is the latest to take advantage of consumers’ embrace of streaming media.
Fourth-quarter earnings came in higher than expected. Subscriptions for its new Discovery+ are on pace to reach 12 million by the end of this month “underscoring the value of the investments we have made in content, beloved personalities and brands with huge consumer appeal,” CEO
said on Monday.
Fourth-quarter profit was $271 million, or 42 cents a share. That was down 43% from the same period in 2019. But adjusted earnings per share of 76 cents beat the consensus call of 72 cents among analysts tracked by FactSet.
Revenue of $2.886 billion slightly beat the consensus estimate and was up 0.7% from the prior year.
Discovery+ combines content from popular cable channels like Food Network, HGTV, Animal Planet, TLC, and Discovery, into one streaming app, available without cable for $5 a month. The cost is $7 a month with the ads stripped out. The service also includes exclusive shows, such as one starring celebrity chefs Bobby Flay and Giada De Laurentiis.
Barrington Research analyst
who rates Discovery at Outperform, said in a research note that Discovery+’s programming and selection of channels offer companies the ability to target ads at narrow groups of consumers, making it more valuable to advertisers. “The distinction of the service, relative to the major streaming services available, derives from its focus on unscripted content that is distinct from and complementary,” he wrote.
Shares rose 6.3%, to a new 52-week high. They are up 61% over the past year compared with the S&P 500’s 16% one-year gain.
It’s the latest evidence streaming services are gaining popularity as people continue to rely on at-home entertainment. This month, Disney said its streaming business revenue was up 73% year over year, to $3.5 billion, while its operating loss narrowed to $466 million, from $1.1 billion.
is prepared to introduce its Paramount+ service next month.
Still, Discovery and Viacom rely on content that runs on cable, and on television advertising. “While each firm’s digital pivot (Paramount+ and Discovery+) is a positive, we suspect that cord cutting and the digital ad migration are apt to endure (if not accelerate),” Citi analyst Jason Bazinet said last month, cutting his ratings on both to Neutral from Buy.
At Discovery, U.S. advertising revenue was flat during the quarter compared with the prior year, the company said.
For the full year 2020, revenue of $10.6 billion fell 4%, and U.S. advertising revenue fell 5%.
The company had a minority stake in
which listed on the New York Stock Exchange in October. Discovery recorded a $126 million fourth-quarter gain, including a realized gain of $101 million from the sale of 4 million fubo shares.
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