Discovery will borrow $500 million under its credit facility to boost its cash position the latest media company to scramble to deal the ongoing coronavirus crisis. The parent of Food Network, TLC and HGTV also withdrew its previous outlook for its fiscal year.
“On March 12, 2020, the Company drew down $500 million under the credit facility to increase its cash position and maximize flexibility in light of the current uncertainty surrounding the impact of COVID-19,” Discovery said Tuesday in a filing with the U.S. Securities and Exchange Commission. Discovery estimated that its adjusted operating income will take a hit to the tune of $175 million to $200 million in the third quarter of the fiscal year.
“As a result of the unknown impact of COVID-19 on the Company’s financial results and the uncertainty related to its duration, as well as the impact of the postponement of the 2020 Olympic Games, the Company is withdrawing its fiscal 2020 outlook,” it said. “The Company is not providing an updated fiscal 2020 outlook at this time.”
Discovery, which was one of two big U.S media companies with rights to televise the 2020 Tokyo Olympics, joins rivals like Comcast and Walt Disney, both of which have told investors that the spread of coronavirus around the world is making it difficult for them to forecast how their business operations will perform in coming months. The other two companies, which also run several large amusement parks, have indicated the effects of coronavirus on consumer behavior has stopped people from going to big events and gatherings and has also had an effect on advertising and broadcasting sports events.
Discovery also revealed that its networks’ ratings have increased in many markets, owing to state governments telling U.S. residents to stay home. “This is helping to offset attributed weakness from economic conditions, and the Company is evaluating the impact of improved ratings and delivery on its performance,” the company said in the filing.