Discovery Communications Reports Second Quarter 2014 Results

         Discovery Communications Reports Second Quarter 2014 Results

PR Newswire

SILVER SPRING, Md., July 31, 2014

SILVER SPRING, Md., July31, 2014 /PRNewswire/ --

Second Quarter 2014 Financial Highlights:

  oRevenues increased 10% to $1,610 million
  oAdjusted OIBDA increased 6% to $694 million
  oNet Income available to Discovery Communications, Inc. increased 26% to
    $379 million
  oAdjusted Earnings per Diluted Share for the last twelve months increased
    35% to $3.62
  oRepurchased 6.7 million shares of common stock for $503 million

Discovery Communications Announces Acquisition of Espresso Education, the
Leading Provider of Primary School Digital Education Content in the U.K.

Discovery Communications, Inc. ("Discovery" or the "Company") (NASDAQ: DISCA,
DISCB, DISCK) today reported financial results for the second quarter ended
June30, 2014.

David Zaslav, Discovery's President and Chief Executive Officer, said, "The
operating strength across Discovery's organic businesses, along with increased
contributions from strategic acquisitions, led to sustained financial momentum
during the second quarter. Our persistent focus on building a broad and deep
content portfolio to leverage the opportunities across our unique distribution
platform is driving viewership and revenue growth worldwide as pay-tv
continues to evolve. Going forward, investing in compelling programing
remains a priority as we integrate our recent acquisitions and build new
avenues of growth so we can deliver additional long term value to our
shareholders."

Second Quarter Results

Second quarter revenues of $1,610 million increased $143 million, or 10%, over
the second quarter a year ago, as 23% growth at International Networks was
partially offset by a 2% decline at U.S. Networks, primarily due to additional
revenues from licensing agreements in the prior year. Adjusted Operating
Income Before Depreciation and Amortization^(1) ("OIBDA") increased 6% to $694
million, as International Networks were up 19% while U.S. Networks were down
1% due to the impact of licensing agreements. Excluding the impact of the
Eurosport transaction^(2),foreign currency fluctuations and licensing
agreements, total Company revenues increased 9% and Adjusted OIBDA increased
11%.

Second quarter net income available to Discovery Communications, Inc. of $379
million ($1.09 per dilutedshare)^(3) increased $79 million, or 26%, compared
to$300 million ($0.82 per diluted share) for the second quarter a year ago,
primarily due to the strong operating performance in the current quarter. The
current quarter results also reflect a $31 million gain associated with the
sale of HowStuffWorks, a $29 million gain associated with the consolidation
of Eurosport and a $15 million increase in equity earnings. Adjusted
Earnings Per Diluted Share^(4) ("Adjusted EPS"), which excludes the impact of
the amortization of acquisition related intangible assets, was $1.16 per
diluted share in the second quarter of this year compared with $0.91 per
diluted share in the same period a year ago. For the last twelve months,
Adjusted EPS was $3.62, up 35% compared with $2.69 in the prior twelve months.

(1) See the full definition of Adjusted Operating Income Before Depreciation
    and Amortization on page 5.
(2) The Company completed its acquisition of a controlling stake in Eurosport
    International ("Eurosport") in May 2014. See page 12 for a reconciliation
   to results excluding Eurosport.
(3) All per share amounts are calculated using Net Income Available to
    Discovery Communications, Inc. stockholders. See table on page 13 for the
   reconciliation.
(4) See the full definition of Adjusted Earnings Per Diluted Share on page 5.
    Note that the purchase price amortization related to Eurosport is still
   preliminary and could be revised once finalized.

Free cash flow was $202 million for the second quarter, a decrease of $109
million, or down 35% from the second quarter of 2013, as increased operating
performance was more than offset by higher tax payments, as well as higher
content and interest payments. Free cash flow is defined as cash provided by
operating activities less purchases of property and equipment.

