* Q1 EPS 57 cents vs Street view 60 cents
* Q1 revenue $1.1 bln vs Street view $1.06 bln
* Raises full-year revenue forecast
* Shares down 6.5 percent
By Jennifer Saba
May 8 Discovery Communications
reported a lower-than-expected quarterly profit on Tuesday, hurt
by losses at the Oprah Winfrey Network (OWN), sending its shares
down 6.5 percent.
OWN, the joint venture with the "queen of talk" that is
struggling with lackluster ratings, was part of the reason
Discovery reported a nearly 30 percent decline in first-quarter
"We have a long way to go," Discovery President and Chief
Executive David Zaslav said on a conference call with analysts
about OWN. "We remain confident in the growth potential of this
OWN has slashed costs by cutting 30 employees and canceling
its heavily hyped Rosie O'Donnell talk show. It recently came
out with a new slate of reality shows to help the network find
Discovery expects the network's cash flow to break even
during the second half of 2013, Zaslav said on the call.
Discovery reported first-quarter earnings per share of 57
cents, 3 cents below analysts' average forecast, according to
Thomson Reuters I/B/E/S.
Revenue rose 16 percent to $1.1 billion. Analysts expected
The challenges at OWN overshadowed Discovery's revenue
growth, boosted by strong ad sales and distribution deals with
the likes of Amazon and Netflix for its
content from other cable networks such as Discovery Channel, TLC
and Animal Planet.
"I thought the results were outstanding," Morningstar
analyst Michael Corty said, citing increases at its domestic and
international divisions. "The Oprah issue -- that shouldn't be a
surprise, it takes time for a network like that to grow."
Executives did not wave any flags signaling a slowdown and
raised the full-year revenue forecast. Discovery now expects
revenue of $4.55 billion to $4.65 billion, up from its prior
forecast of $4.45 billion to $4.58 billion.
Advertising revenue at its U.S. Networks, which jumped 13
percent in the first quarter, is expected to grow in the high
single digits in the second quarter.
The company also announced a $1 billion increase to its
existing stock repurchase program, to $3 billion.
Discovery's shares fell $3.52, or 6.5 percent, to $50.56 in
late-morning Nasdaq trading.