SILVER SPRING, Md.,
Nov. 8, 2018 /PRNewswire/ -- Discovery, Inc. ("Discovery"
or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported
financial results for the third quarter ended September 30,
2018.
"Our solid third quarter results demonstrate the strength of our
brands and unmatched multi-platform distribution network, as we
continue to position our broad suite of IP to maximize value and
extend our global presence," said David
Zaslav, President and Chief Executive Officer for Discovery.
"We are very pleased with how far we've come in the eight months
since we closed our merger with Scripps Networks, highlighted by
the acceleration of synergy generation and strong Adjusted OIBDA
growth in the third quarter. Additionally, we continue to drive
organic growth opportunities across our diverse portfolio, further
positioning us for continued cash flow generation and additional
value creation. We remain increasingly optimistic about the roadmap
ahead of us as we drive forward with our plan to transform our
Company."
Third Quarter 2018 Results
Third quarter revenues of
$2,592 million increased 57% on a
reported basis compared with the prior year quarter. Excluding the
impact of foreign currency fluctuations and the Scripps Networks
Interactive ("Scripps Networks"), Motor Trend Group, LLC ("MTG")
and the Oprah Winfrey Network ("OWN") transactions (collectively,
"the Transactions")(1), revenues increased 1%, as a 3%
increase in International Networks and a 2% increase in U.S.
Networks were partially offset by a significant decrease in
Education and Other revenues due to the sale of the education
business(2) on April 30,
2018. On a pro forma(3) combined basis, excluding
the impact of foreign currency fluctuations, total company third
quarter revenues increased 2%, as International Networks revenues
increased 2% and U.S. Networks revenues increased 4%, partially
offset by the significant decrease in Education and Other
revenues.
Third quarter Adjusted Operating Income Before Depreciation and
Amortization ("Adjusted OIBDA")(4) increased 82% to
$1,044 million on a reported basis
compared with the prior year quarter. Excluding the impact of the
Transactions and foreign currency fluctuations, Adjusted OIBDA
increased 9% compared with the prior year quarter, as International
Networks increased 21% and U.S. Networks increased 6%. On a pro
forma combined basis, excluding the impact of foreign currency
fluctuations, third quarter Adjusted OIBDA increased 18%, as
International Networks' Adjusted OIBDA increased 27% and U.S.
Networks Adjusted OIBDA increased 13%.
Third quarter net income available to Discovery ("DCI Net
Income") was $117 million, compared
with $218 million in the prior year
quarter, as improved operating results were more than offset by
higher restructuring and other charges associated with the
integration of Scripps Networks, higher tax expenses and higher
interest expense. Diluted earnings per share(5)
decreased to $0.16 due to lower DCI
Net Income. Adjusted Earnings Per Diluted Share ("Adjusted
EPS")(4),(5), which excludes the impact of amortization
of acquisition-related intangible assets, net of tax was
$0.52. Adjusted EPS excluding
restructuring and other charges was $0.79, and included $190
million (or $0.27 per share)
of after-tax restructuring and other charges.
(1)
|
The Transactions
refer to the Company's acquisition of Scripps Networks on March 6,
2018, acquisition of a controlling interest in OWN on November 30,
2017 and the contribution of businesses from MTG on September 25,
2017.
|
(2)
|
The Company sold a
majority stake in the education business on April 30,
2018.
|
(3)
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 6 for the full list of pro forma
adjustments and to page 11 for pro forma operating
results.
|
(4)
|
See full definitions
of Adjusted OIBDA and Adjusted EPS on page 5.
|
(5)
|
All per share amounts
are calculated using DCI Net Income. Refer to table on page 21 for
the full schedule.
|
Free cash flow(1) increased to $907 million for the third quarter of 2018 as
cash flow from operations increased to $931
million while capital expenditures of $24 million were consistent with the prior year
quarter. Third quarter cash flow from operations increased
primarily due to higher operating results due to the Transactions
offset by higher content costs, restructuring costs and interest
expense.
THIRD QUARTER SEGMENT RESULTS
Total
Company
|
(dollars in
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,674
|
|
|
$
|
823
|
|
|
NM
|
|
$
|
4,628
|
|
|
$
|
2,542
|
|
|
82
|
%
|
International
Networks
|
|
916
|
|
|
796
|
|
|
15
|
%
|
|
3,065
|
|
|
2,354
|
|
|
30
|
%
|
Education and
Other
|
|
3
|
|
|
32
|
|
|
(91)
|
%
|
|
52
|
|
|
113
|
|
|
(54)
|
%
|
Corporate and
Inter-Segment Eliminations
|
|
(1)
|
|
|
—
|
|
|
NM
|
|
(1)
|
|
|
—
|
|
|
NM
|
Total
revenues
|
|
$
|
2,592
|
|
|
$
|
1,651
|
|
|
57
|
%
|
|
$
|
7,744
|
|
|
$
|
5,009
|
|
|
55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
901
|
|
|
$
|
480
|
|
|
88
|
%
|
|
$
|
2,536
|
|
|
$
|
1,548
|
|
|
64
|
%
|
International
Networks
|
|
254
|
|
|
180
|
|
|
41
|
%
|
|
727
|
|
|
610
|
|
|
19
|
%
|
Education and
Other
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
3
|
|
|
(1)
|
|
|
NM
|
Corporate and
Inter-Segment Eliminations
|
|
(111)
|
|
|
(85)
|
|
|
(31)
|
%
|
|
(311)
|
|
|
(262)
|
|
|
(19)
|
%
|
Total Adjusted
OIBDA
|
|
$
|
1,044
|
|
|
$
|
575
|
|
|
82
|
%
|
|
$
|
2,955
|
|
|
$
|
1,895
|
|
|
56
|
%
|
|
U.S.
Networks
|
(dollars in
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
644
|
|
|
$
|
402
|
|
|
60
|
%
|
|
$
|
1,812
|
|
|
$
|
1,210
|
|
|
50
|
%
|
Advertising
|
|
991
|
|
|
407
|
|
|
NM
|
|
2,708
|
|
|
1,284
|
|
|
NM
|
Other
|
|
39
|
|
|
14
|
|
|
NM
|
|
108
|
|
|
48
|
|
|
NM
|
Total
revenues
|
|
$
|
1,674
|
|
|
$
|
823
|
|
|
NM
|
|
$
|
4,628
|
|
|
$
|
2,542
|
|
|
82
|
%
|
Adjusted
OIBDA
|
|
$
|
901
|
|
|
$
|
480
|
|
|
88
|
%
|
|
$
|
2,536
|
|
|
$
|
1,548
|
|
|
64
|
%
|
U.S. Networks' revenues for the third quarter of 2018 increased
to $1,674 million on a reported basis
compared with the prior year quarter. Excluding the impact of the
Transactions, revenues increased 2%, as an 8% increase in
advertising revenues was partially offset by a 2% decrease in
distribution revenues and a 29% decrease in other revenues. On a
pro forma combined basis, U.S. Networks' revenues for the third
quarter increased 4%, as advertising revenues increased 5%,
distribution revenues remained consistent and other revenues
increased 18%.
(1)
|
Free cash flow is
defined as cash provided by operating activities less purchases of
property and equipment.
|
NM: Not
Meaningful
|
The growth in third quarter pro forma advertising revenues was
primarily driven by increases in pricing and to a lesser extent
volume, as well as the continued monetization of digital content
offerings, partially offset by the impact of audience declines on
our linear networks. Pro forma distribution revenues remained
consistent, as increases in contractual affiliate rates were offset
by a decline in subscribers and lower contributions from content
deliveries under licensing agreements. On a pro forma combined
basis, total portfolio subscribers declined 5%, while subscribers
to our fully distributed networks declined 2%.
Operating expenses for U.S. Networks on a reported basis
increased to $773 million compared
with operating expenses of $343
million in the prior year quarter. Excluding the impact of
the Transactions, operating expenses decreased 3%, as costs of
revenues decreased 4% and SG&A expenses decreased 1%. On a pro
forma combined basis, total operating expenses decreased 6%, as
costs of revenues decreased 6% and SG&A expenses decreased 4%.
The decrease in pro forma combined operating expenses was primarily
attributable to higher content impairment expense recorded by
Scripps Networks during the three months ended September 30, 2017, lower personnel costs due to
restructuring and the integration of Scripps Networks and decreased
spending on marketing.
U.S. Networks' Adjusted OIBDA increased 88% to $901 million on a reported basis compared with
the prior year quarter. Excluding the impact of the Transactions,
U.S. Networks' Adjusted OIBDA increased 6%. On a pro forma combined
basis, Adjusted OIBDA increased 13%, driven by increases in
revenues and declines in operating expenses.
