Discovery Communications Reports First Quarter 2009 Results

First Quarter 2009 Highlights:

-- Revenues increased to $817 million

-- Adjusted OIBDA increased to $329 million

-- Net income attributable to Discovery increased to $119 million

-- Free Cash Flow increased to $120 million

May 4, 2009

(Silver Spring, Md.) Discovery Communications, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the first quarter ended March 31, 2009.  The discussion below assumes the transaction between Discovery Holding Company (“DHC”), Discovery Communications Holding LLC (“DCH”), and Advance/Newhouse Programming Partnership that resulted in Discovery becoming a public company, as described in the Other Items section on page 4, occurred on January 1, 2008, and as such includes 100% of Discovery’s results.

David Zaslav, Discovery’s President and Chief Executive Officer said, “The growth Discovery delivered in the first quarter despite economic and foreign currency headwinds demonstrates the strength of our business model.  Our stable and growing distribution revenue provides a unique resiliency in the face of economic hurdles.  In the first quarter, this distribution strength was complemented by domestic advertising revenue growth as we capitalized on increased ratings across the portfolio.  The durability of our revenue streams, combined with our ability to control spending, translated into Adjusted OIBDA growth of 9% this past quarter, and gives us confidence that we can continue to expand operating margins in today’s challenging environment.”

First quarter revenues of $817 million increased $8 million over the first quarter a year ago as 5% growth at U.S. Networks and 23% growth at Commerce, Education and Other, aided primarily by non-recurring revenue, was offset by a 4% decline at International Networks, mainly the result of a $32 million unfavorable impact from foreign currency fluctuations.  Adjusted Operating Income Before Depreciation and Amortization ⁽¹⁾ (“OIBDA”) grew 9% to $329 million, driven by an increase of 7% at U.S. Networks and an increase of 20% at International Networks.  Total company Adjusted OIBDA margin increased to 40% for the first quarter from 37% for the same period a year ago. 

First quarter net income attributable to Discovery Communications, Inc. of $119 million ($0.28 per share) increased $85 million compared to $34 million ($0.12 per share) for the first quarter a year ago.  The increased results primarily reflect the $28 million growth in Adjusted OIBDA, a $40 million decline in income tax expense, and a $24 million increase in Other non-operating income, partially offset by a $32 million expense in the current year related to the unrealized change in the fair value of the mark-to-market share-based compensation which was a benefit of $36 million in the first quarter a year ago.  

Free cash flow was $120 million for the first quarter, an increase of $75 million from the first quarter of 2008.   Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.

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