Discovery Communications Reports Full Year And Fourth Quarter 2012 Results

  Discovery Communications Reports Full Year And Fourth Quarter 2012 Results

PR Newswire

SILVER SPRING, Md., Feb. 14, 2013

SILVER SPRING, Md., Feb. 14, 2013 /PRNewswire/ --

Full Year 2012 Financial Highlights:

  oRevenues increased 8% to $4.487 billion
  oAdjusted OIBDA increased 9% to $2.095 billion
  oRepurchased 28.5 million shares for an aggregate purchase price of $1.38
    billion

Discovery Communications, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA,
DISCB, DISCK) today reported financial results for the full year and fourth
quarter ended December 31, 2012.

David Zaslav, Discovery's President and Chief Executive Officer said,
"Discovery's commitment to investing in our brands and developing new and
diverse growth opportunities produced another year of strong operating
momentum and financial results in 2012. The appeal of our content resulted in
larger audiences across the globe, enabling us to deliver consistently healthy
advertising growth both domestically and internationally, while we further
leveraged our valuable programming across emerging distribution platforms
worldwide. At the same time, the strength of our balance sheet allowed us to
make several strategic investments that we believe further bolster our asset
portfolio, while also returning over $1.3 billion to shareholders this year.
We head into 2013 with significant momentum, having just delivered the highest
fourth quarter domestic viewership in our history, and will continue to invest
in strategic growth initiatives so that we can deliver sustained long-term
financial results and shareholder value."

Fourth Quarter Results

Fourth quarter revenues of $1,200 million increased $94 million, or 8%, over
the fourth quarter a year ago, led by 15% growth at International Networks and
4% growth at U.S. Networks. Adjusted Operating Income Before Depreciation and
Amortization ^(1) ("OIBDA") grew 9% to $545 million, as a 17% increase at
International Networks, despite the adverse impact of foreign currency
fluctuations, and a 7% increase at U.S. Networks, more than offset strategic
transaction related costs recognized in the quarter. Excluding foreign
currency fluctuations, fourth quarter revenues increased 9% and Adjusted OIBDA
increased 11%.

Fourth quarter net income from continuing operations available to Discovery
Communications, Inc. stockholders of $224 million ($0.61 per diluted share)
decreased $112 million compared to $336 million ($0.86 per diluted share) for
the fourth quarter a year ago as the strong operating performance and improved
equity earnings in the current year were more than offset primarily by higher
taxes and increased mark-to-market equity-based compensation. The higher taxes
were largely due to foreign tax credits recognized a year ago as well as an
increase in tax reserves in the fourth quarter of 2012. 

Free cash flow was $304 million for the fourth quarter, a decrease of $20
million from the fourth quarter of 2011, as improved operating performance was
more than offset by higher content investment, interest and cash taxes. Free
cash flow is defined as cash provided by operating activities less
acquisitions of property and equipment.

Full Year Results

Full year 2012 revenues of $4,487 million increased $319 million, or 8%, over
2011 revenues, primarily driven by 13% growth at International Networks and 5%
growth at U.S. Networks. Adjusted OIBDA grew 9% to $2,095 million, driven by
an 8% increase at U.S. Networks and a 12% increase at International Networks.
Excluding foreign currency fluctuations, full year revenues increased 9% and
Adjusted OIBDA increased 12%.

Full year 2012 net income from continuing operations available to Discovery
Communications, Inc. stockholders of $954 million ($2.51 per diluted share)
decreased $181 million compared to $1,135 million ($2.80 per diluted share) a
year ago as the strong operating performance in the current year was more than
offset by the prior year inclusion of a $102 million, net of tax, gain from
the contribution of the Discovery Health network to the OWN: Oprah Winfrey
Network ("OWN") joint venture as well as the recognition of foreign tax
credits a year ago. Current year results also included increased
mark-to-market equity-based compensation, higher interest expense and lower
equity earnings as the Company began recording 100% of OWN's net losses in
2012.

Free cash flow was $1,022 million for the full year, a decrease of $20 million
from full year 2011, as better operating performance was more than offset by
higher content investment, cash taxes and interest.