International
Networks
|
(dollars in
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
508
|
|
|
$
|
479
|
|
|
6
|
%
|
|
$
|
1,577
|
|
|
$
|
1,383
|
|
|
14
|
%
|
Advertising
|
|
374
|
|
|
298
|
|
|
26
|
%
|
|
1,232
|
|
|
913
|
|
|
35
|
%
|
Other
|
|
34
|
|
|
19
|
|
|
79
|
%
|
|
256
|
|
|
58
|
|
|
NM
|
Total
revenues
|
|
$
|
916
|
|
|
$
|
796
|
|
|
15
|
%
|
|
$
|
3,065
|
|
|
$
|
2,354
|
|
|
30
|
%
|
Adjusted
OIBDA
|
|
$
|
254
|
|
|
$
|
180
|
|
|
41
|
%
|
|
$
|
727
|
|
|
$
|
610
|
|
|
19
|
%
|
International Networks' revenues for the third quarter of 2018
on a reported basis increased 15% to $916
million compared with the prior year quarter. Excluding the
impact of the acquisition of Scripps Networks and foreign currency
fluctuations, International Networks' revenues increased 3%, driven
by a 3% increase in distribution revenues, while advertising
revenues remained flat and other revenues decreased $1 million. On a pro forma combined basis,
excluding the impact of foreign currency fluctuations,
International Networks' revenues increased 2%, driven by a 3%
increase in distribution revenues and a 2% increase in advertising
revenues, slightly offset by a decrease in other revenues. Pro
forma distribution revenue growth was primarily driven by increases
in subscribers to our linear networks and digital subscription
revenues in Europe and increases
in pricing in Latin America,
partially offset by pricing declines in Asia. Pro forma advertising revenue growth was
primarily driven by increases in Europe, mostly due to higher pricing,
partially offset by viewership declines in Europe.
Operating expenses for International Networks on a reported
basis increased to $662 million
compared with operating expenses of $616
million the prior year quarter. Excluding the impact of the
acquisition of Scripps Networks and foreign currency fluctuations,
operating expenses decreased 3%, as costs of revenues decreased 6%
slightly offset by an increase in SG&A of 4%. On a pro forma
combined basis, excluding currency effects, operating expenses
decreased 5%, as costs of revenues decreased 7%, primarily
attributable to content synergies following the acquisition of
Scripps Networks while SG&A remained consistent, as cost
savings from the integration of Scripps Networks offset increased
personnel spending related to digital distribution offerings.
International Networks' Adjusted OIBDA increased 41% to
$254 million on a reported basis
compared with the prior year quarter. Excluding the impact of the
acquisition of Scripps Networks and foreign currency fluctuations,
International Networks' Adjusted OIBDA increased 21%. On a pro
forma combined basis, excluding currency effects, Adjusted OIBDA
increased 27%. The increase in pro forma combined Adjusted OIBDA
was primarily driven by increases in revenues and decreases in
costs of revenues.
Education and
Other
|
(dollars in
millions)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Revenues
|
|
$
|
3
|
|
|
$
|
32
|
|
|
(91)
|
%
|
|
$
|
52
|
|
|
$
|
113
|
|
|
(54)
|
%
|
Adjusted
OIBDA
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
3
|
|
|
$
|
(1)
|
|
|
NM
|
Education and Other revenues for the third quarter of 2018
decreased $29 million and Adjusted
OIBDA was flat due to the sale of a majority stake in the education
business resulting in deconsolidation on April 30, 2018. The
Education and Other segment now only includes activities associated
with inter-company sales of productions for the U.S. Networks
segment.
Corporate and Inter-Segment Eliminations
Adjusted
OIBDA for the third quarter of 2018 decreased 31% on a reported
basis compared with the prior year quarter. Excluding the impact of
the acquisition of Scripps Networks and foreign currency
fluctuations, Adjusted OIBDA decreased 20%. On a pro forma combined
basis, excluding the impact of foreign currency fluctuations,
Adjusted OIBDA decreased 1% compared with the prior year quarter
due to increased technology costs, partially offset by reductions
in personnel costs as a result of the integration of Scripps
Networks.
FULL YEAR 2018 OUTLOOK(1)
Discovery will
provide forward-looking guidance in connection with this quarterly
earnings announcement on its quarterly earnings conference call and
webcast referenced hereafter.
(1)
|
Discovery is unable
to provide a reconciliation of the forward-looking guidance to GAAP
measures as, at this time, Discovery cannot determine all of the
adjustments that would be required.
|
NON-GAAP FINANCIAL MEASURES
In addition to the results
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") provided in this release, the Company has
presented Adjusted OIBDA, Adjusted EPS and free cash flow. These
non-GAAP measures should be considered in addition to, but not as a
substitute for, operating income, net income, earnings per diluted
share and other measures of financial performance reported in
accordance with GAAP. Please review the supplemental
financial schedules beginning on page 19 for reconciliations to the
most comparable GAAP measures.
Adjusted OIBDA and Adjusted OIBDA Excluding the Impact of
Currency Effects
The Company evaluates the operating
performance of its segments based on financial measures such as
revenues and Adjusted Operating Income Before Depreciation and
Amortization ("Adjusted OIBDA"). Adjusted OIBDA is defined as
operating income excluding: (i) mark-to-market share-based
compensation, (ii) depreciation and amortization, (iii)
restructuring and other charges, (iv) certain impairment charges,
(v) gains and losses on business and asset dispositions, (vi)
certain inter-segment eliminations related to production studios,
and (vii) third-party transaction costs directly related to the
acquisition and integration of Scripps Networks.
The Company uses Adjusted OIBDA to assess the operating results
and performance of its segments, perform analytical comparisons,
identify strategies to improve performance and allocate resources
to each segment. The Company believes Adjusted OIBDA is relevant to
investors because it allows them to analyze the operating
performance of each segment using the same metric management uses.
The Company excludes mark-to-market share-based compensation,
restructuring and other charges, certain impairment charges, gains
and losses on business and asset dispositions and Scripps Networks
transaction and integration costs from the calculation of Adjusted
OIBDA due to their impact on comparability between periods. The
Company also excludes depreciation of fixed assets and amortization
of intangible assets, as these amounts do not represent cash
payments in the current reporting period. Certain corporate
expenses are excluded from segment results to enable executive
management to evaluate segment performance based upon the decisions
of segment executives. Total Adjusted OIBDA should be considered in
addition to, but not a substitute for, operating income, net income
and other measures of financial performance reported in accordance
with GAAP. Refer to the comments that follow for our methodology
for calculating growth rates excluding the impact of currency
effects.
Adjusted EPS and Adjusted EPS Excluding the Impact of
Currency Effects
Adjusted EPS is defined as earnings
excluding the impact of amortization of acquisition-related
intangible assets per diluted share. The Company believes Adjusted
EPS is relevant to investors because this metric allows them to
evaluate the performance of the Company's operations exclusive of
the non-cash amortization of acquisition-related intangible assets
that impact the comparability of results from period to period.
Refer to the comments that follow for our methodology for
calculating growth rates excluding the impact of currency
effects.
Methodology for Calculating Growth Rates Excluding the Impact
of Currency Effects
In addition to the Transactions, the
impact of exchange rates on our business is an important factor in
understanding period-to-period comparisons of our results. For
example, our international revenues are favorably impacted as the
U.S. dollar weakens relative to other foreign currencies, and
unfavorably impacted as the U.S dollar strengthens relative to
other foreign currencies. We believe the presentation of results on
a constant currency basis (ex-FX), in addition to results reported
in accordance with GAAP provides useful information about our
operating performance because the presentation ex-FX excludes the
effects of foreign currency volatility and highlights our core
operating results. The presentation of results on a constant
currency basis should be considered in addition to, but not a
substitute for, measures of financial performance reported in
accordance with GAAP.
The ex-FX change represents the percentage change on a
period-over-period basis adjusted for foreign currency impacts. The
ex-FX change is calculated as the difference between the current
year amounts translated at a baseline rate, a spot rate for each of
our currencies determined early in the fiscal year as part of our
forecasting process (the "2018 Baseline Rate"), and the prior year
amounts translated at the same 2018 Baseline Rate.
In addition, consistent with the assumption of a constant
currency environment, our ex-FX results exclude the impact of our
foreign currency hedging activities, as well as realized and
unrealized foreign currency transaction gains and losses. Results
on a constant currency basis, as we present them, may not be
comparable to similarly titled measures used by other
companies.
