Discovery Communications Reports Third Quarter 2013 Results

Discovery Communications Reports Third Quarter 2013 Results

SILVER SPRING, Md., Oct. 31, 2013 /PRNewswire/ --

Third Quarter 2013 Financial Highlights:


-- Revenues increased 28% to $1,375 million
-- Adjusted OIBDA increased 20% to $597 million
-- Net income increased 24% to $255 million
-- Free cash flow increased 24% to $438 million
-- Repurchased 6.0 million shares of common stock for an aggregate purchase
price of $448 million
Discovery Communications, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the third quarter ended September 30, 2013.

David Zaslav, Discovery's President and Chief Executive Officer, said, "Discovery's strong third quarter results once again demonstrate the breadth and depth of our brands and the myriad of opportunities across our global distribution platform. We are translating the consistent viewership gains we are delivering globally into strong advertising growth both domestically and internationally, while at the same time further leveraging our unique distribution footprint by capitalizing on the pay television evolution in many of our markets worldwide. As we invest in the organic growth opportunities across our diverse portfolio, we are also focused on the integration of our recent acquisitions. Building additional long-term growth prospects remains a priority as we deliver sustained financial results and return additional capital to shareholders to further build shareholder value."

Third Quarter Results

Third quarter revenues of $1,375 million were up $299 million, or 28%, compared to the third quarter a year ago, led by 59% growth at International Networks and 10% growth at U.S. Networks. Adjusted Operating Income Before Depreciation and Amortization((1)) ("OIBDA") increased 20% to $597 million, as International Networks were up 34% and U.S. Networks were up 10%. Excluding the impact of licensing agreements, newly acquired businesses((2)) and foreign currency fluctuations, total company revenues increased 12% and Adjusted OIBDA increased 11%.

Third quarter net income available to Discovery Communications, Inc. stockholders of $255 million ($0.71 per diluted share) increased $50 million compared to $205 million ($0.55 per diluted share) for the third quarter a year ago, primarily due to the strong operating performance in the current year and improved earnings from equity investments partially offset by increased amortization associated with purchase price allocation for the SBS transaction. Adjusted Earnings Per Diluted Share((3)), which excludes the impact of the amortization of acquisition related intangible assets, was $0.80 per diluted share during the third quarter compared with $0.55 per diluted share in the same period a year ago.



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


(2) Newly acquired businesses
include SBS Nordic
acquired in April 2013,
Switchover Media
acquired in December
2012 and a TV station
in Dubai acquired in
December 2012. See page
11 for reconciliation to
results excluding newly
acquired businesses.


(3) See the full definition
of Adjusted Earnings Per
Diluted Share on page 4.
Free cash flow was $438 million for the third quarter, an increase of $85 million or 24% from the third quarter of 2012, primarily due to increased operating performance and lower tax payments. Free cash flow is defined as cash provided by operating activities less purchases of property and equipment.

SEGMENT RESULTS





(dollars in millions) Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------

2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------

Revenues:

U.S. Networks $733 $664 10% $2,212 $2,045 8%

International Networks 620 390 59% 1,716 1,175 46%

Education 22 25 (12)% 73 70 4%

Corporate and Eliminations - (3) NM (3) (3) - %
--- --- --- ---

Total Revenues $1,375 $1,076 28% $3,998 $3,287 22%
====== ====== ====== ======


Adjusted OIBDA:

U.S. Networks $425 $386 10% $1,274 $1,207 6%

International Networks 232 173 34% 681 520 31%

Education 2 5 (60)% 13 14 (7)%

Corporate and Eliminations (62) (66) 6% (205) (191) (7)%
--- --- ---- ----

Total Adjusted OIBDA $597 $498 20% $1,763 $1,550 14%
==== ==== ====== ======


U.S. Networks





(dollars in
millions) Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------

2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------

Revenues:

Distribution $329 $300 10% $985 $934 5%

Advertising 383 343 12% 1,165 1,059 10%

Other 21 21 - % 62 52 19%
--- --- --- ---

Total Revenues $733 $664 10% $2,212 $2,045 8%
==== ==== ====== ======

Adjusted OIBDA $425 $386 10% $1,274 $1,207 6%

Adjusted OIBDA
Margin 58% 58% 58% 59%


U.S. Networks' revenues in the third quarter of 2013 increased 10% to $733 million, primarily driven by advertising and distribution revenue growth. Advertising revenue increased 12% mainly due to higher delivery and increased pricing. Distribution revenue increased 10% largely due to increased revenue from licensing agreements and higher rates, as well as from subscriber growth, primarily for networks carried on the digital tier. Excluding the impact of licensing agreements, distribution revenues increased 5% and total revenues increased 8% over the prior year's quarter.

