Analyst discovers things to like about Discovery


Cable programmer Discovery Communications not only had a good quarter year-over-year, it beat the benchmarks established beforehand by knowledgeable observers. And one of them sees good things continuing throughout the year.

Anthony J. DiClemente of Barclays Capital noted strong growth in the company’s US advertising sales in Q1, but even more impressive results scored overseas. Discovery’s domestic increase came in at 15%, but the international gain of 19% was considered to be extremely impressive because it came on top of a 44% increase recorded during Q1 2010.

DiClemente said that the Q1 revenue total of $951.0M was $13.2M better than the consensus prediction and the posted OIBDA of $427.0M was $24.8M better than consensus.

Another strong aspect of the company’s Q1 results was the fact that it came from a diversified pool of advertising categories. The largest single category represented only 11% of the total, said DiClemente.

The across-the-board advertising strength is said to be carrying into April, and Barclays expects that to carry through the year. It’s calling for a 14% increase in US advertising for 2011, after adjusting for Discovery Health.

DiClemente noted that the company is buying back stock at a faster clip than anticipated – it was expected to spend $100M that way in Q1; in fact, it used $167M for buybacks.