Selling, General and Administrative Expense
Selling,
general and administrative expense, as presented, excludes
mark-to-market based compensation and Scripps Networks transaction
and integration costs due to their impact on comparability between
periods.
Free Cash Flow
The Company defines free cash flow as
cash provided by operating activities less acquisitions of property
and equipment. The Company uses free cash flow as it believes it is
an important indicator for management and investors of the
Company's liquidity, including its ability to reduce debt, make
strategic investments and return capital to stockholders.
Pro Forma Adjustments
The discussion and tables
beginning on page 11 compare our actual and pro forma combined
results as if the Transactions occurred on January 1, 2017. Management believes reviewing
our actual operating results in addition to combined pro forma
results is useful in identifying trends in, or reaching conclusions
regarding, the overall operating performance of our businesses. Our
combined U.S. Networks, International Networks and Corporate and
Inter-Segment Eliminations pro forma information is based on the
historical operating results of the respective businesses as
applicable to each segment and includes adjustments directly
attributable to the Transactions as if they had occurred on
January 1, 2017, such as:
- The impact of the purchase price allocation to the fair value
of assets, liabilities, and noncontrolling interests, such as
intangible amortization;
- Adjustments to remove items associated with the Transactions
that will not have a continuing impact on the combined entity, such
as transaction costs and the impact of employee retention
agreements; and
- Changes to align accounting policies.
Adjustments do not include costs related to integration
activities, cost savings or synergies that have been or may be
achieved by the combined businesses. Pro forma amounts are not
necessarily indicative of what our results would have been had we
operated the acquired businesses since January 1, 2017, and should not be taken as
indicative of the Company's future consolidated results of
operations.
Actual amounts for the three and nine months ended September 30, 2018 include the results of
operations for the Discovery and Scripps Networks, OWN and MTG
businesses for the period since each respective transaction.
Scripps Networks was acquired on March 6,
2018, OWN was consolidated on November 30, 2017 and MTG was consolidated on
September 25, 2017.
Conference Call Information
Discovery will host a
conference call today, November 8, 2018 at 8:30 a.m. ET to discuss its third quarter
results. To listen to the call, visit
https://corporate.discovery.com or dial 1-844-452-2811 inside the
U.S. and 1-574-990-9832 outside of the U.S., using conference ID:
8488208 and passcode: DISCA.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations, forecasts and
assumptions that involve risks and uncertainties and on information
available to the Company as of the date hereof. The Company's
actual results could differ materially from those stated or
implied, due to risks and uncertainties associated with its
business, which include the risk factors disclosed in its Annual
Report on Form 10-K filed with the SEC on February 28, 2018.
Forward-looking statements include statements regarding the
Company's expectations, beliefs, intentions or strategies regarding
the future, and can be identified by forward-looking words such as
"anticipate," "believe," "could," "continue," "estimate," "expect,"
"intend," "may," "should," "will" and "would" or similar words.
Forward-looking statements in this release include, without
limitation, statements regarding investing in the Company's
programming, strategic growth initiatives, and the timing and
effects of the Scripps Networks acquisition and related
transactions. The Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
About Discovery
Discovery, Inc. (Nasdaq: DISCA, DISCB,
DISCK) is a global leader in real life entertainment, serving a
passionate audience of superfans around the world with content that
inspires, informs and entertains. Discovery delivers over 8,000
hours of original programming each year and has category leadership
across deeply loved content genres around the world. Available in
220 countries and territories and in nearly 50 languages, Discovery
is a platform innovator, reaching viewers on all screens, including
TV Everywhere products such as the GO portfolio of apps and
Discovery Kids Play; direct-to-consumer streaming services such as
Eurosport Player and Motor Trend OnDemand; digital-first and social
content from Group Nine Media and a strategic alliance with the PGA
Tour to create the Global Home of Golf. Discovery's portfolio of
premium brands includes Discovery Channel, HGTV, Food Network, TLC,
Investigation Discovery, Travel Channel, Turbo/Velocity, Animal
Planet, and Science Channel, as well as OWN: Oprah Winfrey Network
in the U.S., Discovery Kids in Latin
America, and Eurosport, the leading provider of locally
relevant, premium sports and Home of the Olympic Games across
Europe. For more information,
please visit https://corporate.discovery.com and follow
@DiscoveryIncTV across social platforms.
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited; in
millions, except per share amounts)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,152
|
|
|
$
|
881
|
|
|
$
|
3,389
|
|
|
$
|
2,593
|
|
Advertising
|
|
1,365
|
|
|
705
|
|
|
3,940
|
|
|
2,197
|
|
Other
|
|
75
|
|
|
65
|
|
|
415
|
|
|
219
|
|
Total
revenues
|
|
2,592
|
|
|
1,651
|
|
|
7,744
|
|
|
5,009
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Costs of revenues,
excluding depreciation and amortization
|
|
934
|
|
|
670
|
|
|
2,989
|
|
|
1,911
|
|
Selling, general and
administrative
|
|
667
|
|
|
457
|
|
|
1,963
|
|
|
1,261
|
|
Depreciation and
amortization
|
|
398
|
|
|
80
|
|
|
1,001
|
|
|
240
|
|
Restructuring and
other charges
|
|
224
|
|
|
11
|
|
|
652
|
|
|
43
|
|
(Gain) loss on
disposition
|
|
—
|
|
|
—
|
|
|
(84)
|
|
|
4
|
|
Total costs and
expenses
|
|
2,223
|
|
|
1,218
|
|
|
6,521
|
|
|
3,459
|
|
Operating
income
|
|
369
|
|
|
433
|
|
|
1,223
|
|
|
1,550
|
|
Interest expense,
net
|
|
(185)
|
|
|
(136)
|
|
|
(558)
|
|
|
(318)
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54)
|
|
Income (loss) from
equity investees, net
|
|
9
|
|
|
(27)
|
|
|
(53)
|
|
|
(122)
|
|
Other expense,
net
|
|
(15)
|
|
|
(106)
|
|
|
(84)
|
|
|
(143)
|
|
Income before income
taxes
|
|
178
|
|
|
164
|
|
|
528
|
|
|
913
|
|
Income tax (expense)
benefit
|
|
(43)
|
|
|
59
|
|
|
(146)
|
|
|
(89)
|
|
Net income
|
|
135
|
|
|
223
|
|
|
382
|
|
|
824
|
|
Net income
attributable to noncontrolling interests
|
|
(13)
|
|
|
—
|
|
|
(41)
|
|
|
—
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(5)
|
|
|
(5)
|
|
|
(16)
|
|
|
(17)
|
|
Net income available
to Discovery, Inc.
|
|
$
|
117
|
|
|
$
|
218
|
|
|
$
|
325
|
|
|
$
|
807
|
|
|
|
|
|
|
|
|
|
|
Net income per share
allocated to Discovery, Inc. Series A, B and C
common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
0.47
|
|
|
$
|
1.40
|
|
Diluted(1)
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
0.47
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
523
|
|
|
381
|
|
|
490
|
|
|
385
|
|
Diluted(1)
|
|
713
|
|
|
571
|
|
|
679
|
|
|
581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Diluted shares adjust
for the potential dilution that would occur if common stock
equivalents, including convertible preferred stock and share-based
awards, were converted into common stock or exercised.
|
DISCOVERY,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited; in
millions, except par value)
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
531
|
|
|
$
|
7,309
|
|
Receivables,
net
|
|
2,578
|
|
|
1,838
|
|
Content rights,
net
|
|
349
|
|
|
410
|
|
Prepaid expenses and
other current assets
|
|
456
|
|
|
434
|
|
Total current
assets
|
|
3,914
|
|
|
9,991
|
|
|
|
|
|
|
Noncurrent content
rights, net
|
|
3,115
|
|
|
2,213
|
|
Property and
equipment, net
|
|
810
|
|
|
597
|
|
Goodwill,
net
|
|
13,139
|
|
|
7,073
|
|
Intangible assets,
net
|
|
10,040
|
|
|
1,770
|
|
Equity method
investments, including note receivable
|
|
1,015
|
|
|
335
|
|
Other noncurrent
assets
|
|
879
|
|
|
576
|
|
Total
assets
|
|
$
|
32,912
|
|
|
$
|
22,555
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
280
|
|
|
$
|
277
|
|
Accrued
liabilities
|
|
1,623
|
|
|
1,309
|
|
Deferred
revenues
|
|
304
|
|
|
255
|
|
Current portion of
debt
|
|
1,653
|
|
|
30
|
|
Total current
liabilities
|
|
3,860
|
|
|
1,871
|
|
|
|
|
|
|
Noncurrent portion of
debt
|
|
15,829
|
|
|
14,755
|
|
Deferred income
taxes
|
|
1,901
|
|
|
319
|
|
Other noncurrent
liabilities
|
|
1,089
|
|
|
587
|
|
Total
liabilities
|
|
22,679
|
|
|
17,532
|
|
Redeemable
noncontrolling interests
|
|
414
|
|
|
413
|
|
Equity:
|
|
|
|
|
Discovery, Inc.
