Discovery Inc. delivered advertising and affiliate revenue growth in the U.S. in the first quarter even as international revenue fell against tough year-over-year comparisons.
Discovery on Thursday reported total revenue of $2.7 billion, in line with Wall Street’s expectations and up 17% from the year-ago quarter. However, adjusted for the impact of Discovery’s Scripps Networks Interactive acquisition last year, Discovery revenue was down 5% for the quarter. Net income reached $384 million, compared to a loss of $8 million in the year-ago quarter.
Adjusted operating income was up 21% on a pro forma basis to $1.2 billion.
Discovery’s solid showing on the domestic front was offset by declines in its international division, which faced tough year-over-year comparisons after Discovery’s Eurosport unit carried the winter Olympics in Q1 2018.
U.S. networks saw advertising and distribution gains of 4% on a pro forma basis, with ad revenue reaching $1 billion and distribution hitting $697 million for the quarter. On the international side, revenue fell 15% to $953 million while adjusted operating income was up 46% to $219 million due to the absence of Olympics rights costs.
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“In the first quarter we delivered a solid start to 2019, as we continue to power people’s passions through our loved brands and our owned global IP in genres that nourish audiences around the world,” said David Zaslav, president-CEO of Discovery Inc. “We are a differentiated media company and have the right strategy, assets, brands, and management team necessary to drive additional shareholder value.”
Discovery is starting to reap the rewards of having the Scripps channels in the family for nearly a full year. Operating expenses at its domestic channels climbed to $691 million, from $522 million in the year-ago quarter. But on a pro forma basis, operating expenses were down 12%, which Discovery attributed to “content synergies” from the Scripps deal and lower restructuring costs compared to the year-ago quarter.
Discovery’s U.S. channels are still feeling the effects of cord-cutting. Although Discovery outlets were added to Hulu’s digital MVPD channel bundle last fall, total subscribers for Discovery were down 4% in March compared to March 2018, Discovery said. Last month, Discovery cut a deal with YouTube to add eight channels to the YouTube TV platform, which has about 1.5 million subscribers at present.