(Silver Spring, Md.) Discovery Communications, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the third quarter ended September 30, 2012.
David Zaslav, Discovery’s President and Chief Executive Officer said, “Discovery delivered another quarter of strong operating results as a sustained focus on developing compelling content and leveraging it globally provided additional growth opportunities and continued financial momentum. In the U.S. we expanded market share, built new hits and capitalized on the ongoing strength of the ad market, while, internationally, we further leveraged the universal appeal of our programming and increased penetration of global pay-tv platforms to expand our unparalleled distribution footprint. Going forward we remain committed to thoughtfully investing in our brands and platforms while delivering sustained financial success and returning capital to our shareholders.”
Third Quarter Results
Third quarter revenues of $1,076 million were down slightly compared to the third quarter a year ago, as 7% growth at International Networks was offset by a 4% decline at U.S. Networks primarily due to additional revenues in the prior year from extending and expanding certain licensing agreements. Adjusted Operating Income Before Depreciation and Amortization (“OIBDA”) grew 4% to $498 million, driven by an 11% increase at International Networks and a 2% increase at U.S. Networks that included the impact of licensing agreements partially offset by higher content impairment costs in the prior year. Excluding the impact of foreign currency fluctuations, licensing agreements and content impairment costs, total company revenues increased 8% and Adjusted OIBDA increased 14%.
Third quarter net income from continuing operations available to Discovery Communications, Inc. stockholders of $214 million ($0.57 per diluted share) decreased $26 million compared to $240 million ($0.60 per diluted share) for the third quarter a year ago as the strong operating performance in the current year was more than offset by the impact of foreign currency fluctuations, increased mark-to-market equity-based compensation, other and interest expense as well as higher taxes.
Free cash flow was $353 million for the third quarter, an increase of $39 million from the third quarter of 2011, as improved operating performance was partially offset by higher content investment and cash taxes. For the last twelve months, free cash flow increased 13% over the previous twelve month period. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.