stockholders' equity:
|
|
|
|
|
Series A-1
convertible preferred stock: $0.01 par value; 8 authorized; 8
shares issued
|
|
—
|
|
|
—
|
|
Series C-1
convertible preferred stock: $0.01 par value; 6 authorized; 6
shares issued
|
|
—
|
|
|
—
|
|
Series A common
stock: $0.01 par value; 1,700 shares authorized; 159 and 157
shares
issued
|
|
1
|
|
|
1
|
|
Series B
convertible common stock: $0.01 par value; 100 shares authorized; 7
shares
issued
|
|
—
|
|
|
—
|
|
Series C common
stock: $0.01 par value; 2,000 shares authorized; 524 and 383
shares
issued
|
|
5
|
|
|
4
|
|
Additional paid-in
capital
|
|
10,627
|
|
|
7,295
|
|
Treasury stock, at
cost
|
|
(6,737)
|
|
|
(6,737)
|
|
Retained
earnings
|
|
4,984
|
|
|
4,632
|
|
Accumulated other
comprehensive loss
|
|
(764)
|
|
|
(585)
|
|
Total Discovery, Inc.
stockholders' equity
|
|
8,116
|
|
|
4,610
|
|
Noncontrolling
interests
|
|
1,703
|
|
|
—
|
|
Total
equity
|
|
9,819
|
|
|
4,610
|
|
Total liabilities and
equity
|
|
$
|
32,912
|
|
|
$
|
22,555
|
|
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; in
millions)
|
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
Operating
Activities
|
|
|
|
Net income
|
$
|
382
|
|
|
$
|
824
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Share-based
compensation expense
|
92
|
|
|
22
|
|
Depreciation and
amortization
|
1,001
|
|
|
240
|
|
Content rights
amortization and impairment
|
2,523
|
|
|
1,397
|
|
(Gain) loss on
disposition
|
(84)
|
|
|
4
|
|
Equity in losses of
equity method investee companies, net of cash
distributions
|
106
|
|
|
130
|
|
Deferred income
taxes
|
(140)
|
|
|
(167)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
54
|
|
Realized loss from
derivative instruments, net
|
—
|
|
|
98
|
|
Other, net
|
54
|
|
|
74
|
|
Changes in operating
assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
Receivables,
net
|
(19)
|
|
|
(138)
|
|
Content rights and
payables, net
|
(2,222)
|
|
|
(1,400)
|
|
Accounts payable and
accrued liabilities
|
(123)
|
|
|
23
|
|
Income taxes
receivable and prepaid income taxes
|
(53)
|
|
|
11
|
|
Foreign currency and
other, net
|
130
|
|
|
(5)
|
|
Cash provided by
operating activities
|
1,647
|
|
|
1,167
|
|
Investing
Activities
|
|
|
|
Business
acquisitions, net of cash acquired
|
(8,565)
|
|
|
(4)
|
|
Payments for
investments, net
|
(56)
|
|
|
(387)
|
|
Proceeds from
dispositions, net of cash disposed
|
107
|
|
|
29
|
|
Proceeds from sale of
assets previously held for sale
|
68
|
|
|
—
|
|
Purchases of property
and equipment
|
(106)
|
|
|
(103)
|
|
Distributions from
equity method investees
|
1
|
|
|
38
|
|
Payments for
derivative instruments, net
|
(3)
|
|
|
(99)
|
|
Other investing
activities, net
|
5
|
|
|
3
|
|
Cash used in
investing activities
|
(8,549)
|
|
|
(523)
|
|
Financing
Activities
|
|
|
|
Commercial paper
borrowings (repayments), net
|
293
|
|
|
(48)
|
|
Borrowings under
revolving credit facility
|
—
|
|
|
350
|
|
Principal repayments
of revolving credit facility
|
(100)
|
|
|
(475)
|
|
Borrowings under term
loan facilities
|
2,000
|
|
|
—
|
|
Principal repayments
of term loans
|
(2,000)
|
|
|
—
|
|
Borrowings from debt,
net of discount and including premiums
|
—
|
|
|
7,488
|
|
Principal repayments
of debt, including discount payment and premiums to par
value
|
—
|
|
|
(650)
|
|
Payments for bridge
financing commitment fees
|
—
|
|
|
(40)
|
|
Principal repayments
of capital lease obligations
|
(37)
|
|
|
(26)
|
|
Repurchases of
stock
|
—
|
|
|
(603)
|
|
Cash settlement of
common stock repurchase contracts
|
—
|
|
|
58
|
|
Distributions to
noncontrolling interests and redeemable noncontrolling
interests
|
(59)
|
|
|
(22)
|
|
Share-based plan
proceeds, net
|
44
|
|
|
15
|
|
Borrowings under
program financing line of credit
|
23
|
|
|
—
|
|
Other financing
activities, net
|
(16)
|
|
|
(64)
|
|
Cash provided by
financing activities
|
148
|
|
|
5,983
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(24)
|
|
|
67
|
|
Net change in cash
and cash equivalents
|
(6,778)
|
|
|
6,694
|
|
Cash and cash
equivalents, beginning of period
|
7,309
|
|
|
300
|
|
Cash and cash
equivalents, end of period
|
$
|
531
|
|
|
$
|
6,994
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
TOTAL COMPANY
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(2)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,152
|
|
$
|
1
|
|
$
|
1,153
|
|
|
$
|
881
|
|
$
|
270
|
|
$
|
1,151
|
|
|
$
|
271
|
|
31
|
%
|
|
$
|
2
|
|
—
|
%
|
|
2
|
%
|
Advertising
|
|
1,365
|
|
—
|
|
1,365
|
|
|
705
|
|
623
|
|
1,328
|
|
|
660
|
|
94
|
%
|
|
37
|
|
3
|
%
|
|
4
|
%
|
Other
|
|
75
|
|
—
|
|
75
|
|
|
65
|
|
38
|
|
103
|
|
|
10
|
|
15
|
%
|
|
(28)
|
|
(27)
|
%
|
|
(27)
|
%
|
Total
revenues
|
|
2,592
|
|
1
|
|
2,593
|
|
|
1,651
|
|
931
|
|
2,582
|
|
|
941
|
|
57
|
%
|
|
11
|
|
—
|
%
|
|
2
|
%
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
934
|
|
(1)
|
|
933
|
|
|
670
|
|
366
|
|
1,036
|
|
|
264
|
|
39
|
%
|
|
(103)
|
|
(10)
|
%
|
|
(8)
|
%
|
Selling, general
and
administrative
|
|
614
|
|
1
|
|
615
|
|
|
406
|
|
245
|
|
651
|
|
|
208
|
|
51
|
%
|
|
(36)
|
|
(6)
|
%
|
|
(4)
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
1,044
|
|
$
|
1
|
|
$
|
1,045
|
|
|
$
|
575
|
|
$
|
320
|
|
$
|
895
|
|
|
469
|
|
82
|
%
|
|
150
|
|
17
|
%
|
|
18
|
%
|
TOTAL COMPANY
UNAUDITED RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME
TO
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
369
|
|
69
|
|
438
|
|
|
433
|
|
65
|
|
498
|
|
|
$
|
(64)
|
|
(15)
|
%
|
|
$
|
(60)
|
|
(12)
|
%
|
Restructuring and
other charges
|
|
224
|
|
—
|
|
224
|
|
|
11
|
|
—
|
|
11
|
|
|
213
|
|
NM
|
|
213
|
|
NM
|
Depreciation and
amortization
|
|
398
|
|
(70)
|
|
328
|
|
|
80
|
|
311
|
|
391
|
|
|
318
|
|
NM
|
|
(63)
|
|
(16)
|
%
|
Mark-to-market
share-based
compensation
|
|
27
|
|
1
|
|
28
|
|
|
(11)
|
|
4
|
|
(7)
|
|
|
38
|
|
NM
|
|
35
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
26
|
|
—
|
|
26
|
|
|
62
|
|
(60)
|
|
2
|
|
|
(36)
|
|
(58)
|
%
|
|
24
|
|
NM
|
Inter-segment
eliminations
|
|
—
|
|
1
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
NM
|
|
1
|
|
NM
|
Adjusted
OIBDA(3)
|
|
$
|
1,044
|
|
$
|
1
|
|
$
|
1,045
|
|
|
$
|
575
|
|
$
|
320
|
|
$
|
895
|
|
|
469
|
|
82
|
%
|
|
150
|
|
17
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Refer to page 5
for our methodology for calculating growth rates excluding the
impact of currency effects.