SEGMENT RESULTS

(dollars in      Three Months Ended December 31,  Twelve Months Ended December
millions)                                         31,
                 2012        2011        Change   2012        2011      Change
Revenues:
 U.S. Networks $  703      $  677      4%       $  2,748    $  2,619  5%
 International    462         401      15%         1,637       1,455  13%
Networks
 Education        35          29       21%         105         95     11%
 Corporate and    —           (1)      NM          (3)         (1)    NM
Eliminations
Total Revenues   $  1,200    $  1,106    8%       $  4,487    $  4,168  8%
Adjusted OIBDA:
 U.S. Networks $  415      $  388      7%       $  1,622    $  1,495  8%
 International    201         172      17%         721         645    12%
Networks
 Education        13          8        63%         27          25     8%
 Corporate and    (84)        (69)     (22%)       (275)       (249)  (10%)
Eliminations
Total Adjusted   $  545      $  499      9%       $  2,095    $  1,916  9%
OIBDA

U.S. Networks

(dollars in      Three Months Ended December  Twelve Months Ended December 31,
millions)        31,
                 2012      2011      Change   2012        2011         Change
Revenues:
 Distribution  $  288    $  282    2%       $  1,222    $  1,180       4%
 Advertising      397       364    9%          1,456       1,337       9%
 Other            18        31     (42%)       70          102         (31%)
Total Revenues   $  703    $  677    4%       $  2,748    $  2,619       5%
Adjusted OIBDA   $  415    $  388    7%       $  1,622    $  1,495       8%
Adjusted OIBDA      59%       57%                59%         57%
Margin

Fourth Quarter Results

U.S. Networks' revenues in the fourth quarter of 2012 increased 4% to $703
million driven by advertising and distribution revenue growth. Advertising
revenue increased 9% primarily as a result of higher delivery and increased
pricing, partially offset by the absence of non-recurring revenue items in the
fourth quarter a year ago. Distribution revenue grew 2% largely from higher
rates and subscriber growth primarily from networks carried on the digital
tier, partially offset by additional licensing revenue in the fourth quarter
of 2011. Excluding non-recurring advertising revenue items from the prior
year's quarter, advertising revenue grew 10% and excluding the impact from
licensing revenue, distribution revenue grew 5%, compared to the fourth
quarter a year ago. Other revenue decreased $13 million primarily due to lower
revenue from services provided to unconsolidated equity method investees.

Adjusted OIBDA increased 7% to $415 million primarily reflecting 4% revenue
growth and flat operating expenses as higher content amortization was offset
by additional content costs in the fourth quarter of 2011 from a change in
amortization rates at certain networks and higher content impairment charges.
Excluding non-recurring revenue items and the additional content costs in the
prior year, Adjusted OIBDA increased 5%.

Full Year Results

U.S. Networks' revenues for the full year 2012 increased 5% to $2,748 million
primarily driven by advertising and distribution growth. Advertising revenue
increased 9% primarily as a result of higher pricing and increased delivery
partially offset by the absence of non-recurring revenue items recognized in
the prior year. Distribution revenue grew 4% largely from higher rates and
subscriber growth primarily from networks carried on the digital tier,
partially offset by additional licensing revenue in the prior year. Other
revenue decreased $32 million primarily due to lower revenue from services
provided to unconsolidated equity method investees.

Adjusted OIBDA increased 8% to $1,622 million primarily reflecting 5% revenue
growth and flat operating expenses as increased content amortization in the
current year was offset by additional content costs in the prior year from
higher content impairment charges and changes in amortization rates at certain
networks. Additionally, higher personnel costs were offset by lower expenses
from services provided to unconsolidated equity method investees.

International Networks

(dollars in      Three Months Ended December  Twelve Months Ended December 31,
millions)        31,
                    2012       2011   Change     2012        2011      Change
Revenues:
 Distribution  $  253     $  225    12%     $  984      $  890          11%
 Advertising      185        160    16%        580         514          13%
 Other            24         16     50%        73          51           43%
Total Revenues   $  462     $  401    15%     $  1,637    $  1,455        13%
Adjusted OIBDA   $  201     $  172    17%     $  721      $  645          12%
Adjusted OIBDA      44%        43%               44%         44%
Margin

Fourth Quarter Results

International Networks' revenues for the fourth quarter increased 15% to $462
million primarily led by distribution revenue growth of 12% and advertising
revenue growth of 16%. Excluding the impact of foreign currency fluctuations,
total revenues increased 18%. Distribution revenue, excluding foreign
currency fluctuations as well as lower launch support amortization, grew 12%
mainly from increased subscribers in Latin America and CEEMEA. Advertising
revenue in local currency terms was up 18% during the fourth quarter primarily
from higher pricing across most regions and strong growth on new and existing
free to air networks in Western Europe. Other revenue was $8 million higher
primarily due to revenue from a production company acquired in the fourth
quarter of 2011.