Adjusted OIBDA increased 10% to $425 million, primarily reflecting the 10% revenue growth which was partially offset by 11% higher operating expenses, mainly due to increased content amortization as well as higher marketing costs. Excluding the impact of licensing agreements, Adjusted OIBDA grew 6% over last year's third quarter.

International Networks





(dollars in Three Months Ended Nine Months Ended
millions) September 30, September 30,
------------------- ------------------

2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------

Revenues:

Distribution $322 $249 29% $911 $731 25%

Advertising 282 124 127% 756 395 91%

Other 16 17 (6)% 49 49 - %
--- --- --- ---

Total Revenues $620 $390 59% $1,716 $1,175 46%
==== ==== ==== ====

Adjusted OIBDA $232 $173 34% $681 $520 31%

Adjusted OIBDA
Margin 37% 44% 40% 44%


International Networks' revenues for the third quarter increased 59% to $620 million, as advertising revenues were up 127% and distribution revenues were up 29%. Excluding newly acquired businesses and foreign currency fluctuations, total revenues were up 18%. Distribution revenues, excluding newly acquired businesses, in local currency terms grew 14% mainly from increased subscribers, most notably in Latin America, and from higher rates, particularly in Latin America and Asia Pacific, as well as from additional contributions due to the consolidation of Discovery Japan. Advertising revenues, excluding newly acquired businesses, were up 29% in local currency terms, primarily due to increased viewership in Western Europe and higher pricing in Western Europe and Latin America.

Adjusted OIBDA increased 34% to $232 million on a reported basis and was up 17% excluding newly acquired businesses and foreign currency fluctuations, reflecting the 18% revenue growth partially offset by a 19% increase in operating expenses. The higher operating expenses were primarily due to increased content amortization, personnel costs and marketing expense as well as costs related to consolidating Discovery Japan.

Education





(dollars Three Months Ended Nine Months Ended
in September 30, September 30,
millions)
------------------- ------------------

2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------

Revenues $22 $25 (12)% $73 $70 4%

Adjusted
OIBDA $2 $5 (60)% $13 $14 (7)%

Adjusted
OIBDA
Margin 9% 20% 18% 20%


Education revenues decreased by $3 million and Adjusted OIBDA decreased by $3 million compared to the third quarter of 2012 primarily due to the timing of revenues related to certain assessment products.

Corporate and Eliminations

For the third quarter of 2013 Adjusted OIBDA increased $4 million, primarily due to currency gains and lower personnel costs.

STOCK REPURCHASE

During the quarter, the Company, pursuant to its existing stock repurchase program, repurchased 6.0 million shares of its common stock for an aggregate purchase price of approximately $448 million, including 5.21 million shares of its Series C common stock at an average price of $74.05 per share and 0.79 million shares of its Series A common stock at an average price of $79.11 per share.

Following the quarter, from October 1, 2013 through October 29, 2013, the Company repurchased 1.44 million shares of its Series C common stock for approximately $108 million.

The Company has repurchased 67.11 million shares of Series C common stock and 2.78 million shares of its Series A common stock under its $4.0 billion stock repurchase program to date at an aggregate purchase price of approximately $3.3 billion. In aggregate, including the 17.73 million preferred shares acquired from Advance/Newhouse Programming Partnership and from Advance Programming Holdings, LLC, the Company has repurchased 21% of its outstanding shares since buyback activity was authorized in 2010.

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 purchases subject to market conditions and other factors.

FULL YEAR 2013 OUTLOOK

For the full year ending December 31, 2013, Discovery Communications, Inc. expects total revenue between $5.550 billion and $5.625 billion, Adjusted OIBDA between $2.425 billion and $2.475 billion, and net income available to Discovery Communications, Inc. stockholders of $1.100 billion to $1.150 billion. Our outlook incorporates current foreign exchange rates for revenues and expenses and the current share price for mark-to-market equity-based compensation calculations.

