Discovery Communications Reports Second Quarter 2011 Results and Announces $1 Billion Increase to Share Repurchase Program

Discovery Communications Reports Second Quarter 2011 Results and Announces $1 Billion Increase to Share Repurchase Program

SILVER SPRING, Md., Aug. 4, 2011 /PRNewswire/ --

Second Quarter 2011 Financial Highlights:

-- Revenues increased 11% to $1,067 million
-- Adjusted OIBDA increased 12% to $510 million
-- Net income increased to $254 million (up 20% excluding one-time prior
year items)
-- Free Cash Flow increased to $198 million
-- Repurchased 5.6 million shares for an aggregate purchase price of $210
million

Discovery Communications, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the second quarter ended June 30, 2011.

(Logo: http://photos.prnewswire.com/prnh/20080918/NETH035LOGO )

David Zaslav, Discovery's President and Chief Executive Officer said, "Discovery continues to deliver strong financial results, particularly across our unique international platform, as the depth and breadth of our content assets have enabled the company to capitalize on the sustained ad market strength worldwide as well as take advantage of the evolution of pay-tv across the globe. Our growth this past quarter was achieved despite continued strategic investments to further our competitive advantage both domestically and internationally. Bolstering our flagship networks, building additional growth assets across the company and leveraging the unparalleled distribution platform we built over the last 25 years remain our top priorities, and we are focused on doing so while delivering sustained financial results and returning additional capital to our shareholders."

Second quarter revenues of $1,067 million increased $104 million, or 11%, over the second quarter a year ago, led by 20% growth at International Networks and 6% growth at U.S. Networks. Adjusted Operating Income Before Depreciation and Amortization (1) ("OIBDA") grew 12% to $510 million, driven by a 31% increase at International Networks and a 4% increase at U.S. Networks. Adjusted OIBDA margin for the second quarter increased to 48% from 47% in the second quarter of 2010.

Second quarter net income from continuing operations available to Discovery Communications, Inc. stockholders of $254 million ($0.62 per diluted share) increased $148 million compared to $106 million ($0.25 per diluted share) for the second quarter a year ago. The current quarter results reflect the strong operating performance, while the prior year's quarter includes losses from the early extinguishment of debt and termination of interest rate swaps. Excluding these items, net income for the quarter increased $43 million (2).

Free cash flow was $198 million for the second quarter, an increase of $242 million from the second quarter of 2010, due to increased operating performance and lower tax and stock compensation payments as well as $138 million of payments in the prior year for the early extinguishment of debt and termination of interest rate swaps. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.

(1) See the definition of Adjusted Operating Income Before Depreciation and Amortization on page 4.

(2) See net income reconciliation for one-time items on page 11.

SEGMENT RESULTS

(dollars
in
millions) Three Months Ended June 30,
---------------------------
2011 2010 Change
---- ---- ------

Revenues:
U.S.
Networks $660 $620 6%
International
Networks 368 306 20%
Education
and Other 39 33 18%
Corporate
and
Eliminations - 4 NM
--- ---
Total
Revenues $1,067 $963 11%
====== ====

Adjusted
OIBDA:
U.S.
Networks $395 $379 4%
International
Networks 173 132 31%
Education
and Other 5 1 500%
Corporate
and
Eliminations (63) (57) (11%)
--- ---
Total
Adjusted
OIBDA $510 $455 12%
==== ====

(dollars
in
millions) Six Months Ended June 30,
-------------------------
2011 2010 Change
---- ---- ------

Revenues:
U.S.
Networks $1,247 $1,166 7%
International
Networks 691 589 17%
Education
and Other 80 70 14%
Corporate
and
Eliminations - 7 NM
--- ---
Total
Revenues $2,018 $1,832 10%
====== ======

Adjusted
OIBDA:
U.S.
Networks $729 $672 8%
International
Networks 317 254 25%
Education
and Other 13 6 117%
Corporate
and
Eliminations (122) (112) (9%)
---- ----
Total
Adjusted
OIBDA $937 $820 14%
==== ====

U.S. Networks
-------------

(dollars in
millions) Three Months Ended June 30,
---------------------------
2011 2010 Change
---- ---- ------