Adjusted OIBDA increased 17% to $201 million reflecting the 15% revenue
growth, partially offset by a 10% increase in operating expenses. Excluding
the impact of foreign currency and higher content impairment charges taken in
the fourth quarter a year ago, Adjusted OIBDA grew 18% as the 18% revenue
growth was partially offset by increased operating expenses primarily from
higher content amortization, marketing and personnel costs.

Full Year Results

International Networks' revenues for the full year increased 13% to $1,637
million primarily led by distribution revenue growth of 11% and advertising
revenue growth of 13%. Excluding the impact of foreign currency fluctuations,
total revenues increased 18%. Distribution revenue, excluding foreign
currency fluctuations and lower launch support amortization, grew 12% mainly
from increased subscribers in Latin America, CEEMEA and Asia Pacific.
Advertising revenue in local currency terms was up 19% during the full year
2012 primarily from higher pricing across most regions and strong growth on
new and existing free to air networks in Western Europe. Other revenue was
$22 million higher primarily due to revenue from a production company acquired
in the fourth quarter of 2011.

Adjusted OIBDA increased 12% to $721 million reflecting the 13% revenue
growth, partially offset by a 9% increase in operating expenses. Excluding
the impact of foreign currency, Adjusted OIBDA grew 18% as the revenue growth
was partially offset by higher operating expenses primarily due to higher
content amortization and increased personnel costs.

Education

(dollars in      Three Months Ended December 31,  Twelve Months Ended December
millions)                                         31,
                     2012        2011    Change      2012       2011    Change
Revenues         $   35       $  29      21%      $  105     $  95      11%
Adjusted OIBDA   $   13       $  8       63%      $  27      $  25      8%
Adjusted OIBDA       37%         28%                 26%        26%
Margin

Fourth Quarter Results

Education revenue for the fourth quarter increased $6 million to $35 million
and Adjusted OIBDA increased $5 million to $13 million, mainly reflecting
increased licensing fees as well as higher subscription and corporate
partnership revenue. 

Full Year Results

Education revenue for full year 2012 increased 11% to $105 million and
Adjusted OIBDA increased 8%, driven by increased licensing fees as well as
higher subscription and corporate partnership revenue, partially offset by
increased personnel costs.

Corporate and Eliminations

Adjusted OIBDA decreased $15 million when compared to the fourth quarter a
year ago and decreased $26 million compared to full year 2011, primarily due
to strategic transaction costs.

STOCK REPURCHASE

During the quarter, the Company, pursuant to its existing stock repurchase
program, repurchased 4.14 million shares of its common stock for an aggregate
purchase price of approximately $234 million, including 3.77 million shares of
its Series C common stock at an average price of $55.96 per share and 0.37
million shares of its Series A common stock at an average price of $60.44 per
share. For the full year 2012, the Company repurchased a total of 28.53
million shares of its common stock for an aggregate purchase price of
approximately $1,380 million, including 26.54 million shares of its Series C
common stock at an average price of $47.88 per share and 1.99 million shares
of its Series A common stock at an average price of $54.67 per share.

The Company has repurchased 56.69 million shares of Series C common stock and
1.99 million shares of Series A common stock under its $4.0 billion stock
repurchase program to date at an aggregate purchase price of approximately
$2.37 billion and $109 million respectively. In the aggregate, including the
13.73 million preferred shares acquired from Advance/Newhouse Programming
Partnership, the Company has repurchased 17% of the outstanding shares of its
capital stock 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 transactions, subject to market conditions and other factors.

OTHER ITEMS

In December 2012, the Company announced a definitive agreement with the
ProSiebenSat.1 Group to purchase the Nordic television and radio business
operations for a total enterprise value of approximately $1.7 billion. The
transaction is expected to close in the first quarter of 2013.

On December 21, 2012, the Company acquired 20% equity ownership interests in
Eurosport and a portfolio of TF1 pay television channels network for a total
of $264 million, including transaction costs.

FULL YEAR 2013 OUTLOOK

For the full year ending December 31, 2013, Discovery Communications, Inc.
expects total revenue between $5.575 billion and $5.700 billion, Adjusted
OIBDA between $2.425 billion and $2.525 billion, and net income available to
Discovery Communications, Inc. stockholders of $1.200 billion to $1.300
billion. Our outlook assumes the acquisition of the SBS Nordic operations
closes during the first quarter of 2013, 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 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 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
(losses)on business and asset dispositions. The Company uses this measure 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 equity-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.
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 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, and not as a substitute for, operating income, net
income 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 fourth quarter and full year results. To listen to the
call, visit http://www.discoverycommunications.com or dial 1-866-700-6293
inside the U.S. or 1-617-213-8835 outside of the U.S., using the following
passcode: 38272747.

