Full Year 2016 Financial Highlights:
- Revenues increased 2% to $6,497 million (increased 4% excluding currency effects)
- DCI Net Income increased 15% to $1,194 million (increased 11% excluding currency effects)
- Diluted EPS increased 24% to $1.96 and Adjusted EPS increased 21% to $2.13 (increased 17% excluding currency effects)
- Repurchased $1,374 million of stock
Silver Spring, Maryland – February 14, 2017: Discovery Communications, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the full year and fourth quarter ended December 31, 2016.
“Discovery’s diversified set of nonfiction, sports and kids’ entertainment brands, and strong strategic positioning continued to drive attractive distribution agreements, helping to deliver solid operating and financial results in 2016,” said David Zaslav, President and CEO, Discovery Communications. “As we begin 2017, we will continue to invest in our premier global IP and brands to nourish fans across all screens, all platforms and all services to drive shareholder value and propel our business for years to come amid the rapidly changing media landscape.”
Full Year Results
Full year revenues of $6,497 million increased 2% compared to the prior year as 5% growth at U.S. Networks and 1% growth at Education and Other were partially offset by a 2% decline at International Networks, primarily due to the sale of SBS Radio and currency effects. Adjusted Operating Income Before Depreciation and Amortization (“OIBDA”) increased 1% to $2,426 million as 8% growth at U.S. Networks was more than offset by a 12% decline at International Networks, partially due to the sale of SBS Radio and currency effects. Excluding currency effects and the impact of the SBS Radio sale, total Company revenues and Adjusted OIBDA both grew 5%.
Full year net income available to Discovery Communications, Inc. (“DCI Net Income”) increased 15% to $1,194 million, primarily due to higher operating results, currency-related transactional gains, a $31 million (or $0.05 per share) after-tax gain from the Group Nine transaction, and a decrease in taxes, partially offset by a $59 million (or $0.10 per share) after-tax impairment charge related to the Lionsgate investment, losses from equity investees and higher equity-based compensation. Diluted earnings per share increased 24% to $1.96 due to higher DCI Net Income and fewer shares outstanding. Full year Adjusted Earnings Per Diluted Share (“Adjusted EPS”), which excludes the impact of amortization of acquisition-related intangible assets, increased 21% to $2.13. Full year Adjusted EPS excluding currency effects increased 17% and full year Adjusted EPS excluding currency as well as the impact of the Lionsgate impairment and the Group Nine transaction increased 20%.
Free cash flow increased 9% to $1,285 million for the full year 2016 as cash flow from operations increased 8% to $1,373 million while capital expenditures decreased 15% to $88 million. Full year cash flow from operations increased primarily due to improved operating results and lower cash taxes. Full year free cash flow excluding the impact of currency effects increased 21%. Free cash flow is defined as cash provided by operating activities less purchases of property and equipment.
Fourth Quarter Results
Fourth quarter revenues of $1,672 million increased 2% compared to the prior year, as 3% growth at U.S. Networks and slight growth at International Networks were partially offset by a slight decline at Education and Other. Adjusted OIBDA increased 1% to $581 million, as 9% growth at U.S. Networks was largely offset by a 12% decline at International Networks, partially due to currency effects. Excluding currency effects, fourth quarter total Company revenues and Adjusted OIBDA grew 4% and 3%, respectively.
Fourth quarter DCI Net Income increased 39% to $304 million, primarily due to higher operating results, a $31 million (or $0.05 per share) after-tax gain from the Group Nine transaction, and currency-related transactional gains, partially offset by lower equity investees and an increase in taxes. Diluted earnings per share increased 53% to $0.52 due to higher DCI Net Income and fewer shares outstanding. Adjusted EPS increased 47% to $0.56 for the fourth quarter 2016. Fourth quarter Adjusted EPS excluding currency effects increased 34%.
Free cash flow decreased 12% to $527 million for the fourth quarter of 2016 as cash flow from operations decreased to $546 million while capital expenditures declined 30% to $19 million. Fourth quarter cash flow from operations decreased primarily due to higher cash taxes and higher content spend. Fourth quarter free cash flow excluding the impact of currency effects decreased 18%.
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Discovery Communications Full Year and Fourth Quarter 2016 Results Press Release