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Discovery Channel Slowing Down?

Though Dis­cov­ery Com­mu­ni­ca­tions’ Q2 report showed earn­ings up 15.4 per­cent from last year, the com­pa­ny plans to slow its pro­duc­tion dur­ing Q3. Accord­ing to, Dis­cov­ery Com­mu­ni­ca­tions CEO David Zaslav indi­cat­ed that the cul­tur­al appeal of the Olympics has affect­ed the num­ber of pre­mieres the com­pa­ny will release on its net­works dur­ing the third quar­ter, includ­ing its flag­ship net­work, the Dis­cov­ery Chan­nel. What does this mean for cus­tomers? How will the slow down affect Dis­cov­ery Com­mu­ni­ca­tions’ 2012 profits?

Look­ing At Q2

Accord­ing to Dis­cov­ery Com­mu­ni­ca­tions’ Cor­po­rate Press Release, the Q2 earn­ings report showed a net income of $293 mil­lion, which was 15.4 per­cent high­er than the amount report­ed for Q2 2011. Total rev­enues also increased by 7 per­cent from the same quar­ter last year, with an end­ing val­ue of $1.14 bil­lion. Though the com­pa­ny’s over­all rev­enue fell slight­ly short of the $1.16 bil­lion ana­lysts had orig­i­nal­ly pre­dict­ed for this quar­ter, Dis­cov­ery Com­mu­ni­ca­tions’ Q2 net income was sig­nif­i­cant­ly high­er than the same ana­lysts had expect­ed. While finan­cial ana­lysts had pre­dict­ed earn­ings of only 70 cents per share for Dis­cov­er Com­mu­ni­ca­tions dur­ing Q2, the quar­ter­ly report showed actu­al earn­ings to equal 76 cents per share.

Dur­ing Q2, Dis­cov­ery Com­mu­ni­ca­tions’ dra­mat­ic increase in rev­enue was large­ly a result of the pop­u­lar­i­ty of some of its younger net­works, with a sig­nif­i­cant amount of praise going to Inves­ti­ga­tion Dis­cov­ery. Estab­lished chan­nels, on the oth­er hand, such as the Dis­cov­ery Chan­nel and TLC, saw a decline in view­er­ship dur­ing Q2. The com­pa­ny also expe­ri­enced some loss­es on OWN dur­ing this quar­ter, though CEO Zaslav promis­es that the OWN net­work will become prof­itable by the end of the year.

While dis­cussing Q2, Zaslav also stat­ed that, while the Olympics remain on the air, the com­pa­ny will be tak­ing a con­ser­v­a­tive approach with new pro­gram­ming. Accord­ing to Zaslav, the cul­tur­al momen­tum of the Olympics makes it unwise for Dis­cov­ery Com­mu­ni­ca­tions to release com­pet­ing pro­grams. Since the com­pa­ny’s estab­lished net­works are already expe­ri­enc­ing a dimin­ished num­ber of view­ers, they can’t afford to lose any more to the Olympics.

Slow­ing Down to Jump Ahead

Although Dis­cov­ery Com­mu­ni­ca­tions will be lim­it­ing pro­duc­tion for Q3, this does­n’t mean that they are cut­ting back in the long-term. Zaslav clear­ly stat­ed that the slow­down at the Dis­cov­ery Chan­nel and oth­er Dis­cov­ery Com­mu­ni­ca­tions net­works is only tem­po­rary. The strat­e­gy is intend­ed to max­i­mize the num­ber of view­ers who will watch pre­mieres on Dis­cov­ery Com­mu­ni­ca­tions net­works by hold­ing out until after the Olympics have end­ed. Though it may be frus­trat­ing for con­sumers who are already antic­i­pat­ing cer­tain pre­mieres, it will increase the num­ber of view­ers who tune in impulsively.

As fur­ther evi­dence that Dis­cov­ery Com­mu­ni­ca­tions is far from going under, Zaslav also stat­ed that the com­pa­ny will be pour­ing more mon­ey into mar­ket­ing and new con­tent dur­ing the final quar­ters of this year. It will be focus­ing these efforts pri­mar­i­ly on its grow­ing net­works, such as Veloc­i­ty, Mil­i­tary and Inves­ti­ga­tion Dis­cov­ery, in order to take full advan­tage of their strong appeal to viewers.

Though Dis­cov­ery Com­mu­ni­ca­tions was dealt some blows on its old­er net­works dur­ing the sec­ond quar­ter, the num­bers speak for them­selves. Fur­ther­more, the com­pa­ny has big plans to increase its prof­its and raise view­er­ship num­bers in the months to come.

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