Discovery Communications Reports Third Quarter 2009 Results
November 3, 2009
Silver Spring, Maryland - November 3, 2009: Discovery Communications, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the third quarter ended September 30, 2009. The discussion below assumes the transaction between Discovery Holding Company ("DHC"), Discovery Communications Holding, LLC ("DCH"), and Advance/Newhouse Programming Partnership that resulted in Discovery becoming a public company occurred on January 1, 2008 and as such includes 100% of Discovery's results.
David Zaslav, Discovery's President and Chief Executive Officer, said, "Discovery continued to deliver strong operating results during the third quarter, growing Adjusted OIBDA 17% in a challenging global environment. We remain focused on strengthening our portfolio and programming while increasing our efficiency through targeted reductions in our overall cost structure. Our strategy has generated ratings momentum across our networks enabling us to grow market share and, along with our expanding distribution revenues and leaner cost structure, positions us for continued margin expansion as the economy strengthens."
Revenues of $854 million were up slightly compared with the third quarter a year ago as 5% growth at U.S. Networks was partially offset by a 2% decline at International Networks, primarily the result of a $22 million unfavorable impact from foreign currency fluctuations. Adjusted Operating Income Before Depreciation and Amortization (1) ("OIBDA") increased 17% to $364 million, driven by 18% growth at U.S. Networks and 7% growth at International Networks. Total Company Adjusted OIBDA margin increased to 43% for the third quarter from 37% for the same period a year ago.
Third quarter net income available to Discovery Communications, Inc., stockholders of $95 million ($0.22 per share) decreased $39 million compared to $134 million ($0.44 per share) for the third quarter a year ago. The decreased results primarily reflect the $53 million growth in Adjusted OIBDA and $39 million lower tax expense in the quarter, which were more than offset by a $91 million expense in the current year from the unrealized change in the fair value of the mark-to-market share-based compensation, compared with a benefit of $65 million in the third quarter a year ago.
Free cash flow was $29 million for the third quarter, a decrease of $170 million from the third quarter of 2008, primarily due to $81 million in cash taxes paid related to the sale of 50% of the Discovery Kids channel, as well as the timing of $59 million of additional tax payments related to prior periods. Excluding these taxes, free cash flow of $455 million for the nine months year-to-date increased $116 million compared to the same period in 2008. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.
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