Revenues:
Distribution $273 $263 4%
Advertising 361 329 10%
Other 26 28 (7%)
--- ---
Total Revenues $660 $620 6%
==== ====

Adjusted OIBDA $395 $379 4%

Adjusted OIBDA
Margin 60% 61%

(dollars in
millions) Six Months Ended June 30,
-------------------------
2011 2010 Change
---- ---- ------

Revenues:
Distribution $547 $522 5%
Advertising 651 595 9%
Other 49 49 -
--- ---
Total Revenues $1,247 $1,166 7%
====== ======

Adjusted OIBDA $729 $672 8%

Adjusted OIBDA
Margin 58% 58%

U.S. Networks' revenues in the second quarter of 2011 increased 6% to $660 million primarily driven by advertising and distribution revenue growth. Advertising revenue increased 10% due to increased pricing and higher sellouts, as well as $8 million from non-recurring revenue items, partially offset by the absence of $17 million due to the removal of Discovery Health following its contribution into the OWN joint venture on January 1, 2011. Distribution revenue grew 4% largely from higher rates and subscriber growth primarily from networks carried on the digital tier, partially offset by $3 million due to the absence of Discovery Health. Excluding Discovery Health from the 2010 results and non-recurring revenue items, advertising revenues grew 13% and distribution revenues grew 6% compared with the second quarter a year ago.

Adjusted OIBDA increased 4% to $395 million primarily reflecting the 6% revenue growth. Excluding Discovery Health from the 2010 results, Adjusted OIBDA increased 7%. Operating expenses for the quarter increased 10% primarily due to higher content amortization.

International Networks
----------------------

(dollars in
millions) Three Months Ended June 30,
---------------------------
2011 2010 Change
---- ---- ------

Revenues:
Distribution $220 $186 18%
Advertising 132 106 25%
Other 16 14 14%
--- ---
Total Revenues $368 $306 20%
==== ====

Adjusted OIBDA $173 $132 31%

Adjusted OIBDA
Margin 47% 43%

(dollars in
millions) Six Months Ended June 30,
-------------------------
2011 2010 Change
---- ---- ------

Revenues:
Distribution $426 $372 15%
Advertising 234 188 24%
Other 31 29 7%
--- ---
Total Revenues $691 $589 17%
==== ====

Adjusted OIBDA $317 $254 25%

Adjusted OIBDA
Margin 46% 43%

International Networks' revenues for the second quarter increased 20% to $368 million primarily led by distribution revenue growth of 18% and advertising revenue growth of 25%. Excluding the impact of foreign currency fluctuations, revenues increased 14% led by 12% distribution revenue growth, mainly from increased subscribers globally and higher rates and subscribers in Latin America. Advertising revenue in local currency terms was up 17% during the second quarter primarily from higher pricing and sellouts across all regions.

Adjusted OIBDA increased 31% to $173 million reflecting the 20% revenue growth partially offset by a 13% increase in operating expenses. Excluding the impact of foreign currency, Adjusted OIBDA increased 17% as the 14% revenue growth was partially offset by a 12% increase in operating expenses primarily due to higher content amortization and sales commissions as well as increased personnel costs.

Education and Other
-------------------

(dollars in
millions) Three Months Ended June 30,
---------------------------
2011 2010 Change
---- ---- ------

Revenues $39 $33 18%

Adjusted OIBDA $5 $1 500%

Adjusted OIBDA
Margin 13% 3%

(dollars in
millions) Six Months Ended June 30,
-------------------------
2011 2010 Change
---- ---- ------

Revenues $80 $70 14%

Adjusted OIBDA $13 $6 117%

Adjusted OIBDA
Margin 16% 9%

Education and Other second quarter revenues increased 18% to $39 million, mainly reflecting increased Education revenue from higher streaming volumes. Adjusted OIBDA increased $4 million compared to the second quarter of 2010 primarily from a revenue increase at Education.

Corporate and Eliminations

Adjusted OIBDA decreased $6 million when compared to the second quarter a year ago primarily due to increased stock-based compensation expense.