SEGMENT RESULTS

(dollars in           Three Months Ended June 30,  Six Months Ended June 30,
millions)
                      2014       2013      Change  2014      2013      Change
Revenues:
U.S. Networks         $  777     $ 793     (2)  %  $ 1,485   $ 1,479   —     %
International         802        652       23   %  1,473     1,096     34    %
Networks
Education             31         24        29   %  63        51        24    %
Corporate and         —          (2)       NM      —         (3)       NM
Eliminations
Total Revenues        $  1,610   $ 1,467   10   %  $ 3,021   $ 2,623   15    %
Adjusted OIBDA:
U.S. Networks         $  466     $ 472     (1)  %  $ 849     $ 849     —     %
International         297        249       19   %  518       436       19    %
Networks
Education             6          4         50   %  12        11        9     %
Corporate and         (75)       (72)      (4)  %  (160)     (143)     (12)  %
Eliminations
Total Adjusted OIBDA  $  694     $ 653     6    %  $ 1,219   $ 1,153   6     %



U.S. Networks

(dollars in          Three Months Ended June 30,  Six Months Ended June 30,
millions)
                     2014        2013     Change  2014       2013       Change
Revenues:
Distribution         $  319      $ 348    (8)  %  $ 638      $ 656      (3)  %
Advertising          446         426      5    %  819        782        5    %
Other                12          19       (37) %  28         41         (32) %
Total Revenues       $  777      $ 793    (2)  %  $ 1,485    $ 1,479    —    %
Adjusted OIBDA       $  466      $ 472    (1)  %  $ 849      $ 849      —    %
Adjusted OIBDA       60      %   60    %          57      %  57      %
Margin

U.S. Networks' revenues in the second quarter of 2014 decreased 2% to $777
million as advertising growth was more than offset by a decline in
distribution and other revenue. Advertising revenues increased 5% mainly due
to higher pricing. Distribution revenues decreased 8% as higher rates were
more than offset by additional revenues from licensing agreements in the
second quarter of 2013. Other revenues declined by $7 million due to a
decrease in content production contracts as well as lower representative fees
. Excluding the impact of licensing agreements, distribution revenues grew 6%
and total revenues grew 4% over the prior year's quarter.

Adjusted OIBDA decreased slightly to $466 million, primarily reflecting the
impact of licensing agreements in the prior year. Excluding the impact of
licensing agreements, Adjusted OIBDA grew 8% over last year's second quarter,
reflecting the 4% revenue growth as well as lower marketing costs.

International Networks

(dollars in          Three Months Ended June 30,  Six Months Ended June 30,
millions)
                     2014        2013     Change  2014       2013       Change
Revenues:
Distribution         $  373      $ 314    19   %  $ 711      $ 589      21  %
Advertising          397         322      23   %  713        474        50  %
Other                32          16       100  %  49         33         48  %
Total Revenues       $  802      $ 652    23   %  $ 1,473    $ 1,096    34  %
Adjusted OIBDA       $  297      $ 249    19   %  $ 518      $ 436      19  %
Adjusted OIBDA       37      %   38    %          35      %  40      %
Margin

International Networks' revenues for the second quarter increased 23% to $802
million, as advertising revenues were up 23% and distribution revenues were up
19%. Excluding Eurosport and foreign currency fluctuations, total revenues
were up 14%. Advertising revenues, excluding Eurosport, were up 17% in local
currency terms, primarily due to increased pricing and volume in Western
Europe, Latin America and CEEMEA as well as from eight additional days due to
the timing of the closing of the SBS Nordic acquisition. Distribution
revenues, excluding Eurosport, grew 10% in local currency terms, mainly from
increased subscribers and higher rates in Latin America and subscriber growth
in CEEMEA and as well as due to the timing of the SBS Nordic acquisition.
Other revenues increased 22% excluding Eurosport and foreign currency
fluctuations due to additional revenues from new production studios.

Adjusted OIBDA increased 19% to $297 million on a reported basis and was up
15% excluding Eurosport and foreign currency fluctuations, reflecting the 14%
revenue growth partially offset by a 13% increase in operating expenses. The
higher operating expenses were primarily due to increased content expense,
production costs associated with production studios and personnel costs.

