MUMBAI: Global media firm Discovery has announced its results for the fourth quarter and year ended 31 December 2006.
Its revenue increased 16 per cent for the quarter to $899 million and 13 per cent for the year to $3.01 billion. DCI's operating cash flow increased five per cent for the quarter to $194 million and 5% for the year to $722 million. Total revenue increased due to increases in distribution revenue of 16 per cent for the quarter and 20 per cent for the year and increases in ad revenue of 14 per cent for the quarter and five per cent for the year.
In the US revenue increased 16 per cent for the quarter to $516 million and 10 per cent for the year to $1.93 billion. Operating cash flow increased 22 per cent for the quarter to $181 million and 13% for the year to $727 million. The increases in revenue were due to growth in distribution and advertising revenue across the portfolio.
Distribution revenue increased 13 per cent for the
quarter and 18 per cent for the year due to an 11 per cent increase in paying subscription units during the year and contractual rate increases. DCI experienced ratings increases during the year at three of its largest networks, the Discovery Channel, TLC and the Travel Channel. Net ad revenue increased 14 per cent for the quarter and two per cent for the year primarily due to higher ad sell-out rates and higher audience delivery on certain channels.
Operating expenses increased by 13 per cent for the quarter and nine per cent for the year due to an increase in programming expense. Programming expense increased due to the company's continued investment across all U.S. networks in original productions and series and specials.
Its revenue from abroad increased by 17 per cent for the quarter to $256 million and 19 per cent for the year to $879 million. Operating cash flow decreased 29 per cent for the quarter to $24 million and increased eight per cent for the year to $116 million. The increase in revenue was due to growth in both distribution and ad revenue.
Net distribution revenue increased 22 per cent for the quarter and 23 per cent for the year due to a 13 per cent increase in paying subscription units combined with contractual rate increases in certain markets. Growth in paying subscription units was primarily due to growth in Europe and Latin America. Net advertising revenue increased 13% for the quarter and 14 per cent for the year primarily due to higher viewership in Europe and Latin America combined with an increased subscriber base in most markets worldwide.
Operating expenses increased 26 per cent for the quarter and 21 per cent for the year due to increased programming costs. Programming costs increased due to the launch of several networks along with a new free-to-air channel in Germany branded as DMAX. SG&A expenses increased due
to infrastructure expansions in Europe and Asia and an increase in marketing expense resulting from marketing campaigns in Europe and Asia for the launch of new channels.
Revenue in the commerce, education and other divisions increased by 15 per cent for the quarter and nine per cent for the year. The quarter over quarter increase was due to a 29 per cent, or $3 million, increase in education revenue combined with a 13 per cent, or $14 million, increase in commerce revenue.
Last year David Zaslav took over as Discovery's president and CEO. Discovery recently announced a series of structural and personnel changes in order to grow further. A number of positions were eliminated like the post of Discovery US president.
As part of Discovery's effort to build a lean and aggressive organisation, network general managers will have full authority and accountability to grow their brands. Discovery will be organized into five network brand groups reporting to the CEO: Discovery Channel, TLC, Discovery Travel Media, Animal Planet/Discovery Kids Media and Discovery Health Media Enterprises.
The leaders of the network brand groups will assume additional authority over key business functions including production, marketing, new media, communications and research and will have dedicated brand support from ad sales and business development.