STOCK REPURCHASE

During the quarter, the Company, pursuant to its existing stock repurchase program repurchased 5.64 million shares of its Series C common stock at an average price of $37.27 per share for an aggregate purchase price of approximately $210 million.

From July 1, 2011 through August 3, 2011, the Company repurchased 3.45 million shares of its Series C common stock for approximately $127 million.

The Company has repurchased 16.81 million shares of Series C common stock under its $1.0 billion stock repurchase plan to date at an aggregate price of approximately $609 million. Additionally, the Company's Board of Directors has approved a $1.0 billion increase to the existing stock repurchase program. Under the stock repurchase program, management is authorized to purchase shares from time to time through open market purchases at prevailing prices or privately negotiated transactions, subject to market conditions and other factors.

OTHER ITEMS

In June 2011, the Company completed the issuance of $650 million 4.375% Senior Notes due June 2021. The Company intends to use the net proceeds for general corporate purposes.

FULL YEAR 2011 OUTLOOK

For the full year ending December 31, 2011, Discovery Communications, Inc. expects total revenue between $4,075 million and $4,175 million, Adjusted OIBDA between $1,875 million and $1,950 million, and net income available to Discovery Communications, Inc. stockholders of $1,000 million to $1,075 million. Our outlook incorporates current foreign exchange rates for revenues and expenses and the current share price for mark-to-market stock-based compensation calculations.

NON-GAAP FINANCIAL MEASURES

Adjusted OIBDA and Free Cash Flow

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 and free cash flow. 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 revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market stock-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) certain impairment charges, and (vi) gains (losses) on business and asset dispositions. The Company uses this measure to assess 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 and also provides investors a measure to analyze the operating performance of each segment against historical data. The Company excludes mark-to-market stock-based compensation, exit and restructuring charges, certain impairment charges, and gains (losses) on business and asset dispositions from the calculation of Adjusted OIBDA due to their volatility or non-recurring nature. The Company also excludes depreciation of fixed assets and amortization of intangible assets and deferred launch incentive as these amounts do not represent cash payments in the current reporting period.

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.

Adjusted OIBDA and free cash flow are non-GAAP measures, and should be considered in addition to, but not as a substitute for, operating income, net income, cash flows provided by operating activities and other measures of financial performance reported in accordance with GAAP. Please review the supplemental financial schedules beginning on page 9 for reconciliations to GAAP measures.

Conference Call Information

Discovery Communications, Inc. will host a conference call today at 8:30 a.m. EDT to discuss its second quarter results. To listen to the call, visit http://www.discoverycommunications.com or dial 1-888-873-4896 inside the U.S. and 1-617-213-8850 outside of the U.S., using the following passcode: 56019852.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. These statements are based on information available to the Company as of the date hereof, and 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 18, 2011. 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, the full year 2011 outlook and plans for stock repurchases. 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.

DISCOVERY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2011 2010 2011 2010
---- ---- ---- ----

Revenues:
Distribution $493 $449 $973 $894
Advertising 494 435 886 783
Other 80 79 159 155
--- --- --- ---
Total revenues 1,067 963 2,018 1,832
----- --- ----- -----

Costs of
revenues,
excluding
depreciation
and
amortization 288 254 561 521
Selling,
general and
administrative 300 304 569 588
Depreciation
and
amortization 30 33 60 66
Restructuring
charges 4 - 5 3
Gains on
dispositions - - (129) -
--- --- ---- ---
622 591 1,066 1,178
--- --- ----- -----

Operating
income 445 372 952 654

Interest
expense, net (49) (48) (98) (106)
Loss on
extinguishment
of debt - (136) - (136)
Other income
(expense),
net 2 (37) (5) (41)
--- --- --- ---

Income before
income taxes 398 151 849 371
Provision for
income taxes (144) (41) (290) (88)
---- --- ---- ---

Net income 254 110 559 283
Less net
income
attributable
to
noncontrolling
interests - (3) - (7)
--- --- --- ---
Net income
attributable
to Discovery
Communications,
Inc. 254 107 559 276
Stock
dividends to
preferred
interests - (1) - (1)
--- --- --- ---