NON-GAAP FINANCIAL MEASURES

Adjusted OIBDA, Adjusted Earnings Per Share 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, Adjusted Earnings Per Diluted Share 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 equity-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) certain impairment charges, and (vi) gains and 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. The Company excludes mark-to-market equity-based compensation, exit and restructuring charges, certain impairment charges, and gains and losses on business and asset dispositions from the calculation of Adjusted OIBDA due to their volatility. The Company also excludes depreciation of fixed assets and amortization of intangible assets and deferred launch incentives, as these amounts do not represent cash payments in the current reporting period.

The company defines Adjusted Earnings Per Diluted Share ("Adjusted EPS") as earnings excluding the impact of amortization of acquisition-related intangible assets per share. The Company believes Adjusted EPS is relevant to investors because it 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.

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, Adjusted EPS 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, earnings per diluted share 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. ET to discuss its third quarter results. To listen to the call, visit http://discoverycommunications.com or dial 1-866-271-5140 inside the U.S. and 1-617-213-8893 outside of the U.S., using the following passcode: 41986390.

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/A filed with the SEC on February 19, 2013. 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 2013 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 Nine Months
Ended Ended

September September
30, 30,
---------- ----------


2013 2012 2013 2012
---- ---- ---- ----

Revenues:

Distribution $651 $549 $1,896 $1,665

Advertising 665 468 1,922 1,455

Other 59 59 180 167
--- --- --- ---

Total revenues 1,375 1,076 3,998 3,287
----- ----- ----- -----

Costs and expenses:

Costs of revenues, excluding depreciation and amortization 435 296 1,214 890

Selling, general and administrative 379 314 1,125 932

Depreciation and amortization 80 27 190 87

Restructuring charges 1 1 11 4

Gain on disposition (19) - (19) -
--- --- --- ---

Total costs and expenses 876 638 2,521 1,913
--- --- ----- -----

Operating income 499 438 1,477 1,374

Interest expense (80) (68) (228) (184)

Losses from equity investees, net - (22) (9) (76)

Other income (expense), net - 1 37 (1)
--- --- --- ---

Income from continuing operations before income taxes 419 349 1,277 1,113

Provision for income taxes (163) (134) (490) (381)
---- ---- ---- ----

Income from continuing operations, net of taxes 256 215 787 732

Loss from discontinued operations, net of taxes - (9) - (11)
--- --- --- ---

Net income 256 206 787 721

Net income attributable to noncontrolling interests (1) (1) (1) (2)
--- --- --- ---

Net income available to Discovery Communications, Inc. stockholders $255 $205 $786 $719
==== ==== ==== ====


Basic earnings per share available to Discovery

Communications, Inc. stockholders:

Continuing operations $0.72 $0.58 $2.18 $1.92

Discontinued operations $ - $(0.02) $ - $(0.03)

Net income $0.72 $0.55 $2.18 $1.89

Diluted earnings per share available to Discovery

Communications, Inc. stockholders:

Continuing operations $0.71 $0.57 $2.16 $1.91

Discontinued operations $ - $(0.02) $ - $(0.03)

Net income $0.71 $0.55 $2.16 $1.88

Weighted average shares outstanding:

Basic 356 372 360 380

Diluted 359 375 363 383




DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; in millions)


September 30, December 31,

2013 2012
---- ----

ASSETS

Current assets:

Cash and cash equivalents $439 $1,201

Receivables, net 1,344 1,130

Content rights, net 274 122

Deferred income taxes 74 74

Prepaid expenses and other current assets 233 203
--- ---

Total current assets 2,364 2,730


Noncurrent content rights, net 1,833 1,555

Property and equipment, net 492 388

Goodwill 7,301 6,399

Intangible assets, net 1,606 611

Equity method investments 1,087 1,095

Other noncurrent assets 184 152
--- ---

Total assets $14,867 $12,930
======= =======


LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $116 $71

Accrued expenses and other current liabilities 832 721

Deferred revenues 164 123

Current portion of debt 23 31
--- ---

Total current liabilities 1,135 946


Noncurrent portion of debt 6,485 5,212

Deferred income taxes 681 272

Other noncurrent liabilities 309 207
--- ---

Total liabilities 8,610 6,637


Redeemable noncontrolling interest 32 -


Equity:

