Discovery Communications Inc. (NASDAQ:DISCA) said that the revenue can suffer from a strong U.S. dollar in the coming quarter as it gets almost 50% of its revenue from outside the U.S. It forecasts a $425 million hit from a strong dollar to its revenue for fiscal compared to previous forecast of $350 million. The dollar surged almost 20% versus a basket of major world currencies, and is expected to strengthen, indicating revenue measured in other currencies becomes less valuable in dollar terms.
Increasing costs
Discovery Communications said that it expects costs to surge in U.S. networks in the coming quarters due to increased timing and marketing of some content. The growth in adjusted OIBDA will lag revenue growth in the second quarter, adversely affected by higher spending on content at Discovery’s Eurosport channel. The company posted a 6% growth in adjusted OIBDA for the first quarter ended March 2015. A 2% decline in operating costs helped the company to post strong adjusted OIBDA.
The highlights
Discovery Communications quarterly profit came above the analysts’ projections as total margin expanded 2% to 39% on organic basis. It posted total adjusted OIBDA growth of 8% boosted by cost-led upside in major geographic markets. The total adjusted OIBDA of $568 million was better than Cowen & Co analyst’s estimate of $512 million. The increased subscribers and higher rates in Latin America helped company enhance distribution revenue by 13% in U.S. networks and 17% in international networks.
The performance
Discovery Communications Inc. (NASDAQ:DISCA) stated that total revenue from U.S. networks jumped 6% to $749 million. The performance from international networks was much better as revenue surged 10.2% to $735 million. The revenue from both segment collectively jumped 9% to $1.54 billion. The 1Q net income available to company grew to $250 million from $230 million, a year earlier.
Discovery shares closed with loss of over 2% at $32.59 on the NASDAQ on Tuesday’s trading session.