Net income
available to
Discovery
Communications,
Inc.
stockholders $254 $106 $559 $275
==== ==== ==== ====

Net income per
share
available to
Discovery
Communications,
Inc.
stockholders:
Basic $0.63 $0.25 $1.37 $0.65
===== ===== ===== =====
Diluted $0.62 $0.25 $1.36 $0.64
===== ===== ===== =====
Weighted
average
shares
outstanding:
Basic 406 426 407 425
=== === === ===
Diluted 410 431 412 430
=== === === ===

DISCOVERY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)

June 30, December 31,
2011 2010
---- ----

ASSETS
Current assets:
Cash and cash equivalents $1,095 $466
Receivables, net 908 880
Content rights, net 93 83
Deferred income taxes 65 81
Prepaid expenses and other
current assets 160 225
--- ---
Total current assets 2,321 1,735

Noncurrent content rights,
net 1,310 1,245
Property and equipment, net 382 399
Goodwill 6,302 6.434
Intangible assets, net 584 605
Investments 806 455
Other noncurrent assets 131 146
--- ---
Total assets $11,836 $11,019
======= =======

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $48 $87
Accrued liabilities 364 393
Deferred revenues 98 114
Current portion of stock-
based compensation
liabilities 52 118
Current portion of long-
term debt 22 20
Other current liabilities 30 53
--- ---
Total current liabilities 614 785

Long-term debt 4,235 3,598
Deferred income taxes 373 304
Other noncurrent liabilities 100 99
--- ---
Total liabilities 5,322 4,786
Commitments and
contingencies

Equity:
Preferred stock 2 2
Common stock 3 3
Additional paid-in capital 6,441 6,358
Treasury stock, at cost: 13
and 3 Series C common
shares at 2011 and 2010,
respectively (482) (105)
Retained earnings 559 -
Accumulated other
comprehensive loss (10) (33)
--- ---
Total Discovery
Communications, Inc.
stockholders' equity 6,513 6,225
Noncontrolling interests 1 8
--- ---
Total equity 6,514 6,233
----- -----
Total liabilities and equity $11,836 $11,019
======= =======

DISCOVERY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)

Six Months Ended June 30,
-------------------------
2011 2010
---- ----

OPERATING ACTIVITIES
Net income $559 $283
Adjustments to
reconcile net income
to cash provided by
operating
activities:
Content expense 381 350
Stock-based
compensation 49 94
Depreciation and
amortization 60 67
Gains on dispositions (129) -
Deferred income tax
expense (benefit) 71 (44)
Noncash portion of
loss on
extinguishment - 12
Other noncash
expenses, net 30 43
Changes in operating
assets and
liabilities:
Receivables, net (31) (31)
Content rights (430) (370)
Accounts payable and
accrued liabilities (116) (159)
Stock-based
compensation
liabilities (92) (123)
Income tax receivable 94 (11)
Other, net (15) (21)
--- ---
Cash provided by
operating activities 431 90

INVESTING ACTIVITIES
Purchases of property
and equipment (27) (20)
Business
acquisitions, net of
cash acquired - (38)
Investments in and
advances to equity
investees (82) (41)
--- ---
Cash used in
investing activities (109) (99)

FINANCING ACTIVITIES
Borrowings from long
term debt, net of
discounts and
issuance costs 641 2,970
Principal repayments
of long-term debt - (2,883)
Principal repayments
of capital lease
obligations (13) (5)
Repurchases of common
stock (377) -
Cash distributions to
noncontrolling
interests (7) (2)
Proceeds from stock
option exercises 38 15
Excess tax benefits
from stock-based
compensation 17 4
--- ---
Cash provided by
financing activities 299 99

Effect of exchange
rate changes on cash
and cash equivalents 8 -
--- ---

NET CHANGE IN CASH
AND CASH EQUIVALENTS 629 90
Cash and cash
equivalents,
beginning of period 466 623
--- ---
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $1,095 $713
====== ====

DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; in millions)

Three Months Ended June 30, 2011
--------------------------------
Amortization
Adjusted Depreciation of
-------- ------------ -------------
Deferred
Operating and Launch
--------- --- ---------
Income Before Amortization Incentives
------------- ------------ ----------
Depreciation
and
-------------
Amortization
------------

