MUMBAI: For the three months ended 31 March 2006 Discovery Communications Inc experienced a six per cent revenue growth to $443 million and three per cent operating cash flow growth to $152 million.
Internationally, it achieved a 21 per cent revenue growth to $193 million and 35 per cent operating cash flow growth to $31 million at its International Networks division for the first quarter of 2006.
During the first quarter, Discovery commercially launched Cosmeo, its online homework help tool.
Net distribution revenue increased by 25 per cent due to increases in paying subscription units in Europe, Latin America and Asia, as well as the international joint venture channels combined with contractual rate increases in certain markets. Net ad revenue increased by 16 per cent primarily due to higher viewership in Europe and Latin America combined with an increased subscriber base in most markets worldwide.
Operating expenses increased by 19 per cent due to expected increases in headcount as the business expands, particularly in the UK and Europe, combined with an increase in marketing expense associated with branding and awareness efforts, particularly in Europe, related to the Lifestyles category initiative. Operating cash flow increased as the growth in revenue outpaced the growth in operating expenses.
The growth in revenue in the US was due to a 22 per cent increase in distribution revenue. This was partially offset by a six per cent decrease in ad revenue. Net distribution revenue increased 22 per cent as the US Networks had an 11 per cent increase in paying subscribers in the first quarter combined with contractual rate increases.
US networks distribution revenue increases were also aided by reduced launch fee amortisation, a contra-revenue item, as certain affiliation agreements were extended. Net ad revenue decreased by six per cent, primarily due to lower advertising sell-out rates combined with lower rates at certain networks.
Operating expenses increased by eight per cent due to an increase in programming expense as the company continued its investment across all US networks in original productions and high profile series and specials. Operating cash flow increased due to the increased revenue.
