NEW YORK (TheStreet) -- Discovery Communications (DISCA) was already having a tough time reversing the trend of declining television advertising revenues. Now, it has to deal with Vladimir Putin's Russia.
Like the rest of the television industry, Discovery is trying to cope with sluggish ad sales as audiences and marketers look beyond traditional television for entertainment and customers. In its earnings report for the quarter that ended March 31, Discovery's ad revenue declined to $687 million from $689 million for the prior year period. Domestically, ad revenue grew by a modest 1% to $375 million, though its international networks' ad sales shrank 1% to $312 million.
Shares of Silver Spring, Md.-based Discovery were falling for a third consecutive day on Thursday, losing 2.1% to $31.34, extending its 2015 decline to 9%.
Yes, new programming efforts are underway at Discovery Channel under Rich Ross, who became president in October. But Doug Creutz, a Cowen media stocks analyst rightly points out that those moves haven't translated to improvements at its other channels. "Gains in key demo[graphic] ratings at Discovery Channel [were] more than offset by declines at Animal Planet, ID, and TLC," Creutz wrote on an investor note.
And then there's Russia. Discovery's earnings report cited foreign currency fluctuations as a factor in its revenue decline, but the report also said the company didn't book advertising revenue from its Russian pay-TV networks during the quarter because of recently approved laws that put limits on advertising on pay-TV networks and foreign programming.
Furthermore, the report stated Discovery will have to divest a portion of its interest in its Russian subsidiaries by next January. Those Russian networks provide less than 2% of Discovery's total revenue, but the earnings report stated that the law forcing the reduction in ownership is likely to adversely affect the company's results.