NEW YORK (TheStreet) -- Shares of Discovery Communications (DISCK) - Get Report are jumping, sharply up 7.35% to $31.67 in mid-morning trading Monday, following reports that the company has held preliminary takeover talks with Rupert Murdoch's Twenty-First Century Fox(FOXA) - Get Report , according to the Australian Financial Review.

The two media companies met two weeks ago in order to discuss a potential takeover bid to create a $100 billion entertainment giant, with no guarantee that a formal offer would be made or that the talks would continue, the Australian Financial Review reports.

But, Fox has denied any talks with Discovery and says there is no truth in the rumors, Reuters reports.

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New York City-based Twenty-First Century Fox is a diversified global media and entertainment company that operates industry segments including cable network programming, television, filmed entertainment, and direct broadcast satellite television.

Silver Spring, MD-based Discovery Communications is a global media and entertainment company that provides programming throughout multiple distribution platforms worldwide. The company's networks consist of domestic television networks and websites, as well as international television networks and websites.

Discovery owns both Animal Planet and the Discovery Channel.

Separately, TheStreet Ratings team rates DISCOVERY COMMUNICATIONS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DISCOVERY COMMUNICATIONS INC (DISCK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DISCK's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • DISCOVERY COMMUNICATIONS INC's earnings per share declined by 7.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $1.50 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($5.73 versus $1.50).
  • Net operating cash flow has increased to $425.00 million or 19.71% when compared to the same quarter last year. Despite an increase in cash flow, DISCOVERY COMMUNICATIONS INC's average is still marginally south of the industry average growth rate of 22.45%.
  • The gross profit margin for DISCOVERY COMMUNICATIONS INC is rather high; currently it is at 59.19%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.91% trails the industry average.
  • You can view the full analysis from the report here: DISCK Ratings Report