Discovery Hits 20M Streaming Subscribers In Third Quarter – Deadline

Discovery ended the September quarter with 20 million DTC subscribers, up 3 million from the prior June quarter June.

The paying subs are largely Discovery+ but also include a handful of other services. Discovery had 17 million subs at the end of June and 18 million by early August when it reported its second quarter numbers.

Discovery is inching closer to a merger with AT&T’s WarnerMedia, expected to close in the middle of next year, which will see its offerings expand exponentially with the addition of HBO Max.

“We are very excited about our pending merger with WarnerMedia and the opportunity to bring these two companies together, combining iconic and globally cherished franchises and brands, and positioning us to more efficiently drive global scale across the combined portfolio,” said CEO David Zaslav. He may address the upcoming combination in more detail at a call skedded for 8 am ET.

Total revenue of $3.15 billion was up 23%. Of that, U.S. ad revenues increased by 5% and distribution revenues by 21%. International advertising sales grew 28%, distribution revenues by 7%.

Net income came in at $156 million, down 48%, in part from higher expenses (up 26% from the year before to nearly $900 million). Diluted earnings per share was at $0.24.

Costs were led by third-party app store fees and growing content investment and marketing expenses for Discovery+.

Discovery stock, which has not been having a great run lately, is down just over 1% in premarket trading.

The company attributed the 5% U.S. ad bump primarily due to higher pricing, monetization of content on next generation platforms and higher inventory — partly offset by lower overall ratings and secular declines in the pay-TV ecosystem. Gains in distribution sales were  driven by Discovery+ and increases in contractual affiliate rates — partially offset by a decline in linear subscribers.

Subscribers to Discovery’s fully distributed linear networks at September 30 were 3% lower than the year earlier. Total subscribers to linear networks were 8% lower, or 4% down excluding the impact from the sale of Great American Country.

“We made great strides in the quarter operationally, financially and creatively. The team drove solid momentum in our direct-to-consumer business, which we grew to 20 million paid subscribers at quarter end on the strength of our global brands and fan-favorite content, including the Summer Olympic Games and Shark Week. Additionally, we delivered double-digit growth in both advertising and distribution revenues, as we doubled next generation revenues year over year. This strong performance once again drove very healthy cash flows during the quarter, further strengthening our balance sheet and financial profile,” Zaslav said.

Source: Deadline

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