Discovery Communications Inc.
) reported mixed financial results for the fourth quarter of
2013. While net earnings significantly outpaced the Zacks
Consensus Estimate, total revenue fell below the same. The board
of directors has approved a $1.5 billion increase to the existing
stock repurchase program, lifting the total authorization to $5.5
Quarterly net income was $289 million or 81 cents per share
compared with $224 million or 61 cents per share in the year-ago
quarter. However, fourth-quarter adjusted earnings per share of
92 cents were well above the Zacks Consensus Estimate of 88
Quarterly total revenue of $1,537 million was up 28.1% year
over year but below the Zacks Consensus Estimate of $1,548
million. Total Distribution revenue was $640 million, up 18.3%
year over year. Total Advertising revenue came in at $817
million, up 40.4% year over year. Other revenues were $80
million, up 3.9% year over year.
Quarterly operating expenses were $1,016 million against $719
million in the prior-year quarter. However, operating income was
$521 million compared with $481 million in the prior-year
Quarterly adjusted operating income before depreciation and
amortization (OIBDA) was $662 million, up 21.5% year over year.
During the fourth quarter of 2013, Discovery repurchased 4.3
million worth of shares for a total consideration of $336
During 2013, Discovery generated $1,285 million of cash from
operations compared with $1,099 million in 2012. Free cash flow,
in 2013, was $1,170 million compared with $1,022 million in
At the end of 2013, Discovery had $408 million of cash and
$6,499 million of debt outstanding against $1,201 million of cash
and $5,212 million of debt outstanding at the end of 2012. The
debt-to-capitalization ratio, at the end of 2013 was 0.51 against
0.45 at the end of 2012.
U.S. Networks Segment
Total revenue stood at $740 million, up 5% year over year.
Within this, Distribution revenues were $309 million, up 7% year
over year. Advertising revenues were $411 million, up 4% from the
prior-year quarter. Other revenues were $20 million, up 11% year
over year. Adjusted OIBDA was $434 million, up 5% year over year.
Adjusted OIBDA margin was 59%, flat year over year.
International Networks Segment
Total revenue was $758 million, up 64% year over year. Within
this, Distribution revenues were $331 million, up 31% year over
year. Advertising revenues stood at $406 million, up a
substantial 119% year over year. Other revenues were $21 million,
down 13% from the earlier-year quarter. Adjusted OIBDA was $295
million, up 47% year over year. Adjusted OIBDA margin was 39% as
against 44% in the prior-year quarter.
Total revenue was $41 million, up 17% year over year. Adjusted
OIBDA was $14 million, up 8% from the year-ago quarter. Adjusted
OIBDA margin was 34% as against 37% in the prior-year
Discovery expects its total revenue for fiscal 2014 to be
between $6.45 billion and $6.625 billion. Adjusted OIBDA is
likely to range from $2.6-$2.725 billion. Net income is
anticipated between $1.2 billion and $1.3 billion.
Other Stocks to Consider
Discovery currently has a Zacks Rank #4 (Sell). However, other
stocks in the media industry which warrant a look include
Cumulus Media Inc.
LIN Media LLC.
). All three have a Zacks Rank #2 (Buy).
CUMULUS MEDIA (CMLS): Free Stock Analysis
DISCOVERY COM-A (DISCA): Free Stock Analysis
LIN MEDIA LLC (LIN): Free Stock Analysis
STARZ-LIB CAP-A (STRZA): Free Stock Analysis
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