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Discovery Communications Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: DISCA

Andy will discuss the specifics behind our financial performance in a moment, but before he does, let me take a few moments to highlight some of the initiatives contributing to our sustained operational and financial success.

You've heard us talk in the past about Discovery's long-term strategy of investing in bigger, stronger brands and the highest quality nonfiction content. We've increased our success base content costs by about 7% or 8% annually over the last 4 or 5 years. This sustained investment in programming is delivering market share growth worldwide, and given the continued strength in the advertising market across the globe, we have been able to generate 13% total company organic growth in the second quarter.

The biggest contributor to this growth in percentage terms is our International business, which generated local ad growth of 22% this quarter. This business is a true differentiator for Discovery, and the significant advertising growth highlights the opportunity we have to exploit our global infrastructure by launching new channels, growing our audience and building stronger brands.

There is no better example than the global rollout of TLC, which most of you are familiar with by now. Over the last 2 years, we established TLC as another global flagship. TLC is the #1 most distributed women's brand in the world. It is now in over 150 countries, is making money and we are only in the early stages of its growth cycle. But that's just 1 example. We have a robust portfolio of 26 brands, 137 networks and 170 feeds around the world, and we are strategically investing in content to further capitalize on our market opportunities to drive audience and advertising growth.

Our latest initiative is to drive the IT brand in markets where we think it will have broad appeal. Earlier this month, we rebranded Liv, our fully distributed entertainment channel, in 38 countries throughout Latin America to ID. After seeing the success of crime and investigation genre across our existing platforms, we are already seeing a larger audience on that channel. ID is now in over 100 countries globally, and we think this can be another growth driver for our International business over the next several years.

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