We last bought Discovery (DISCA) in September and sold in October, and the stock has risen to the top of our filters again, recalls David Fried, a specialist in stock repurchase programs and editor of The Buyback Letter.
Discovery is one of the largest media companies in the U.S. and among the largest in the world, with an enviable portfolio of premium brands that includes Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, and Science Channel.
In addition, it also owns the forthcoming multi-platform JV with Chip and Joanna Gaines, Magnolia, as well as OWN: Oprah Winfrey Network in the U.S., Discovery Kids in Latin America, and Eurosport (leading provider of premium sports and home of the Olympic Games across Europe).
Discovery delivers over 8,000 hours of original programming each year, is available in 220 countries and territories and in nearly 50 languages.
Its TV Everywhere products include the GO portfolio of apps; direct-to-consumer streaming services such as Eurosport Player, Food Network Kitchen and MotorTrend OnDemand.
It also includes the digital-first and social content from Group Nine Media — a landmark natural history and factual content partnership with the BBC — and a strategic alliance with PGA TOUR to create the international home of golf.
It is in the news because the company will launch discovery+, a direct-to-consumer, non-fiction, real-life streaming platform, the first week of January 2021. The CEO calls it “a new SUV with large, fresh content,” vs. calling other players in the field (Netflix, Amazon, Disney+) “sports cars.”
It will feature new, exclusive originals from Chip and Joanna Gaines, Sir David Attenborough, David Schwimmer, Will Packer and Kevin Hart, Bobby Flay and Giada De Laurentiis, Duff Goldman, Amy Schumer, Carla Hall, Mike Rowe, 90 Day Fiance, and more.
Q3 2020 showed quarterly earnings of 81 cents per share (a surprise of 19.12%; a decrease of 6.9% year over year), with revenues of $2.56 billion (a surprise of 2.06%; a decrease of 4.4% year over year). The year-over-year decline was said to be due to a decrease in advertising revenues; advertising makes up 51% of revenues.
Q2 showed Discovery had been hurt by not being able to air all of its live programming, and the advertising market has weakened due to budget cuts. Internationally, it missed out on airing the 2020 Summer Olympics, for which it has the European broadcast rights.
DISCA repurchased $228 million in shares in Q3, under a $2 billion authorization plan announced in February. In the last 12 months, management has reduced shares outstanding by 6.532%.