|
(3) See full
definition of Adjusted OIBDA on page 5.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
U.S. NETWORKS
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
644
|
|
$
|
1
|
|
$
|
645
|
|
|
$
|
402
|
|
$
|
240
|
|
$
|
642
|
|
|
$
|
242
|
|
60
|
%
|
|
$
|
3
|
|
—
|
%
|
Advertising
|
|
991
|
|
(1)
|
|
990
|
|
|
407
|
|
534
|
|
941
|
|
|
584
|
|
NM
|
|
49
|
|
5
|
%
|
Other
|
|
39
|
|
1
|
|
40
|
|
|
14
|
|
20
|
|
34
|
|
|
25
|
|
NM
|
|
6
|
|
18
|
%
|
Total
revenues
|
|
1,674
|
|
1
|
|
1,675
|
|
|
823
|
|
794
|
|
1,617
|
|
|
851
|
|
NM
|
|
58
|
|
4
|
%
|
Costs of
revenues,
excluding
depreciation
and amortization
|
|
(486)
|
|
—
|
|
(486)
|
|
|
(226)
|
|
(292)
|
|
(518)
|
|
|
(260)
|
|
NM
|
|
32
|
|
6
|
%
|
Selling, general
and
administrative
|
|
(287)
|
|
—
|
|
(287)
|
|
|
(117)
|
|
(183)
|
|
(300)
|
|
|
(170)
|
|
NM
|
|
13
|
|
4
|
%
|
Adjusted
OIBDA(2)
|
|
901
|
|
1
|
|
902
|
|
|
480
|
|
319
|
|
799
|
|
|
421
|
|
88
|
%
|
|
103
|
|
13
|
%
|
|
U.S. NETWORKS
UNAUDITED RECONCILIATION OF REPORTED AND PRO FORMA OPERATING
INCOME
TO ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
399
|
|
$
|
70
|
|
$
|
469
|
|
|
$
|
469
|
|
$
|
41
|
|
$
|
510
|
|
|
$
|
(70)
|
|
(15)
|
%
|
|
$
|
(41)
|
|
(8)
|
%
|
Depreciation and
amortization
|
|
296
|
|
(69)
|
|
227
|
|
|
7
|
|
284
|
|
291
|
|
|
289
|
|
NM
|
|
(64)
|
|
(22)
|
%
|
Restructuring and
other charges
|
|
206
|
|
—
|
|
206
|
|
|
2
|
|
—
|
|
2
|
|
|
204
|
|
NM
|
|
204
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
3
|
|
—
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
NM
|
|
3
|
|
NM
|
Inter-segment
eliminations
|
|
(3)
|
|
—
|
|
(3)
|
|
|
2
|
|
(6)
|
|
(4)
|
|
|
(5)
|
|
NM
|
|
1
|
|
25
|
%
|
Adjusted
OIBDA(2)
|
|
901
|
|
1
|
|
902
|
|
|
480
|
|
319
|
|
799
|
|
|
421
|
|
88
|
%
|
|
103
|
|
13
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
INTERNATIONAL
NETWORKS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(2)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
508
|
|
$
|
—
|
|
$
|
508
|
|
|
$
|
479
|
|
$
|
30
|
|
$
|
509
|
|
|
$
|
29
|
|
6
|
%
|
|
$
|
(1)
|
|
—
|
%
|
|
3
|
%
|
Advertising
|
|
374
|
|
1
|
|
375
|
|
|
298
|
|
89
|
|
387
|
|
|
76
|
|
26
|
%
|
|
(12)
|
|
(3)
|
%
|
|
2
|
%
|
Other
|
|
34
|
|
(1)
|
|
33
|
|
|
19
|
|
18
|
|
37
|
|
|
15
|
|
79
|
%
|
|
(4)
|
|
(11)
|
%
|
|
(11)
|
%
|
Total
revenues
|
|
916
|
|
—
|
|
916
|
|
|
796
|
|
137
|
|
933
|
|
|
120
|
|
15
|
%
|
|
(17)
|
|
(2)
|
%
|
|
2
|
%
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
(449)
|
|
1
|
|
(448)
|
|
|
(433)
|
|
(73)
|
|
(506)
|
|
|
(16)
|
|
(4)
|
%
|
|
58
|
|
11
|
%
|
|
7
|
%
|
Selling, general
and
administrative
|
|
(213)
|
|
(1)
|
|
(214)
|
|
|
(183)
|
|
(38)
|
|
(221)
|
|
|
(30)
|
|
(16)
|
%
|
|
7
|
|
3
|
%
|
|
—
|
%
|
Adjusted
OIBDA(3)
|
|
254
|
|
—
|
|
254
|
|
|
180
|
|
26
|
|
206
|
|
|
74
|
|
41
|
%
|
|
48
|
|
23
|
%
|
|
27
|
%
|
INTERNATIONAL
NETWORKS UNAUDITED RECONCILIATION OF OPERATING INCOME TO PRO
FORMA
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
146
|
|
$
|
—
|
|
$
|
146
|
|
|
$
|
117
|
|
$
|
(9)
|
|
$
|
108
|
|
|
$
|
29
|
|
25
|
%
|
|
$
|
38
|
|
35
|
%
|
Depreciation and
amortization
|
|
82
|
|
—
|
|
82
|
|
|
56
|
|
26
|
|
82
|
|
|
26
|
|
46
|
%
|
|
—
|
|
—
|
%
|
Restructuring and
other charges
|
|
16
|
|
—
|
|
16
|
|
|
7
|
|
—
|
|
7
|
|
|
9
|
|
NM
|
|
9
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
3
|
|
—
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
NM
|
|
3
|
|
NM
|
Inter-segment
eliminations
|
|
7
|
|
—
|
|
7
|
|
|
—
|
|
9
|
|
9
|
|
|
7
|
|
NM
|
|
(2)
|
|
(22)
|
%
|
Adjusted
OIBDA(3)
|
|
254
|
|
—
|
|
254
|
|
|
180
|
|
26
|
|
206
|
|
|
74
|
|
41
|
%
|
|
48
|
|
23
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Refer to page 5
for our methodology for calculating growth rates excluding the
impact of currency effects.
