English Entertainment
Discovery Intl 3Q revenues up 24 %
MUMBAI: Discovery Holdings, which, owns a 50 per cent stake in Discovery Communications (DCI) has announced its results for the third quarter, ended 30 September 2005.
DCI’s revenue of $639 million and operating cash flow of $171 million are 15 per cent and six per cent ahead of the same period a year ago, respectively.
Discovery International’s revenue increased by 24 per cent due to increases in both subscriber fees and ad revenue as also,favourable exchange rates. Net ad revenue increased by 25 per cent primarily due to higher viewership in the
UK and an increased subscriber base in the UK and Europe. Net subscriber fees increased by 24 per cent due to increases in paying subscription units in Europe and Asia and international joint venture channels combined with contractual rate increases in certain markets.
Operating expenses increased by 26 per cent due to the previously announced investment in its Lifestyles category designed to develop and grow that market opportunity. Operating cash flow increased by 15 per cent due to the increased revenue. Excluding the effects of exchange rates, revenue increased by 23 per cent and operating cash flow increased by 23 per cent.
Revenue in the US, increased by 11 per cent due to increases in subscriber fees and advertising revenue. Net subscriber fees increased by 16 per cent as the US Networks had a 14 per cent increase in paying subscribers combined with contractual rate increases at most networks.
Free viewing periods related to a number of
US networks, principally networks that are carried on the digital tier, began expiring in 2004 and DCI is now recognising subscriber fees for those networks. Net subscriber fee increases were also attributable to lower launch support ammortisation, a contra-revenue item, as the result of extensions to certain affiliation agreements.
Net ad revenue increased by six per cent as higher ad sell-out and rates were partially offset by lower audience delivery at certain networks. Operating expenses increased by 12 per cent due to an increase in programming and marketing expenses across US networks. Operating cash flow increased by nine per cent to $165 million.
Revenue in its commerce, education and other divisions increased by 15 per cent, principally as a result of a 38 per cent increase in revenue at Discovery Education and a 10 per cent increase in average sales per store offset by a seven per cent decrease in the average number of stores. Discovery Education revenue increased due to acquisitions that were made over the past year and an increase in the number of schools purchasing its products and services.
The operating cash flow loss in its commerce, education and other divisions increased by $8 million, or 50 per cent, primarily due to the previously announced investment in Discovery Education. DCI’s outstanding debt balance was $2.7 billion as of 30 September, 2005.
For 2005, revenue is expected to grow between 11-15 per cent. Operating cash flow is expected to grow by around five per cent. Operating income is expected to grow by 10 per cent.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
