This was a complicated quarter: In April Discovery closed its $1.7B acquisition of SBS Nordic, the Scandinavian TV and radio company. Even so, investors had high expectations for the company that the Q2 numbers out this morning missed. Net income came in at $300M, +2.4% vs the period last year, on revenues of $1.47B, +30.3%. The top line was just a hair below the $1.48B that analysts anticipated. But earnings at 82 cents a share missed forecasts for 90 cents. Meanwhile, Discovery shaved its full year outlook. It now foresees revenues going as high as $5.625B, down from $5.7B it had in its range three months ago, with the most optimistic net income forecast dropping to $1.15B from $1.3B. A 10% improvement in ad revenues, and a slug of cash from Netflix, helped to propel a 13% improvement in revenues at the U.S. cable networks, coming in at $793M. Discovery says that it saw an additional $37M from licensing arrangements; without that, distribution revenues would have been +5%. The company’s focus on overseas properties appeared to pay off: Revenues at international networks jumped 61% to $652M, and would have been up a respectable 14% without the new acquisitions. Strong performances in Latin America and Western Europe resulted in a 21% pick up in ad sales, not including the new properties. “Discovery’s strong operating and financial momentum continued during the second quarter as we further capitalized on the organic growth opportunities across our portfolio while beginning to take advantage of the benefits that our recent strategic acquisitions provide,” CEO David Zaslav says.
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