Discovery Communications' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Discovery Communications (DISCA)

Q1 2012 Earnings Call

May 08, 2012 8:30 am ET


Craig Felenstein -

David M. Zaslav - Chief Executive Officer, President, Director and Member of Executive Committee

Andrew C. Warren - Chief Financial Officer and Senior Executive Vice President


Benjamin Swinburne - Morgan Stanley, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

David Bank - RBC Capital Markets, LLC, Research Division

John Janedis - UBS Investment Bank, Research Division

Spencer Wang - Crédit Suisse AG, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Richard Greenfield - BTIG, LLC, Research Division



Good day, ladies and gentlemen, and welcome to the Q1 2012 Discovery Communications, Inc. Earnings Conference Call. My name is Corita, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Mr. Craig Felenstein, Senior Vice President of Investor Relations. Please go ahead.

Craig Felenstein

Thank you. Good morning, everyone, and welcome to Discovery Communications First Quarter 2012 Earnings Call. Joining me today is David Zaslav, our President and Chief Executive Officer; and Andy Warren, our Chief Financial Officer.

Hopefully, you have all received our earnings release, but if not, feel free to access it on our website at

On today's call, we will begin with some opening comments from David and Andy, after which, we will open the call up to your questions. We urge you to please keep to one or 2 questions, so we can accommodate as many folks as possible.

Before we start, I would like to remind you that comments today regarding the company's future business plans, prospects and financial performance are forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are made based on management's current knowledge and assumptions about future events, and may involve risks and uncertainties that could cause actual results to differ materially from our expectations.

In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them.

For additional information on important factors that could affect these expectations, please see our Form 10-K for the year ended December 31, 2011, and our subsequent filings made with the U.S. Securities and Exchange Commission.

And with that, I'll turn the call over to David.

David M. Zaslav

Thanks, Craig. Good morning, everyone, and thank you for joining us. Discovery is off to a great start in 2012, delivering first quarter results that built upon the double-digit growth and strong operating momentum we generated throughout 2011. Importantly, our success continues to be well-balanced with growth spread across geographic boundaries and driven by diversified revenue streams, each of which are leveraging the strength of our content portfolio and robust distribution platform.

On our year-end call, I highlighted some of the elements that contributed to our success a year ago, from a strengthened programming library that capitalized on a robust global ad market and a growing demand for content across emerging distribution platforms to the opportunities we are exploiting across our international asset base.

As evidenced by our first quarter results, these drivers remain firmly in place. Andy will discuss the specifics behind our financial performance in a moment. But before he does, let me take a few minutes to highlight some of the opportunities we continue to take advantage of and also discuss some of the initiatives that we expect will contribute to sustained financial and operating momentum throughout the remainder of 2012.

Once again, during the first quarter, Discovery's long-term strategy of investing in bigger, stronger brands and the highest quality nonfiction content continued to pay off with consumers watching more television in total than ever before across conventional and emerging distribution channels. Simply put, it is a great time to be in the content business. Even more so, if your programming resonates with diverse audiences and you own the rights for the majority of your content.

Our sustained investment in programming is delivering market share growth worldwide, and given the continued strength in the advertising market, we were able to generate total company global ad growth of 16% in the first quarter.

Domestically, our market share growth built upon the viewership gains we delivered in each of the last several years with viewership in the first quarter expanding over 6% in prime time among adults 25 to 54. This success was even more compelling when you consider that the non-Discovery cable declined slightly and broadcast was down 7% in the same period. Equally as compelling is the fact that our success was broad-based and not driven by just one brand. Discovery Channel grew 5% in prime time, led by the continued success of returning hits Gold Rush, the #1 show on TV on Friday nights for men, including the broadcast nets, Flying Wild Alaska and Sons of Guns. Discovery also benefited from the strong performances of several new series, including Moonshiners and Bering Sea Gold along with the premiere of Frozen Planet.

Animal Planet was up 18% in the first quarter, led by the growth of several returning series, including the second season of Finding Bigfoot, which grew 17% over its premiere season.

TLC ratings declined versus a year ago, but has built a broad, stable of returning hits, including 17 series that are delivering over 1 million viewers, and TLC is the #1 ad-supported cable network for women on Friday nights.

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