U.S. Networks $395 $(4) $(2)
International
Networks 173 (12) (10)
Education and Other 5 (1) -
Corporate and
Eliminations (63) (13) -
--- --- ---
Total $510 $(30) $(12)
==== ==== ====

Three Months Ended June 30, 2011
--------------------------------
Mark-to- Other
Market (a) Operating
--------- ------ ---------
Stock-Based Income
----------- ------
Compensation
------------

U.S. Networks $- $(2) $387
International
Networks - (2) 149
Education and Other - - 4
Corporate and
Eliminations (19) - (95)
--- --- ---
Total $(19) $(4) $445
==== === ====

Three Months Ended June 30, 2010
--------------------------------
Amortization
Adjusted Depreciation of
-------- ------------ -------------
Deferred
Operating and Launch
--------- --- ---------
Income Before Amortization Incentives
------------- ------------ ----------
Depreciation
and
-------------
Amortization
------------

U.S. Networks $379 $(5) $(2)
International
Networks 132 (11) (8)
Education and Other 1 (2) -
Corporate and
Eliminations (57) (15) -
--- --- ---
Total $455 $(33) $(10)
==== ==== ====

Three Months Ended June 30, 2010
--------------------------------
Mark-to-
Market Other Operating
--------- ----- ---------
Stock-Based Income
----------- ------
Compensation
------------

U.S. Networks $- $- $372
International
Networks - - 113
Education and Other - - (1)
Corporate and
Eliminations (40) - (112)
--- --- ----
Total $(40) $- $372
==== === ====

(a) For the three months ended June 30, 2011, amounts represent
restructuring charges of $4 million.

DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; amounts in millions)

Six Months Ended June 30, 2011
------------------------------
Amortization
Adjusted Depreciation of
-------- ------------ -------------
Deferred
Operating and Launch
--------- --- ---------
Income Before Amortization Incentives
------------- ------------ ----------
Depreciation
and
-------------
Amortization
------------

U.S. Networks $729 $(8) $(4)
International
Networks 317 (22) (22)
Education and Other 13 (3) -
Corporate and
Eliminations (122) (27) -
---- --- ---
Total $937 $(60) $(26)
==== ==== ====

Six Months Ended June 30, 2011
------------------------------
Mark-to- Other
Market (a) Operating
--------- ------ ---------
Stock-Based Income
----------- ------
Compensation
------------

U.S. Networks $- $126 $843
International
Networks - (2) 271
Education and Other - - 10
Corporate and
Eliminations (23) - (172)
--- --- ----
Total $(23) $124 $952
==== ==== ====

Six Months Ended June 30, 2010
------------------------------
Amortization
Adjusted of
-------- -------------
Deferred
Operating Launch
--------- ---------
Income Before Depreciation Incentives
------------- ------------ ----------
Depreciation
and and
------------- ---
Amortization Amortization
------------ ------------

U.S. Networks $672 $(11) $(4)
International
Networks 254 (19) (17)
Education and Other 6 (3) -
Corporate and
Eliminations (112) (33) -
---- --- ---
Total $820 $(66) $(21)
==== ==== ====

Six Months Ended June 30, 2010
------------------------------
Mark-to- Other
Market (a) Operating
--------- ------ ---------
Stock-Based Income
----------- ------
Compensation
------------

U.S. Networks $- $- $657
International
Networks - (3) 215
Education and Other - - 3
Corporate and
Eliminations (76) - (221)
--- --- ----
Total $(76) $(3) $654
==== === ====

(a) For the six months ended June 30, 2011 amount represents a pre-
tax gain of $129 million as a result of contributing Discovery
Health to the OWN joint venture and restructuring charges of $5
million. For the six months ended June 30, 2010, amounts represent
restructuring charges of $3 million.

DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited; in millions)

CALCULATION OF FREE CASH FLOW

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2011 2010 Change 2011 2010 Change
---- ---- ------ ---- ---- ------

Cash
provided
by (used
in)
operating
activities $214 $(36) $250 $431 $90 $341
Acquisition
of
property
and
equipment (16) (8) (8) (27) (20) (7)
--- --- --- --- --- ---
Free cash
flow $198 $(44) $242 $404 $70 $334
==== ==== ==== ==== === ====

RECONCILIATION OF 2011 OUTLOOK TO GAAP MEASURES

Full Year 2011
--------------
Net income available to Discovery
Communications, Inc. stockholders $1,000 To $1,075
Interest expense, net 210 To 205
Depreciation and amortization 125 To 115
Other expense, including amortization
of deferred launch incentives, mark-
to-market stock-based
compensation, asset impairment, exit
and restructuring costs, gains
(losses) on business disposition,
gains (losses) on sale of
securities, equity earnings (losses)
in unconsolidated affiliates,
unrealized and realized gains
(losses) from derivatives, income
tax expense, net loss (income)
attributable to noncontrolling
interests, and stock dividends to
preferred interests 540 To 555
Adjusted OIBDA $1,875 To $1,950
====== ======

NET INCOME RECONCILIATION FOR ONE-TIME ITEMS

Three Months
------------
Ended June 30,
--------------
2011 2010
---- ----

Net income available to Discovery
Communications, Inc. stockholders, $254 $106
Loss on early extinguishment of debt, net
of tax - 90
Loss on early termination of interest rate
swaps, net of tax - 15
--- ---

Net income available to Discovery
Communications, Inc. stockholders
excluding one-time items $254 $211
==== ====

DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
SELECTED FINANCIAL DETAIL
(unaudited; in millions)

BORROWINGS
June 30, 2011
-------------
3.70% Senior Notes, semi-annual interest, due June
2015 $850
5.625% Senior Notes, semi-annual interest, due
August 2019 500
5.05% Senior Notes, semi-annual interest, due June
2020 1,300
4.375% Senior Notes, semi-annual interest, due June
2021 650
6.35% Senior Notes, semi-annual interest, due June
2040 850
Capital lease and other obligations 118
---
Total long-term debt 4,268
Unamortized discount (11)
---
Long-term debt, net 4,257
Less current portion of long-term debt (22)
---
Noncurrent portion of long-term debt $4,235
======

STOCK-BASED COMPENSATION

June 30, 2011
-------------
Total Units Weighted
----------- --------
Long-Term Outstanding Average
--------- ----------- -------
(in Grant
Incentive Plans millions) Price
--------------- ---------- ------

Discovery
Appreciation
Plan 7.3 $29.54

Stock
Appreciation
Rights 0.1 26.00

Stock Options 14.2 21.27

Performance-
based Restricted
Stock Units 1.7 35.31

Service-based
Restricted Stock
Units 0.8 35.08
---
Total Stock-
based
Compensation
Plans 24.1 $25.24
----

June 30, 2011
-------------
Vested
Units Weighted
------- --------
Long-Term Outstanding Average
--------- ----------- -------
(in Grant
Incentive Plans millions) Price
--------------- ---------- ------

Discovery
Appreciation
Plan 0.5 $21.77

Stock
Appreciation
Rights -- --

Stock Options 4.1 17.16

Performance-
based Restricted
Stock Units -- --

Service-based
Restricted Stock
Units -- --
---
Total Stock-
based
Compensation
Plans 4.6 $17.66
---

SHARE COUNT ROLL FORWARD Common Preferred Total
------------------------ ------ --------- -----
(Basic shares, in millions)
Total shares outstanding as of
December 31, 2010 283.76 127.46 411.22
Shares repurchased (10.37) -- (10.37)
Shares issued - stock option
exercises 2.34 -- 2.34
---- --- ----
Total shares outstanding as of
June 30, 2011 275.73 127.46 403.19

SOURCE Discovery Communications, Inc.

Photo:http://photos.prnewswire.com/prnh/20080918/NETH035LOGO
http://photoarchive.ap.org/
Discovery Communications, Inc.

CONTACT: Tammy Shea, Corporate Communications, +1-240-662-6506, tammy_shea@discovery.com; Craig Felenstein, Investor Relations, +1-212-548-5109, craig_felenstein@discovery.com

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