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 that are 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 17, 2012.
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, plans for stock
repurchases and statements regarding the anticipated completion of pending
acquisitions. The Company expressly disclaims any obligation or undertaking to
update or revise 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  Twelve Months Ended
                                       December 31,        December 31,
                                          2012      2011      2012      2011
Revenues:
Distribution                           $  541     $ 507    $  2,206   $ 2,070
Advertising                               582       524       2,037     1,852
Other                                     77        75        244       246
Total revenues                            1,200     1,106     4,487     4,168
Costs and expenses:
 Costs of revenues, excluding          328       316       1,218     1,176
depreciation and amortization
 Selling, general and                  359       316       1,291     1,171
administrative
 Depreciation and amortization         30        29        117       117
 Restructuring and impairment          2         23        6         30
charges
 Gain on disposition                   —         —         —         (129)
Total costs and expenses                  719       684       2,632     2,365
Operating income                          481       422       1,855     1,803
Interest expense                          (64)      (54)      (248)     (208)
Other expense, net                        (12)      (22)      (89)      (32)
Income from continuing operations         405       346       1,518     1,563
before income taxes
Provision for income taxes                (181)     (9)       (562)     (427)
Income from continuing operations, net    224       337       956       1,136
of taxes
Loss from discontinued operations, net    —         —         (11)      (3)
of taxes
Net income                                224       337       945       1,133
Net income attributable to                —         (1)       (2)       (1)
noncontrolling interests
Net income available to Discovery
Communications, Inc.                   $  224     $ 336    $  943     $ 1,132

stockholders
Income per share from continuing
operations available to

Discovery Communications, Inc.
stockholders:
Basic                                  $  0.61    $ 0.86   $  2.54    $ 2.83
Diluted                                $  0.61    $ 0.86   $  2.51    $ 2.80
Loss per share from discontinued
operations available to

Discovery Communications, Inc.
stockholders:
Basic                                  $  —       $ —      $  (0.03)  $ (0.01)
Diluted                                $  —       $ —      $  (0.03)  $ (0.01)
Net income per share available to
Discovery

Communications, Inc. stockholders:
Basic                                  $  0.61    $ 0.86   $  2.51    $ 2.82
Diluted                                $  0.61    $ 0.86   $  2.48    $ 2.80
Weighted average shares outstanding:
Basic                                     366       391       376       401
Diluted                                   369       393       380       405



DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; in millions)


                                                    December 31,  December 31,
                                                    2012          2011
ASSETS
Current assets:
Cash and cash equivalents                           $   1,201     $   1,048
Receivables, net                                        1,130         1,042
Content rights, net                                     122           93
Deferred income taxes                                   74            73
Prepaid expenses and other current assets               203           175
Total current assets                                    2,730         2,431
Noncurrent content rights, net                          1,555         1,302
Property and equipment, net                             388           379
Goodwill                                                6,399         6,291
Intangible assets, net                                  611           571
Equity method investments                               1,095         807
Other noncurrent assets                                 152           132
Total assets                                        $   12,930    $   11,913
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                    $   71        $   53
Accrued expenses and other current liabilities          721           554
Deferred revenues                                       123           113
Current portion of long-term debt                       31            26
Total current liabilities                               946           746
Long-term debt                                          5,212         4,219
Deferred income taxes                                   272           337
Other noncurrent liabilities                            207           92
Total liabilities                                       6,637         5,394
Equity:
Preferred stock                                         2             2
Common stock                                            3             3
Additional paid-in capital                              6,689         6,505
Treasury stock, at cost                                 (2,482)       (1,102)
Retained earnings                                       2,075         1,132
Accumulated other comprehensive income (loss)           4             (23)
 Total Discovery Communications, Inc.                6,291         6,517
stockholders' equity
 Noncontrolling interests                            2             2
Total equity                                            6,293         6,519
Total liabilities and equity                        $   12,930    $   11,913



DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)


