DISCOVERY COMMUNICATIONS REPORTS FULL YEAR AND FOURTH QUARTER 2017 RESULTS

Silver Spring, Maryland – February 27, 2018: 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, 2017.

“2017 was an historic year for Discovery. We took significant steps to position ourselves for success in a changing industry, while driving growth from our traditional linear business and accelerating our investments in new growth areas like digital and mobile in an effort to reach superfans on every screen,” said David Zaslav, President and CEO, Discovery Communications. “Solid global advertising and distribution revenue growth helped us achieve our 2017 strategic and financial objectives. Additionally, we remain excited by the prospects for a combined Discovery and Scripps Networks.”

Full Year Results

Full year revenues of $6,873 million increased 6% compared to the prior year primarily due to 8% growth at International Networks and 5% growth at U.S. Networks, partially offset by a slight decline at Education and Other.  Adjusted Operating Income Before Depreciation and Amortization (“OIBDA”) increased 5% to $2,531 million primarily due to 5% growth at U.S. Networks, 3% growth at International Networks, and a profit at Education and Other compared to a loss in the prior year, partially offset by higher corporate costs.  Excluding currency effects and the impact of the The Enthusiast Network, Inc. (“TEN”) and Oprah Winfrey Network (“OWN”) transactions, total Company revenues and Adjusted OIBDA both grew 4%.

Full year net income/(loss) available to Discovery Communications, Inc. (“DCI Net Income”) decreased to $(337) million as higher operating results and a positive after-tax impact from our solar investments were more than offset by a non-cash $1,321 million (or $2.29 per share) after-tax goodwill impairment charge, $201 million (or $0.35 per share) of after-tax Scripps Networks transaction-related costs and currency-related transactional losses compared to gains in the prior year.  DCI Net Income excluding the impact of amortization of acquisition-related intangible assets, the goodwill impairment charge and Scripps Networks transaction-related costs (“Adjusted Net Income”) was relatively consistent with the prior year, while Adjusted Net Income excluding currency effects increased 10%.  Diluted earnings per share decreased to $(0.59) due to lower DCI Net Income.  Adjusted Earnings Per Diluted Share (“Adjusted EPS”), which excludes the impact of amortization of acquisition-related intangible assets, the goodwill impairment charge and Scripps Networks transaction-related costs, increased  5% and Adjusted EPS excluding currency effects increased 16%.

Free cash flow increased 16% to $1,494 million for the full year 2017 from $1,292 million in the prior year as cash flow from operations increased 18% to $1,629 million from $1,380 million while capital expenditures increased to $135 million from $88 million.  Cash flow from operations increased primarily due to improved operating results and lower cash taxes.  Capital expenditures increased primarily due to higher technology and infrastructure investment.  Free cash flow excluding the impact of currency effects and Scripps Networks transaction-related costs increased 25%.  The goodwill impairment charge did not impact free cash flow.

Fourth Quarter Results

Fourth quarter revenues of $1,864 million increased 11% compared to the prior year due to 13% growth at International Networks, 10% growth at U.S. Networks and slight growth at Education and Other.  Adjusted OIBDA increased 10% to $636 million due to 9% growth at International Networks, 7% growth at U.S. Networks, and a profit at Education and Other compared to a loss in the prior year, partially offset by higher corporate costs.  Excluding currency effects and the consolidation of TEN and OWN, fourth quarter total Company revenues and Adjusted OIBDA grew 5% and 9%, respectively.

Fourth quarter DCI Net Income decreased to $(1,144) million as improved operating results were more than offset by a non-cash $1,321 million after-tax goodwill impairment charge, $59 million (or $0.10 per share) of after-tax Scripps Networks transaction-related costs and currency-related transactional losses compared to gains in the prior year.  Adjusted Net Income excluding currency effects decreased 4%.  Diluted earnings per share decreased to $(1.99) due to lower DCI Net Income.  Adjusted EPS decreased 16%, while Adjusted EPS excluding currency effects increased 1%.

Free cash flow decreased to $430 million for the fourth quarter of 2017 as cash flow from operations decreased to $462 million while capital expenditures increased to $32 million.  Fourth quarter cash flow from operations decreased primarily due to higher operating results and lower cash taxes more than offset by the timing of content spend and working capital.  Free cash flow excluding the impact of currency effects and Scripps Networks transaction-related costs decreased 4%.  The goodwill impairment charge did not impact free cash flow.

TO VIEW THE FULL PRESS RELEASE IN PDF FORMAT, CLICK:
Discovery Communications Full Year and Fourth Quarter 2017 Results Press Release