|
(3) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
$
|
(1)
|
|
$
|
—
|
|
$
|
(1)
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(1)
|
|
NM
|
|
$
|
(1)
|
|
NM
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
1
|
|
—
|
|
$
|
1
|
|
|
—
|
|
(1)
|
|
(1)
|
|
|
1
|
|
NM
|
|
2
|
|
NM
|
Selling, general
and
administrative
|
|
(111)
|
|
—
|
|
(111)
|
|
|
(85)
|
|
(24)
|
|
(109)
|
|
|
(26)
|
|
(31)
|
%
|
|
(2)
|
|
(2)
|
%
|
Adjusted
OIBDA(2)
|
|
(111)
|
|
—
|
|
(111)
|
|
|
(85)
|
|
(25)
|
|
(110)
|
|
|
(26)
|
|
(31)
|
%
|
|
(1)
|
|
(1)
|
%
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS UNAUDITED RECONCILIATION OF OPERATING
INCOME
TO PRO FORMA ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro
Forma Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
(loss)
|
|
$
|
(177)
|
|
$
|
(1)
|
|
$
|
(178)
|
|
|
$
|
(151)
|
|
$
|
33
|
|
$
|
(118)
|
|
|
$
|
(26)
|
|
(17)
|
%
|
|
$
|
(60)
|
|
(51)
|
%
|
Mark-to-market
share-based
compensation
|
|
27
|
|
1
|
|
28
|
|
|
(11)
|
|
4
|
|
(7)
|
|
|
38
|
|
NM
|
|
35
|
|
NM
|
Depreciation and
amortization
|
|
20
|
|
(1)
|
|
19
|
|
|
15
|
|
1
|
|
16
|
|
|
5
|
|
33
|
%
|
|
3
|
|
19
|
%
|
Restructuring and
other charges
|
|
2
|
|
—
|
|
2
|
|
|
—
|
|
—
|
|
—
|
|
|
2
|
|
NM
|
|
2
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
20
|
|
—
|
|
20
|
|
|
62
|
|
(60)
|
|
2
|
|
|
(42)
|
|
(68)
|
%
|
|
18
|
|
NM
|
Inter-segment
eliminations
|
|
(3)
|
|
1
|
|
(2)
|
|
|
—
|
|
(3)
|
|
(3)
|
|
|
(3)
|
|
NM
|
|
1
|
|
33
|
%
|
Adjusted
OIBDA(2)
|
|
(111)
|
|
—
|
|
(111)
|
|
|
(85)
|
|
(25)
|
|
(110)
|
|
|
(26)
|
|
(31)
|
%
|
|
(1)
|
|
(1)
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
TOTAL COMPANY
REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
3,389
|
|
$
|
178
|
|
$
|
3,567
|
|
|
$
|
2,593
|
|
$
|
825
|
|
$
|
3,418
|
|
|
$
|
796
|
|
31
|
%
|
|
$
|
149
|
|
4
|
%
|
|
3
|
%
|
Advertising
|
|
3,940
|
|
426
|
|
4,366
|
|
|
$
|
2,197
|
|
1,980
|
|
4,177
|
|
|
1,743
|
|
79
|
%
|
|
189
|
|
5
|
%
|
|
3
|
%
|
Other
|
|
415
|
|
19
|
|
434
|
|
|
219
|
|
106
|
|
325
|
|
|
196
|
|
89
|
%
|
|
109
|
|
34
|
%
|
|
30
|
%
|
Total
revenues
|
|
7,744
|
|
623
|
|
8,367
|
|
|
5,009
|
|
2,911
|
|
7,920
|
|
|
2,735
|
|
55
|
%
|
|
447
|
|
6
|
%
|
|
4
|
%
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
2,989
|
|
204
|
|
3,193
|
|
|
1,911
|
|
1,008
|
|
2,919
|
|
|
1,078
|
|
56
|
%
|
|
274
|
|
9
|
%
|
|
8
|
%
|
Selling, general
and
administrative
|
|
1,800
|
|
160
|
|
1,960
|
|
|
1,203
|
|
769
|
|
1,972
|
|
|
597
|
|
50
|
%
|
|
(12)
|
|
(1)
|
%
|
|
(3)
|
%
|
Adjusted
OIBDA(4)
|
|
2,955
|
|
259
|
|
3,214
|
|
|
1,895
|
|
1,134
|
|
3,029
|
|
|
1,060
|
|
56
|
%
|
|
185
|
|
6
|
%
|
|
6
|
%
|
TOTAL COMPANY
UNAUDITED RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME
TO ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
1,223
|
|
282
|
|
1,505
|
|
|
1,550
|
|
256
|
|
1,806
|
|
|
(327)
|
|
(21)
|
%
|
|
(301)
|
|
(17)
|
%
|
Restructuring and
other charges
|
|
652
|
|
10
|
|
662
|
|
|
43
|
|
—
|
|
43
|
|
|
609
|
|
NM
|
|
619
|
|
NM
|
Depreciation and
amortization
|
|
1,001
|
|
(6)
|
|
995
|
|
|
240
|
|
933
|
|
1,173
|
|
|
761
|
|
NM
|
|
(178)
|
|
(15)
|
%
|
Mark-to-market
share-based
compensation
|
|
56
|
|
1
|
|
57
|
|
|
(4)
|
|
5
|
|
1
|
|
|
60
|
|
NM
|
|
56
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
107
|
|
(28)
|
|
79
|
|
|
62
|
|
(60)
|
|
2
|
|
|
45
|
|
73
|
%
|
|
77
|
|
NM
|
(Gain) loss on
disposition
|
|
(84)
|
|
—
|
|
(84)
|
|
|
4
|
|
—
|
|
4
|
|
|
(88)
|
|
NM
|
|
(88)
|
|
NM
|
Adjusted
OIBDA(4)
|
|
2,955
|
|
259
|
|
3,214
|
|
|
1,895
|
|
1,134
|
|
3,029
|
|
|
1,060
|
|
56
|
%
|
|
185
|
|
6
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Certain updates
were made to previously disclosed pro forma adjustments as a result
of further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3) Refer to page 5
for our methodology for calculating growth rates excluding the
impact of currency effects.
|
(4) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
U.S. NETWORKS
REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,812
|
|
$
|
156
|
|
$
|
1,968
|
|
|
$
|
1,210
|
|
$
|
740
|
|
$
|
1,950
|
|
|
$
|
602
|
|
50
|
%
|
|
$
|
18
|
|
1
|
%
|
Advertising
|
|
2,708
|
|
356
|
|
3,064
|
|
|
1,284
|
|
1,702
|
|
2,986
|
|
|
1,424
|
|
NM
|
|
78
|
|
3
|
%
|
Other
|
|
108
|
|
7
|
|
115
|
|
|
48
|
|
63
|
|
111
|
|
|
60
|
|
NM
|
|
4
|
|
4
|
%
|
Total
revenues
|
|
4,628
|
|
519
|
|
5,147
|
|
|
2,542
|
|
2,505
|
|
5,047
|
|
|
2,086
|
|
82
|
%
|
|
100
|
|
2
|
%
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
(1,297)
|
|
(152)
|
|
(1,449)
|
|
|
(652)
|
|
(802)
|
|
(1,454)
|
|
|
(645)
|
|
(99)
|
%
|
|
5
|
|
—
|
%
|
Selling, general
and
administrative
|
|
(795)
|
|
(111)
|
|
(906)
|
|
|
(342)
|
|
(587)
|
|
(929)
|
|
|
(453)
|
|
NM
|
|
23
|
|
2
|
%
|
Adjusted
OIBDA(3)
|
|
2,536
|
|
256
|
|
2,792
|
|
|
1,548
|
|
1,116
|
|
2,664
|
|
|
988
|
|
64
|
%
|
|
128
|
|
5
|
%
|
|
U.S. NETWORKS
UNAUDITED RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME
TO
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
1,581
|
|
$
|
279
|
|
$
|
1,860
|
|
|
$
|
1,511
|
|
$
|
287
|
|
$
|
1,798
|
|
|
$
|
70
|
|
5
|
%
|
|
$
|
62
|
|
3
|
%
|
Mark-to-market
share-based
compensation
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(2)
|
|
(2)
|
|
|
—
|
|
NM
|
|
2
|
|
NM
|
Depreciation and
amortization
|
|
691
|
|
(25)
|
|
666
|
|
|
21
|
|
852
|
|
873
|
|
|
670
|
|
NM
|
|
(207)
|
|
(24)
|
%
|
Restructuring and
other charges
|
|
259
|
|
6
|
|
265
|
|
|
6
|
|
—
|
|
6
|
|
|
253
|
|
NM
|
|
259
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
7
|
|
—
|
|
7
|
|
|
—
|
|
—
|
|
—
|
|
|
7
|
|
NM
|
|
7
|
|
NM
|
Inter-segment
eliminations
|
|
(2)
|
|
(4)
|
|
(6)
|
|
|
10
|
|
(21)
|
|
(11)
|
|
|
(12)
|
|
NM
|
|
5
|
|
45
|
%
|
Adjusted
OIBDA(3)
|
|
2,536
|
|
256
|
|
2,792
|
|
|
1,548
|
|
1,116
|
|
2,664
|
|
|
988
|
|
64
|
%
|
|
128
|
|
5
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Certain updates
were made to previously disclosed pro forma adjustments as a result
of further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
INTERNATIONAL
NETWORKS REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,577
|
|
$
|
22
|
|
$
|
1,599
|
|
|
$
|
1,383
|
|
$
|
85
|
|
$
|
1,468
|
|
|
$
|
194
|
|
14
|
%
|
|
$
|
131
|
|
9
|
%
|
|
6
|
%
|
Advertising
|
|
1,232
|
|
70
|
|
1,302
|
|
|
913
|
|
278
|
|
1,191
|
|
|
319
|
|
35
|
%
|
|
111
|
|
9
|
%
|
|
5
|
%
|
Other
|
|
256
|
|
12
|
|
268
|
|
|
58
|
|
43
|
|
101
|
|
|
198
|
|
NM
|
|
167
|
|
NM
|
|
NM
|
Total
revenues
|
|
3,065
|
|
104
|
|
3,169
|
|
|
2,354
|
|
406
|
|
2,760
|
|
|
711
|
|
30
|
%
|
|
409
|
|
15
|
%
|
|
11
|
%
|
Costs of
revenues,
excluding
depreciation and a
mortization
|
|
(1,675)
|
|
(52)
|
|
(1,727)
|
|
|
(1,214)
|
|
(205)
|
|
(1,419)
|
|
|
(461)
|
|
(38)
|
%
|
|
(308)
|
|
(22)
|
%
|
|
(18)
|
%
|
Selling, general
and
administrative
|
|
(663)
|
|
(27)
|
|
(690)
|
|
|
(530)
|
|
(107)
|
|
(637)
|
|
|
(133)
|
|
(25)
|
%
|
|
(53)
|
|
(8)
|
%
|
|
(2)
|
%
|
Adjusted
OIBDA(4)
|
|
727
|
|
25
|
|
752
|
|
|
610
|
|
94
|
|
704
|
|
|
117
|
|
19
|
%
|
|
48
|
|
7
|
%
|
|
5
|
%
|
INTERNATIONAL
NETWORKS UNAUDITED RECONCILIATION OF OPERATING INCOME TO PRO
FORMA
ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro
Forma Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
217
|
|
$
|
1
|
|
$
|
218
|
|
|
$
|
417
|
|
$
|
(6)
|
|
$
|
411
|
|
|
$
|
(200)
|
|
(48)
|
%
|
|
$
|
(193)
|
|
(47)
|
%
|
Depreciation and
amortization
|
|
232
|
|
19
|
|
251
|
|
|
165
|
|
79
|
|
244
|
|
|
67
|
|
41
|
%
|
|
7
|
|
3
|
%
|
Restructuring and
other charges
|
|
262
|
|
2
|
|
264
|
|
|
28
|
|
—
|
|
28
|
|
|
234
|
|
NM
|
|
236
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
3
|
|
—
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
NM
|
|
3
|
|
NM
|
Inter-segment
eliminations
|
|
13
|
|
3
|
|
16
|
|
|
—
|
|
21
|
|
21
|
|
|
13
|
|
NM
|
|
(5)
|
|
(24)
|
%
|
Adjusted
OIBDA(4)
|
|
727
|
|
25
|
|
752
|
|
|
610
|
|
94
|
|
704
|
|
|
117
|
|
19
|
%
|
|
48
|
|
7
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Certain updates
were made to previously disclosed pro forma adjustments as a result
of further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3) Refer to page 5
for our methodology for calculating growth rates excluding the
impact of currency effects.
