Discovery is the latest big media company to withdraw financial guidance and boost its
cash cushion in uncertain times, tapping $500 million of a $2.5 billion revolving credit facility to “maximize flexibility in light of the current uncertainty” surrounding the impact of the coronavirus pandemic on its operations.
Discovery is one media company with deep pockets, including $1.55 billion of cash on its balance sheet. But in the current climate companies are looking for additional padding. In an SEC filing Tuesday, it noted that it has debt repayments due in June of 2020, for $600 million, and in June of 2021, for $640 million.
The company also withdrew the financial guidance it provided on a quarterly conference call in late February and is not updating its fiscal 2020 outlook given the unprecedented economic uncertainty created by the coronavirus – including the postponement of the Tokyo Summer Olympic Games. Discovery’s Eurosport division has the rights to air the games in Europe. The parent said
it expects to incur an Olympics-driven operating income loss of between $175 million to $200 million in the third quarter of fiscal 2020 and that the delay of the games will shift Olympic-related revenues and expenses from fiscal 2020 to fiscal 2021.
Discovery noted that the global pandemic has spurred television viewing dramatically around the world, boosting ratings and delivery. “This is helping to offset attributed weakness from economic conditions, and the company is evaluating the impact of improved ratings and delivery on its performance.”
It said it continues to pursue a number of cost savings initiatives that it hopes will offset a portion of the revenue losses due to the impact of COVID-19, including those from production shutdowns and delays.
Earlier this week, Disney raised fresh cash by selling $6 billion worth of notes.
Yesterday, Twitter withdrew its financial guidance and said advertising had weakened over the past several weeks. Facebook sounded a similar alarm bell today.
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