Discovery posted a net loss of $8 million in the first quarter, compared with a profit of $215 million in the year-ago period, with the company blaming costs linked to the acquisition of Scripps Networks Interactive and other charges.
Revenue in the quarter hit $2.3 billion, up 14% from a year ago when the Scripps deal and transactions involving OWN and the Enthusiast Network are removed. International, a strong suit of Discovery under current management, posted a 28% gain in revenue, compared with 3% for U.S. networks.
CEO David Zaslav called the quarter “historic” and “pivotal” for the company, which closed its $14 billion purchase of Scripps in the period, creating an unscripted powerhouse, albeit one that is doubling down on the traditional TV ecosystem in a time of change. Zaslav has argued that the company’s programming and IP is ideally suited for the mobile and digital era. “As our industry continues to evolve, we are uniquely positioned to maximize the value of our traditional pay-TV business while driving new opportunities and growth from our digital and direct to consumer businesses around the world,” he said in the earnings release.
On a pro forma basis accounting for the Scripps deal, Discovery reported a 5% decline in subscribers across its network portfolio. The U.S. networks results included a 2% increase in distribution revenue and a 4% gain in advertising (2% on a pro forma basis). The company credited the ad gains to “the continued monetization of digital content offerings as well as higher volumes, partially offset by lower linear delivery.” The company said the distribution growth was driven by increases in affiliate fee rates, partially offset by a decline in affiliate subscribers.