|
(4) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
$
|
(1)
|
|
$
|
—
|
|
$
|
(1)
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
(1)
|
|
NM
|
|
(1)
|
|
NM
|
Costs of
revenues,
excluding
depreciation and
amortization
|
|
—
|
|
—
|
|
—
|
|
|
(1)
|
|
(1)
|
|
(2)
|
|
|
1
|
|
NM
|
|
2
|
|
NM
|
Selling, general
and
administrative
|
|
(310)
|
|
(22)
|
|
(332)
|
|
|
(261)
|
|
(75)
|
|
(336)
|
|
|
(49)
|
|
(19)
|
%
|
|
4
|
|
1
|
%
|
Adjusted
OIBDA(3)
|
|
(311)
|
|
(22)
|
|
(333)
|
|
|
(262)
|
|
(76)
|
|
(338)
|
|
|
(49)
|
|
(19)
|
%
|
|
5
|
|
1
|
%
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS UNAUDITED RECONCILIATION OF OPERATING
INCOME
TO PRO FORMA ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
(loss)
|
|
$
|
(666)
|
|
$
|
2
|
|
$
|
(664)
|
|
|
$
|
(376)
|
|
$
|
(25)
|
|
$
|
(401)
|
|
|
$
|
(290)
|
|
(77)
|
%
|
|
$
|
(263)
|
|
(66)
|
%
|
Mark-to-market
share-based
compensation
|
|
56
|
|
1
|
|
57
|
|
|
(4)
|
|
7
|
|
3
|
|
|
60
|
|
NM
|
|
54
|
|
NM
|
Depreciation and
amortization
|
|
75
|
|
—
|
|
75
|
|
|
50
|
|
2
|
|
52
|
|
|
25
|
|
50
|
%
|
|
23
|
|
44
|
%
|
Restructuring and
other charges
|
|
130
|
|
2
|
|
132
|
|
|
6
|
|
—
|
|
6
|
|
|
124
|
|
NM
|
|
126
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
97
|
|
(28)
|
|
69
|
|
|
62
|
|
(60)
|
|
2
|
|
|
35
|
|
56
|
%
|
|
67
|
|
NM
|
Inter-segment
eliminations
|
|
(3)
|
|
1
|
|
(2)
|
|
|
—
|
|
—
|
|
—
|
|
|
(3)
|
|
NM
|
|
(2)
|
|
NM
|
Adjusted
OIBDA(3)
|
|
(311)
|
|
(22)
|
|
(333)
|
|
|
(262)
|
|
(76)
|
|
(338)
|
|
|
(49)
|
|
(19)
|
%
|
|
5
|
|
1
|
%
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Refer to page 6 for full list of
adjustments to pro forma results.
|
(2) Certain updates
were made to previously disclosed pro forma adjustments as a result
of further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3) See full
definition of Adjusted OIBDA on page 5.
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
|
Three Months Ended
September 30, 2018
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
117
|
|
Net income
attributable to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
5
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
13
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
43
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
15
|
|
(Income) from equity
investees, net
|
|
|
|
|
|
|
|
|
|
(9)
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
185
|
|
Operating
income
|
|
399
|
|
|
146
|
|
|
1
|
|
|
(177)
|
|
|
369
|
|
Restructuring and
other charges
|
|
206
|
|
|
16
|
|
|
—
|
|
|
2
|
|
|
224
|
|
Depreciation and
amortization
|
|
296
|
|
|
82
|
|
|
—
|
|
|
20
|
|
|
398
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
27
|
|
Scripps Networks
transaction and integration costs
|
|
3
|
|
|
3
|
|
|
—
|
|
|
20
|
|
|
26
|
|
Inter-segment eliminations
|
|
(3)
|
|
|
7
|
|
|
(1)
|
|
|
(3)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
901
|
|
|
254
|
|
|
$
|
—
|
|
|
(111)
|
|
|
$
|
1,044
|
|
|
|
Three Months Ended
September 30, 2017
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
218
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
5
|
|
Income tax
(benefit)
|
|
|
|
|
|
|
|
|
|
(59)
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
106
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
27
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
136
|
|
Operating
income
|
|
469
|
|
|
117
|
|
|
(2)
|
|
|
(151)
|
|
|
433
|
|
Restructuring and
other charges
|
|
2
|
|
|
7
|
|
|
2
|
|
|
—
|
|
|
11
|
|
Depreciation and
amortization
|
|
7
|
|
|
56
|
|
|
2
|
|
|
15
|
|
|
80
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
(11)
|
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
62
|
|
Inter-segment eliminations
|
|
2
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
480
|
|
|
180
|
|
|
—
|
|
|
(85)
|
|
|
$
|
575
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
|
Nine Months Ended
September 30, 2018
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
325
|
|
Net income
attributable to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
16
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
41
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
146
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
84
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
53
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
558
|
|
Operating
income
|
|
1,581
|
|
|
217
|
|
|
91
|
|
|
(666)
|
|
|
1,223
|
|
Restructuring and
other charges
|
|
259
|
|
|
262
|
|
|
1
|
|
|
130
|
|
|
652
|
|
Depreciation and
amortization
|
|
691
|
|
|
232
|
|
|
3
|
|
|
75
|
|
|
1,001
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
56
|
|
Scripps Networks
transaction and integration costs
|
|
7
|
|
|
3
|
|
|
—
|
|
|
97
|
|
|
107
|
|
(Gain) on
disposition
|
|
—
|
|
|
—
|
|
|
(84)
|
|
|
—
|
|
|
(84)
|
|
Inter-segment eliminations
|
|
(2)
|
|
|
13
|
|
|
$
|
(8)
|
|
|
(3)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
2,536
|
|
|
727
|
|
|
$
|
3
|
|
|
(311)
|
|
|
$
|
2,955
|
|
|
|
Nine Months Ended
September 30, 2017
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
807
|
|
Net income
attributable to redeemable
noncontrolling interests
|
|
|
|
|
|
|
|
|
|
17
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
—
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
89
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
143
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
122
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
54
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
318
|
|
Operating
income
|
|
1,511
|
|
|
417
|
|
|
(2)
|
|
|
(376)
|
|
|
1,550
|
|
Restructuring and
other charges
|
|
6
|
|
|
28
|
|
|
3
|
|
|
6
|
|
|
43
|
|
Depreciation and
amortization
|
|
21
|
|
|
165
|
|
|
4
|
|
|
50
|
|
|
240
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
(4)
|
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
62
|
|
Loss on
disposition
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Inter-segment eliminations
|
|
10
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
1,548
|
|
|
610
|
|
|
(1)
|
|
|
$
|
(262)
|
|
|
$
|
1,895
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
EARNINGS PER
SHARE
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
135
|
|
|
$
|
223
|
|
|
$
|
382
|
|
|
$
|
824
|
|
Less:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible preferred
