UPDATE 3-Discovery profit up 42 pct with help from abroad

Fri Apr 30, 2010 12:19pm EDT

* Q1 shr $0.39 vs Wall St. view $0.34

* Revenue up greater-than-expected 8 percent

* Sees full year revenue of $3.68-$3.78 bln

* Shares hit all-time high (Adds executive, analyst comment, share price, byline)

By Paul Thomasch

NEW YORK, April 30 (Reuters) - Discovery Communications (DISCA.O) reported a 42 percent rise in quarterly profit, as the company's push to bring its hit cable TV programs abroad resulted in a sharp jump in international advertising sales.

Shares of Discovery, the cable TV broadcaster behind hit shows like "Cake Boss," "Little People, Big World," and "Man vs. Wild," rose 3.5 percent and hit an all-time high after the better-than-expected results on Friday. The stock has nearly doubled in the past year, making Discovery among the most popular media companies with investors.

One reason for its standing is the consistently strong ratings of its U.S. cable networks, which include the Discovery Channel and Animal Planet and specialize in adventure, travel and cooking shows. Its ratings rose 11 percent in the first quarter.

But the first quarter earnings also showed that Discovery's efforts in Europe, the Middle East, Africa and Latin America are paying dividends. Excluding any help from exchange rates, the company boosted international revenue by 10 percent and ad sales by a whopping 35 percent. This at a time when most media companies are hoping to squeak by with even small increases.

Executives on a conference call said that while 35 percent increases should not be expected every quarter, they did foresee double-digit advertising gains from the international business in the quarters ahead.

That suggests international ad sales will continue to outpace those in the United States, although executives sounded upbeat about the recovery in advertising spending here. Among other factors, they pointed to a rebound in spending by automakers on commercial time.

"There was no question there is a much higher degree of optimism in the marketplace from clients across virtually every category," said Chief Executive David Zaslav. He added that he expected "significant increases" in sales of commercial time for the 2010-2011 TV season when negotiations begin in the coming weeks.

During the first quarter, Discovery's advertising sales rose 9 percent in the United States. Below the increase in its international business, its U.S. performance is still likely to outshine nearly every other major media company.

For instance, Viacom Inc VIAb.N, owner of the MTV and Nickelodeon cable channels, reported a 1 percent increase in U.S. ad sales in its report on Thursday. It was the first increase in two years.

What is more, Discovery is preparing for the launch of another much-talked-about new cable network, the Oprah Winfrey Network. It has a 50 percent stake in the network, a partnership with the famous talk-show queen, and has already signed a major, multiyear ad deal with Procter & Gamble Co (PG.N). The network will debut in January 2011.

But some analyst worry that after a year-long rally, the stock may not have much more room to run.

"The strong momentum in advertising continues to exceed expectations with Discovery's first quarter results," wrote Macquarie analyst Ben Stretch. But "while the first quarter was certainly a quality result, we have a hard time supporting the stock given its current valuation level," he added in a note.

Overall, Discovery's first quarter revenue rose 8 percent to $879 million, surpassing the average estimate of $863.3 that analysts polled by Thomson Reuters I/B/E/S had expected.

Profit also topped expectations, rising to $169 million, or 39 cents a share, up from $119 million, or 28 cents a share, in the period a year earlier.

For 2010, Discovery expects full-year revenue of $3.68 billion to $3.78 billion. Analysts had forecast revenue for the period of $3.74 billion.

Shares of the company were up $1.34 at $38.86 on the New York Stock Exchange. (Reporting by Paul Thomasch; Editing by Derek Caney)