Discovery Drops as Discovery+ Growth Eats Into Profit

Discovery reported a 63% decline in net income year over year, owing in part to costs related to launching the Discovery+ streaming service.
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Discovery Inc.  (DISCA) - Get Report shares were falling on Wednesday after the media company reported first-quarter earnings that missed analyst estimates. 

The Silver Spring, Md., company reported net income fell 63% to $140 million, or 21 cents a share, on revenue of $2.79 billion. The latest adjusted earnings were 23 cents. 

Analysts surveyed by FactSet were expecting earnings of 33 cents a share, or an adjusted 64 cents a share, on revenue of $2.77 billion. 

"The global rollout of discovery+ is off to a fantastic start by any measure. Key metrics, including subscriber additions, customer engagement, and retention, are exceeding our expectations and demonstrating sustained momentum into the second quarter," Chief Executive David Zaslav said in a statement. 

The company says it now has 15 million total paying direct-to-consumer subscribers across its platform, including more than 13 million for its Discovery+ streaming product. 

That growth came at a cost as the parent of Food Network, HGTV, TLC and Discovery said costs related to launching Discovery+ were substantial during the third quarter. 

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Revenue in the company's U.S. operations rose 3% to nearly $1.81 billion thanks to a nearly 12% increase in distribution fees. Advertising revenue fell 4% during the period. 

Revenue from the company's overseas operations rose 7% to $987 million due to a 16% increase in advertising sales.

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