stock
|
|
(12)
|
|
|
(27)
|
|
|
(34)
|
|
|
(99)
|
|
Net income
attributable to noncontrolling interests
|
|
(13)
|
|
|
—
|
|
|
(41)
|
|
|
—
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(5)
|
|
|
(5)
|
|
|
(16)
|
|
|
(17)
|
|
Redeemable
noncontrolling interest adjustments to redemption value
|
|
—
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
Net income allocated
to Discovery, Inc. Series A, B and C common and Series C-1
convertible preferred stockholders for basic net income per
share
|
|
$
|
105
|
|
|
$
|
191
|
|
|
$
|
285
|
|
|
$
|
708
|
|
Allocation of net
income to Discovery, Inc. Series A, B and C common
stockholders and Series C-1 convertible preferred stockholders for
basic net
income per share:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
86
|
|
|
146
|
|
|
231
|
|
|
539
|
|
Series C-1
convertible preferred stockholders
|
|
19
|
|
|
45
|
|
|
54
|
|
|
169
|
|
Total
|
|
105
|
|
|
191
|
|
|
285
|
|
|
708
|
|
Add:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible preferred
stockholders
|
|
12
|
|
|
27
|
|
|
34
|
|
|
99
|
|
Net income allocated
to Discovery, Inc. Series A, B and C common stockholders for
diluted net income per share
|
|
$
|
117
|
|
|
$
|
218
|
|
|
$
|
319
|
|
|
$
|
807
|
|
|
|
|
|
|
|
|
|
|
Denominator —
weighted average:
|
|
|
|
|
|
|
|
|
Series A, B and C
common shares outstanding — basic
|
|
523
|
|
|
381
|
|
|
490
|
|
|
385
|
|
Impact of assumed
preferred stock conversion
|
|
187
|
|
|
189
|
|
|
187
|
|
|
194
|
|
Dilutive effect of
share-based awards
|
|
3
|
|
|
1
|
|
|
2
|
|
|
2
|
|
Series A, B and C
common shares outstanding — diluted
|
|
713
|
|
|
571
|
|
|
679
|
|
|
581
|
|
Series C-1
convertible preferred stock outstanding — basic and
diluted
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share allocated to Discovery, Inc. Series A, B and C common and
Series C-1 convertible preferred stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
0.47
|
|
|
$
|
1.40
|
|
Series C-1
convertible preferred stockholders
|
|
$
|
3.19
|
|
|
$
|
7.41
|
|
|
$
|
9.13
|
|
|
$
|
27.06
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share allocated to Discovery, Inc. Series A, B and C common and
Series C-1 convertible preferred stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
0.47
|
|
|
$
|
1.39
|
|
Series C-1
convertible preferred stockholders
|
|
$
|
3.18
|
|
|
$
|
7.40
|
|
|
$
|
9.10
|
|
|
$
|
26.96
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
CALCULATION OF
ADJUSTED EARNINGS PER DILUTED SHARE
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Diluted net income
per share available to Discovery, Inc. Series
A, B and C common stockholders
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
(0.22)
|
|
|
$
|
0.47
|
|
|
$
|
1.39
|
|
|
$
|
(0.92)
|
|
Per share impact of
amortization of acquisition-related
intangible assets, net of tax
|
|
0.36
|
|
|
0.05
|
|
|
0.31
|
|
|
0.89
|
|
|
0.13
|
|
|
0.76
|
|
Adjusted earnings per
diluted share
|
|
$
|
0.52
|
|
|
$
|
0.43
|
|
|
$
|
0.09
|
|
|
$
|
1.36
|
|
|
$
|
1.52
|
|
|
$
|
(0.16)
|
|
CALCULATION OF
FREE CASH FLOW
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
Change
|
|
%
Change
|
Cash provided by
operating
activities
|
|
931
|
|
|
$
|
724
|
|
|
$
|
207
|
|
|
29
|
%
|
|
$
|
1,647
|
|
|
$
|
1,167
|
|
|
$
|
480
|
|
|
41
|
%
|
Purchases of property
and
equipment
|
|
(24)
|
|
|
(25)
|
|
|
1
|
|
|
4
|
%
|
|
(106)
|
|
|
(103)
|
|
|
(3)
|
|
|
(3)
|
%
|
Free cash
flow
|
|
$
|
907
|
|
|
$
|
699
|
|
|
$
|
208
|
|
|
30
|
%
|
|
$
|
1,541
|
|
|
$
|
1,064
|
|
|
$
|
477
|
|
|
45
|
%
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
BORROWINGS
|
|
|
September 30,
2018
|
|
December 31,
2017
|
5.625% Senior notes,
semi-annual interest, due August 2019
|
$
|
411
|
|
|
$
|
411
|
|
2.200% Senior notes,
semi-annual interest, due September 2019
|
500
|
|
|
500
|
|
Floating rate notes,
quarterly interest, due September 2019
|
400
|
|
|
400
|
|
2.750% Senior notes,
semi-annual interest, due November 2019
|
500
|
|
|
—
|
|
2.800% Senior notes,
semi-annual interest, due June 2020
|
600
|
|
|
—
|
|
5.050% Senior notes,
semi-annual interest, due June 2020
|
789
|
|
|
789
|
|
4.375% Senior notes,
semi-annual interest, due June 2021
|
650
|
|
|
650
|
|
2.375% Senior notes,
euro denominated, annual interest, due March 2022
|
350
|
|
|
358
|
|
3.300% Senior notes,
semi-annual interest, due May 2022
|
500
|
|
|
500
|
|
3.500% Senior notes,
semi-annual interest, due June 2022
|
400
|
|
|
—
|
|
2.950% Senior notes,
semi-annual interest, due March 2023
|
1,200
|
|
|
1,200
|
|
3.250% Senior notes,
semi-annual interest, due April 2023
|
350
|
|
|
350
|
|
3.800% Senior notes,
semi-annual interest, due March 2024
|
450
|
|
|
450
|
|
2.500% Senior notes,
sterling denominated, annual interest, due September
2024
|
525
|
|
|
538
|
|
3.900% Senior notes,
semi-annual interest, due November 2024
|
500
|
|
|
—
|
|
3.450% Senior notes,
semi-annual interest, due March 2025
|
300
|
|
|
300
|
|
3.950% Senior notes,
semi-annual interest, due June 2025
|
500
|
|
|
—
|
|
4.900% Senior notes,
semi-annual interest, due March 2026
|
700
|
|
|
700
|
|
1.900% Senior notes,
euro denominated, annual interest, due March 2027
|
700
|
|
|
717
|
|
3.950% Senior notes,
semi-annual interest, due March 2028
|
1,700
|
|
|
1,700
|
|
5.000% Senior notes,
semi-annual interest, due September 2037
|
1,250
|
|
|
1,250
|
|
6.350% Senior notes,
semi-annual interest, due June 2040
|
850
|
|
|
850
|
|
4.950% Senior notes,
semi-annual interest, due May 2042
|
500
|
|
|
500
|
|
4.875% Senior notes,
semi-annual interest, due April 2043
|
850
|
|
|
850
|
|
5.200% Senior notes,
semi-annual interest, due September 2047
|
1,250
|
|
|
1,250
|
|
Revolving credit
facility
|
325
|
|
|
425
|
|
Commercial
paper
|
297
|
|
|
—
|
|
Program financing
line of credit
|
23
|
|
|
—
|
|
Capital lease
obligations
|
245
|
|
|
225
|
|
Total debt
|
17,615
|
|
|
14,913
|
|
Unamortized discount,
premium and debt issuance costs, net
|
(133)
|
|
|
(128)
|
|
Debt, net of
unamortized discount, premium and debt issuance costs
|
17,482
|
|
|
14,785
|
|
Current portion of
debt
|
(1,653)
|
|
|
(30)
|
|
Noncurrent portion of
debt
|
$
|
15,829
|
|
|
$
|
14,755
|
|
View original
content:http://www.prnewswire.com/news-releases/discovery-inc-reports-third-quarter-2018-results-300746534.html
SOURCE Discovery, Inc.