Discovery jumps 12% amid streaming possibilities
Shares of Discovery rose 12 percent on better-than-expected profits, even as the broadcasting giant that owns Food Network, HGTV and TLC eyed new ways to make its shows more accessible to cord cutters.
Discovery Chief Executive David Zaslav said Thursday that the company was weighing options for a streaming service in the US that could feature much of Discovery’s TV library.
While Zaslav was stingy on details, he said the new service wouldn’t conflict with Discovery’s existing cable TV business in the US.
“We think that we have the ability to attack everyone that doesn’t subscribe to cable and watch the great content they grew up watching,” Zaslav said on Discovery’s third-quarter earnings call. “We want everyone to watch our content.”
The comments came as lower costs, higher operating results and advertising growth helped Discovery more than double its profits as it turns its efforts to building direct-to-consumer streaming services.
Currently, Discovery is widely distributed in overseas markets through partnerships with existing streaming services.
Zaslav said that abroad, the company is focused on sports and other niche content, and that Discovery’s goal is to “become the Hulu equivalent in select TV markets in Europe.”
In the US, Discovery is beginning to offer video-streaming options of its own. Last month, it launched Food Network Kitchen, a streaming app that allows consumers to take live video classes from celebrity chefs and purchase ingredients through Amazon Fresh and other food delivery services.
It also will launch a streaming product with home-improvement gurus Chip and Joanna Gaines, as well as a nonfiction streaming service featuring natural-history content.
Zaslav emphasized that Discovery wouldn’t include scripted entertainment because the market is already flooded with such content from services like Netflix, Amazon Prime Video, Hulu, Apple and incoming entrants Disney+ and HBO Max.
“It’s going to be a lot of carnage,” he said, explaining that only “three or four” of those services “are going to make it.”
During the quarter ended Sept. 30, net income rose to $262 million, or 35 cents a share, versus the year-earlier $117 million, or 16 cents a share, due in part to lower costs.
Excluding one-time items, the company earned 87 cents a share, beating Wall Street’s estimates of 82 cents.
Revenue met analysts’ expectations, growing 3 percent, to $2.68 billion, helped by increases in ad pricing.
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