Preferred stock 2 2

Common stock 3 3

Additional paid-in capital 6,798 6,689

Treasury stock, at cost (3,195) (2,482)

Retained earnings 2,604 2,075

Accumulated other comprehensive income 8 4
--- ---

Total Discovery Communications, Inc. stockholders' equity 6,220 6,291

Noncontrolling interests 5 2
--- ---

Total equity 6,225 6,293
----- -----

Total liabilities and equity $14,867 $12,930
======= =======







DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)


Nine Months
Ended
September
30,
------------

Operating Activities 2013 2012
---- ----

Net income $787 $721

Adjustments to reconcile net income to
cash provided by operating
activities:

Equity-based compensation
expense 129 112

Depreciation and amortization 190 87

Content amortization and
impairment expense 850 638

(Gain) loss on disposition (19) 6

Remeasurement gain on previously
held equity interest (92) -

Equity in losses and
distributions from investee
companies 15 91

Deferred income tax expense
(benefit) 144 (60)

Other, net 91 26

Changes in operating assets and
liabilities:

Receivables, net (92) (36)

Content rights (1,061) (828)

Accounts payable and accrued
liabilities 41 82

Equity-based compensation
liabilities (61) (39)

Income tax receivable 50 -

Other, net (42) (29)
--- ---

Cash provided by operating
activities 930 771


Investing Activities

Purchases of property and
equipment (76) (53)

Business acquisitions, net of
cash acquired (1,832) (20)

Investments in foreign exchange
contracts (55) -

Proceeds from disposition 28 -

Distribution from equity method
investee 23 17

Investments in and advances to
equity method investees, net (28) (115)

Other investing activities, net (1) (24)
--- ---

Cash used in investing
activities (1,941) (195)


Financing Activities

Borrowings from long term debt,
net of discount and issuance
costs 1,186 981

Principal repayments of capital
lease obligations (21) (17)

Repurchases of common stock (713) (1,146)

Repurchases of preferred stock (256) -

Tax settlements associated with
equity-based plans (22) (3)

Proceeds from issuance of common
stock in connection with
equity-based plans 43 79

Excess tax benefits from equity-
based compensation 40 37

Other financing activities, net (3) (3)
--- ---

Cash provided by (used in)
financing activities 254 (72)


Effect of exchange rate changes
on cash and cash equivalents (5) 1
--- ---


Net change in cash and cash
equivalents (762) 505

Cash and cash equivalents,
beginning of period 1,201 1,048
----- -----

Cash and cash equivalents, end
of period $439 $1,553
==== ======




DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; in millions)


Three Months Ended September 30, 2013
-------------------------------------

Adjusted Depreciation Amortization Mark-to- Other
of Market (a) Operating

Operating and Deferred
Launch
Incentives Equity-Based Income

Income
Before Amortization Compensation

Depreciation
and

Amortization
------------

U.S. Networks $425 $(2) $(2) $ - $19 $440

International Networks 232 (62) (2) - (1) 167

Education 2 (1) - - - 1

Corporate and Eliminations (62) (15) - (32) - (109)
--- --- --- --- ---

Total $597 $(80) $(4) $(32) $18 $499
==== ==== === ==== === ====




Three Months Ended September 30, 2012
-------------------------------------

Adjusted Amortization Mark-to- Other
of Market (a) Operating

Operating Depreciation Deferred
Launch
Incentives Equity-Based Income

Income
Before and Compensation

Depreciation
and Amortization

Amortization
------------

U.S. Networks $386 $(3) $(2) $ - $(1) $380

International Networks 173 (9) (3) - - 161

Education 5 - - - - 5

Corporate and Eliminations (66) (15) - (27) - (108)
--- --- --- --- --- ----

Total $498 $(27) $(5) $(27) $(1) $438
==== ==== === ==== === ====


(a) For the three months ended September 30, 2013 amount represents a $19 million gain recognized from the disposition of Petfinder by our U.S Networks segment partially offset by restructuring charges
of $1 million at our International Networks segment. For the three months ended September 30, 2012 amount represents restructuring charges of $1 million at our U.S Networks segment.




DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; amounts in millions)


Nine Months Ended September 30, 2013
------------------------------------

Adjusted Depreciation Amortization Mark-to- Other
of Market (a) Operating

Operating and Deferred
Launch
Incentives Stock-Based Income

Income
Before Amortization Compensation

Depreciation
and

Amortization
------------

U.S. Networks $1,274 $(8) $(6) $ - $16 $1,276

International Networks 681 (138) (8) - (8) 527

Education 13 (2) - - - 11

Corporate and Eliminations (205) (42) - (90) - (337)
---- --- --- --- --- ----

Total $1,763 $(190) $(14) $(90) $8 $1,477
====== ===== ==== ==== === ======




Nine Months Ended September 30, 2012
------------------------------------

Adjusted Amortization Mark-to- Other
of Market (a) Operating

Operating Depreciation Deferred
Launch
Incentives Stock-Based Income

Income
Before and Compensation

Depreciation
and Amortization

Amortization
------------

U.S. Networks $1,207 $(9) $(7) $ - $(2) $1,189

International Networks 520 (34) (8) - (1) 477

Education 14 (1) - - - 13

Corporate and Eliminations (191) (43) - (70) (1) (305)
---- --- --- --- --- ----

Total $1,550 $(87) $(15) $(70) $(4) $1,374
====== ==== ==== ==== === ======


(a) For the nine months ended September 30, 2013 amount represents a $19 million gain recognized from the disposition of Petfinder by our U.S. Networks segment partially offset by restructuring charges
of $8 million and $3 million at our International Networks and U.S Networks segments, respectively. For the nine months ended September 30, 2012 amount represents restructuring charges of $2 million,
$1 million and $1 million at our U.S Networks, International Networks and Corporate segments, respectively.




DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF NEWLY ACQUIRED BUSINESSES(1)

(unaudited; amounts in millions)


Three months ended September 30,

2013 2013 2013 2012

International Newly International International %
Change

Networks Acquired Networks Ex- Networks

As Reported Businesses Acquisitions As Reported
----------- ---------- ------------ -----------

Revenues:

Distribution $322 $45 $277 $249 11%

Advertising 282 125 $157 124 27%

Other 16 4 $12 17 (29)%
--- --- ---

Total Revenues $620 $174 $446 $390 14%
==== ==== ==== ==== ===

Adjusted OIBDA $232 $33 $199 $173 15%


Three months ended September 30,
--------------------------------

2013 2013 2013 2012

Total Newly Total Total %
Change

Company Acquired Company Ex- Company

As Reported Businesses Acquisitions As Reported
----------- ---------- ------------ -----------

Revenues:

Distribution $651 $45 $606 $549 10%

Advertising 665 125 $540 468 15%

Other 59 4 $55 59 (7)%

Total Revenues $1,375 $174 $1,201 $1,076 12%
====== ==== ====== ====== ===

Adjusted OIBDA $597 $33 $564 $498 13%







Nine months ended September 30,
-------------------------------

2013 2013 2013 2012

International Newly International International %
Change

Networks Acquired Networks Networks

As Reported Businesses Ex-
Acquisitions As Reported
----------- ---------- ------------ -----------

Revenues:

Distribution $911 $88 $823 $731 13%

Advertising 756 280 $476 395 21%

Other 49 12 $37 49 (24)%
--- --- ---

Total Revenues $1,716 $380 $1,336 $1,175 14%
====== ==== ====== ====== ===

Adjusted OIBDA $681 $81 $600 $520 15%


Nine months ended September 30,
-------------------------------

2013 2013 2013 2012

Total Newly Total Total %
Change

Company Acquired Company Company

As Reported Businesses Ex-
Acquisitions As Reported
----------- ---------- ------------ -----------

Revenues:

Distribution $1,896 $88 $1,808 $1,665 9%

Advertising 1,922 280 $1,642 1,455 13%

Other 180 12 $168 167 1%
--- --- ---

Total Revenues $3,998 $380 $3,618 $3,287 10%
====== ==== ====== ====== ===

Adjusted OIBDA $1,763 $81 $1,682 $1,550 9%


(1) Newly acquired
businesses include SBS
Nordic acquired in April
2013, Switchover Media
acquired in December
2012 and a TV station in
Dubai acquired in
December 2012. Note that
this reconciliation does
not take into account
other one-time items
such as foreign exchange
and licensing revenues.




DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited; in millions)


CALCULATION OF FREE CASH FLOW


Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2013
2012 Change 2013 2012 Change
------

Cash provided by operating activities $460 $382 $78 $930 $771 $159

Purchases of property and equipment (22) (29) 7 (76) (53) (23)
--- --- --- --- --- ---

Free cash flow $438 $353 $85 $854 $718 $136
==== ==== === ==== ==== ====




CALCULATION OF ADJUSTED EARNINGS PER DILUTED SHARE


Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------

2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------

Earnings per diluted share $0.71 $0.55 $0.16 $2.16 $1.88 $0.28

Amortization of acquisition-related 0.09 - 0.09 0.18 - 0.18

intangible assets, net of tax


Adjusted earnings per diluted share $0.80 $0.55 $0.25 $2.34 $1.88 $0.46
===== ===== ===== ===== ===== =====




RECONCILIATION OF 2013 OUTLOOK TO GAAP MEASURES


Full Year
2013
----------

Net income available to Discovery
Communications, Inc.
stockholders

$
$
1,100 To 1,150

Interest expense, net 310 To 300

Depreciation and amortization 265 To 285

Other expense, including
amortization of deferred launch unrealized and realized gains
incentives, mark-to-market (losses) from derivatives,
equity-based compensation, income tax expense, net loss
asset impairment, exit and (income) attributable to
restructuring costs, gains noncontrolling interests, and
(losses) on business stock dividends to preferred
disposition, gains (losses) on interests
sale of securities, equity
earnings (losses) in
unconsolidated affiliates, 750 To 740
---

Adjusted OIBDA $2,425 To $2,475
==== ====




DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

SELECTED FINANCIAL DETAIL

(unaudited; in millions)


BORROWINGS

September 30, 2013
------------------

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

3.30% Senior Notes, semi-annual
interest, due May 2022 500

3.25% Senior Notes, semi-annual
interest, due April 2023 350

6.35% Senior Notes, semi-annual
interest, due June 2040 850

4.95% Senior Notes, semi-annual
interest, due May 2042 500

4.875% Senior Notes, semi-
annual interest, due April 2043 850

Capital lease obligations 175
---

Total debt 6,525

Unamortized discount (17)
---

Debt, net 6,508

Current portion of debt (23)
---

Noncurrent portion of debt $6,485
======




EQUITY-BASED COMPENSATION

September 30, 2013
------------------

Total Units
Outstanding Weighted Vested Units Outstanding Weighted

Long-Term (in
millions) Average (in millions) Average

Incentive
Plans Grant Price Grant Price
--------- ----------- -----------

Unit Awards 1.7 $38.14 - $-

Stock
Appreciation
Rights 3.2 55.16 - -

Stock Options 8.0 35.41 4.5 24.20

Performance-
based
Restricted
Stock Units 1.6 43.12 0.3 32.39

Service-
based
Restricted
Stock Units 0.8 51.99 - -
--- ---

Total Equity-
based
Compensation
Plans 15.3 $41.52 4.8 $24.71
---- ---




SHARE COUNT ROLL FORWARD Common Preferred Total
------------------------ ------ --------- -----

(Basic shares, in millions)

Total shares outstanding as
of December 31, 2012 245.17 119.05 364.22

Shares repurchased (9.77) (4.00) (13.77)

Shares issued - equity-
based compensation 2.24 - 2.24

Conversion of shares 0.55 (0.55) -
---- ----- ---

Total shares outstanding as
of September 30, 2013 238.19 114.50 352.69


SOURCE Discovery Communications, Inc.

Discovery Communications, Inc.

CONTACT: Corporate Communications, Michelle Russo (240) 662-2901, michelle_russo@discovery.com or Investor Relations, Craig Felenstein (212) 548-5109, craig_felenstein@discovery.com

Web Site: http://discoverycommunications.com


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