Discovery said it ended the fourth quarter with 22 million DTC subscribers, up from 20 million for Q3. The bulk of subs are from Discovery+.
Revenue rose 10% to $3.2 million, ahead of Wall Street forecasts on higher advertising and distribution. Free cash flow, a key metric, increased 78% to $784 million, primarily driven by higher adjusted OIBDA (operating income before depreciation and amortization) and improvements in working capital.
Net income fell 86% to $38 million, an EPS of 8 cents a shares from 42 cents.
The latest numbers hit as the company’s merger with WarnerMedia looks set to close by late April, and as streaming, which underpins this deal and much recent activity in the entertainment sector, comes under increasing scrutiny as a business of high costs and uncertain returns.
In the U.S. advertising sales grew 5% and distribution 17%, primarily driven by the growth of discovery+ and increases in contractual affiliate rates. Internationally, those increases were 10% and 2%.
Subscribers to fully distributed linear networks were down 4% at year end 2021 from the year before. Total subscribers to our linear networks were 8% lower, or 5% lower excluding the impact from the sale of the Great American Country linear network.
“2021 was by all measures an exceptional year for our company, in which we achieved significant operational, financial, and strategic objectives,” said Discovery CEO Davis Zaslav, positioning “us well to take advantage of the remarkable opportunities ahead for Warner Bros. Discovery, which we believe will be among the world’s most dynamic media companies.”
The $43-billion combination was announced in May and got a green light from the U.S. Department of Justice earlier this week.
Discovery shareholders are set to vote on the merger at a special virtual meeting March 11, then its just the mechanics of AT&T spinning off WarnerMedia. AT&T shareholders will receive about one fourth of a share in the new Warner Bros. for each AT&T share in hand. (So a holder of four shares of AT&T, for example, would end up with one share of Warner Bros. Discovery.) AT&T stockholders as a group will end up owning 71% of the new company, Discovery shareholders the rest.
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