the Games, the company said. That is nearly 18 times the pace for PyeongChang at the same point in 2018.