                                              Twelve Months Ended December 31,
                                                   2012                2011
OPERATING ACTIVITIES
Net income                                    $    945            $    1,133
Adjustments to reconcile net income to cash
provided by operating activities:
Equity-based compensation expense                  154                 99
Depreciation and amortization                      117                 119
Content amortization and impairment expense        865                 846
Loss (gains) on dispositions                       6                   (129)
Equity in losses and distributions from            106                 65
investee companies
Deferred income tax (benefit) expense              (70)                40
Other, net                                         32                  69
 Changes in operating assets and
liabilities:
 Receivables, net                                (59)                (179)
 Content rights                                  (1,091)             (884)
 Accounts payable and accrued liabilities        171                 6
 Equity-based compensation liabilities           (45)                (126)
 Income tax receivable                           (11)                72
 Other, net                                      (21)                (31)
Cash provided by operating activities              1,099               1,100
INVESTING ACTIVITIES
Purchases of property and equipment                (77)                (58)
Business acquisitions, net of cash acquired        (149)               (26)
Distributions from equity method investees         17                  21
Investments in and advances to equity method       (404)               (151)
investees
Other investing activities, net                    (30)                —
Cash used in investing activities                  (643)               (214)
FINANCING ACTIVITIES
Borrowings from long term debt, net of             981                 639
discount and issuance costs
Principal repayments of capital lease              (22)                (20)
obligations
Repurchases of common stock                        (1,380)             (997)
Proceeds from issuance of common stock in          81                  60
connection with equity-based plans
Excess tax benefits from equity-based              38                  28
compensation
Other financing activities, net                    (3)                 (7)
Cash used in financing activities                  (305)               (297)
Effect of exchange rate changes on cash and        2                   (7)
cash equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS            153                 582
Cash and cash equivalents, beginning of           1,048               466
period
CASH AND CASH EQUIVALENTS, END OF PERIOD      $    1,201          $    1,048



DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; in millions)


              Three Months Ended December 31, 2012
              Adjusted

              Operating                 Amortization
                           Depreciation of           Mark-to-Market
              Income                                                Other Operating
              Before       and          Deferred     Equity-Based   ^(a)
                                        Launch                            Income
              Depreciation Amortization              Compensation
              and                       Incentives

              Amortization
U.S. Networks $ 415       $  (4)     $  (2)     $    —      $    $  408
                                                                    (1)
International 201          (13)         (3)          —              —     185
Networks
Education     13           (1)          —            —              —     12
Corporate and (84)         (12)         —            (27)           (1)   (124)
Eliminations
 Total  $ 545       $ (30)      $  (5)     $  (27)      $    $  481
                                                                    (2)
              Three Months Ended December 31, 2011
              Adjusted
                           
              Operating                 Amortization
                                       of           Mark-to-Market
              Income                                                Other Operating
              Before       Depreciation Deferred     Equity-Based   ^(a)
                                        Launch                            Income
              Depreciation and          Incentives   Compensation
              and
                           Amortization
              Amortization
U.S. Networks $  388      $  (3)     $   (3)    $   —       $    $  361
                                                                    (21)
International 172          (10)         (10)         —              (1)   151
Networks
Education     8            (1)          —            —              —     7
Corporate and (69)         (15)         —            (12)           (1)   (97)
Eliminations
 Total  $  499      $ (29)      $  (13)     $  (12)       $    $  422
                                                                    (23)



    For the three months ended December 31, 2012, amount represents
(a) restructuring charges of $2 million. For the three months ended December
    31, 2011, amounts represent asset impairments of $20 million and
    restructuring charges of $3 million.



DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; amounts in millions)


              Twelve Months Ended December 31, 2012
              Adjusted

              Operating                 Amortization
                           Depreciation of           Mark-to-Market
              Income                                                Other Operating
              Before       and          Deferred     Equity-Based   ^(a)
                                        Launch                            Income
              Depreciation Amortization              Compensation
              and                       Incentives

              Amortization
U.S. Networks $ 1,622     $  (13)    $   (9)    $    —     $    $  1,597
                                                                    (3)
International 721          (47)         (11)         —              (1)   662
Networks
Education     27           (2)          —            —              —     25
Corporate and (275)        (55)         —            (97)           (2)   (429)
Eliminations
 Total  $ 2,095     $ (117)     $  (20)     $   (97)     $    $  1,855
                                                                    (6)
              Twelve Months Ended December 31, 2011
              Adjusted
                           
              Operating                 Amortization
                                       of           Mark-to-Market
              Income                                                Other Operating
              Before       Depreciation Deferred     Equity-Based   ^(a)
                                        Launch                            Income
              Depreciation and          Incentives   Compensation
              and
                           Amortization
              Amortization
U.S. Networks $ 1,495     $  (15)    $  (10)     $    —     $     $ 1,575
                                                                    105
International 645          (43)         (42)         —              (3)   557
Networks
Education     25           (3)          —            —              —     22
Corporate and (249)        (56)         —            (43)           (3)   (351)
Eliminations
 Total  $ 1,916     $  (117)    $  (52)     $   (43)     $    $ 1,803
                                                                    99



    For the twelve months ended December 31, 2012 amounts represent
    restructuring charges of $6 million. For the twelve months ended December
(a) 31, 2011, amounts represent a pre-tax gain of $129 million as a result of
    contributing Discovery Health to the OWN joint venture and asset
    impairments of $20 million and restructuring charges of $10 million.



DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited; in millions)


CALCULATION OF FREE CASH FLOW
                 Three Months Ended December  Twelve Months Ended December 31,
                 31,
                 2012       2011      Change  2012        2011        Change
Cash provided by
operating        $  328     $  340    $ (12)  $  1,099    $  1,100    $  (1)
activities
Acquisition of
property and        (24)       (16)     (8)      (77)        (58)        (19)
equipment
Free cash flow   $  304     $  324    $ (20)  $  1,022    $  1,042    $  (20)



RECONCILIATION OF 2013 OUTLOOK TO GAAP MEASURES


                                                            Full Year 2013
Net income available to Discovery Communications, Inc.      $ 1,200 To $ 1,300
stockholders
Interest expense, net                                         305   To   295
Depreciation and amortization                                 135   To   125
Other expense, including amortization of deferred launch
incentives, mark-to-market equity-based

 compensation, asset impairment, exit and restructuring
costs, gains (losses) on business

 disposition, gains (losses) on sale of securities,          785   To   805
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
Adjusted OIBDA                                              $ 2,425 To $ 2,525



NET INCOME AVAILABLE TO DISCOVERY COMMUNICATIONS, INC. STOCKHOLDERS


                            ThreeMonths              Twelve Months

                            EndedDecember31,         EndedDecember31,
                            2012          2011         2012        2011
Income from continuing      $       $       $      $     
operations, net of taxes       224        337         1,136
                                                       956
Net income attributable to  —             (1)          (2)         (1)
noncontrolling interests
Net income from continuing
operations available to
Discovery                   224           336          954         1,135

Communications, Inc.
stockholders
Loss from discontinued      —             —            (11)        (3)
operations, net of taxes
Net income available to     $       $       $      $     
Discovery Communications,      224        336         1,132
Inc. stockholders                                      943



DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

SELECTED FINANCIAL DETAIL

(unaudited; in millions)


BORROWINGS
                                                           December 31, 2012
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
6.35% Senior Notes, semi-annual interest, due June 2040           850
4.95% Senior Notes, semi-annual interest due May 2042             500
Capital lease obligations                                         110
Total long-term debt                                              5,260
Unamortized discount                                              (17)
Long-term debt, net                                               5,243
Current portion of long-term debt                                 (31)
Noncurrent portion of long-term debt                       $      5,212



EQUITY-BASED COMPENSATION
                        December 31, 2012
                       Total Units    Weighted     Vested Units   Weighted
                        Outstanding
Long-Term                              Average      Outstanding    Average
                        (in millions)
Incentive Plans                        Grant Price  (in millions)  Grant Price
Discovery Appreciation  3.1            $  34.78     ——             $  ——
Plan
Stock Appreciation      1.8               41.13     ——                ——
Rights
Stock Options           9.0               28.53     5.4               21.08
Performance-based       2.1               39.23     ——                ——
Restricted Stock Units
Service-based           0.8               40.82     ——                ——
Restricted Stock Units
 Total
Equity-based            16.8           $  32.96     5.4            $  21.08
Compensation Plans
SHARE COUNT ROLL                          Common    Preferred         Total
FORWARD
(Basic shares, in
millions)
Total shares
outstanding as of                         260.37    127.46            387.83
December 31, 2011
 Shares repurchased                      (28.53)   ——                (28.53)
 Shares issued –
equity-based                              4.92      ——                4.92
compensation
 Conversion of shares                    8.41      (8.41)            ——
Total shares
outstanding as of                         245.17    119.05            364.22
December 31, 2012







SOURCE Discovery Communications, Inc.

Website: http://www.discoverycommunications.com
Contact: Corporate Communications, Michelle Russo, +1-240-662-2901,
michelle_russo@discovery.com; Investor Relations, Craig Felenstein,
+1-212-548-5109, craig_felenstein@discovery.com
 
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