Education

(dollars in millions)  Three Months Ended June 30,  Six Months Ended June 30,
                       2014        2013     Change  2014       2013    Change
Revenues               $  31       $  24    29  %   $  63      $ 51    24  %
Adjusted OIBDA         $  6        $  4     50  %   $  12      $ 11    9   %
Adjusted OIBDA Margin  19     %    17    %          19     %   22   %

Education revenues for the second quarter increased by $7 million due to
higher streaming, licensing and digital textbook revenues as well as
additional revenues due to a business combination. Adjusted OIBDA increased by
$2 million compared to the second quarter of 2013, as the revenue growth was
partially offset by investment in new products as well as integration costs
associated with the business combination.

Corporate and Eliminations

Adjusted OIBDA decreased by $3 million compared to the second quarter a year
ago, primarily due to the acceleration of certain equity-based compensation
expense as well as higher professional fees.

STOCK REPURCHASE

During the quarter, the Company, pursuant to its existing stock repurchase
program, repurchased 6.7 million shares of its Series C common stock for an
aggregate purchase price of $503 million at an average price of $74.85 per
share. Following the quarter, from July 1, 2014 through July 28, 2014, the
Company repurchased 1.4 million shares of its Series C common stock for
approximately $109 million.

The Company has repurchased 81.5 million shares of Series C common stock and
2.8 million shares of its Series A common stock under its stock repurchase
program to date at an aggregate purchase price of approximately $4.4 billion.
In aggregate, including the 17.73 million preferred shares acquired from
Advance/Newhouse Programming Partnership ("ANPP") and from Advance Programming
Holdings, LLC, the Company has repurchased 24% of its outstanding shares since
buyback activity was authorized in 2010.

Under the stock repurchase program, management is authorized to purchase
shares of common stock from time to time through open market purchases at
prevailing prices or privately negotiated purchases or pursuant to one or more
accelerated stock repurchase agreements or other derivative arrangements as
permitted by securities laws and other legal requirements and subject to stock
price, business and market conditions and other factors.

On May 22, 2014, the Company entered into a share repurchase agreement with
ANPP to repurchase their shares of the Company's Series C convertible
preferred stock, on a quarterly basis, in proportion to the company's
repurchases under its stock repurchase program in a manner that is intended to
maintain ANPP's current ownership percentage of the Company. The first
purchases under this agreement are expected to take place in the third quarter
of 2014.

OTHER ITEMS

On May 8, 2014, Discovery and Liberty Global plc ("Liberty Global") announced
the formation of a joint venture to acquire All3Media, a leading international
production company. The acquisition will be funded by contributions of
approximately $153 million from each of Discovery and Liberty Global and
additional equity and non-recourse credit facilities raised at All3Media.

On May 20, 2014, the Company announced a special dividend of one share of
Series C Common Stock payable on each share of Series A Common Stock, Series B
Common Stock or Series C Common Stock outstanding as of July 28, 2014. The
dividend is expected to be paid on August 6, 2014.

On May 30, 2014, the Company completed the previously announced acquisition of
a controlling interest in Eurosport International, increasing its stake from
20% to 51% for approximately $349 million, which resulted in a gain of $29
million included in Other Income.

On May 30, 2014, Discovery sold HowStuffWorks for $45 million, which resulted
in a pre-tax gain on disposition of $31 million.

FULL YEAR 2014 OUTLOOK

For the full year ending December 31, 2014, Discovery Communications, Inc.
expects total revenue between $6.45 billion and $6.525 billion, Adjusted OIBDA
between $2.6 billion and $2.65 billion, net income available to Discovery
Communications, Inc. between $1.225 billion and $1.275 billion and Adjusted
net income available to Discovery Communications, Inc.^(5) ("Adjusted net
income") between $1.34 billion and $1.4 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.

(5) See the full definition of Adjusted net income on page 5.

NON-GAAP FINANCIAL MEASURES

Adjusted OIBDA, Adjusted Net Income, 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 net income, Adjusted EPS 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 and losseson business and asset
dispositions.

Beginning January 1, 2014, the Company reclassified foreign currency gains
(losses), net due to transaction settlements and re-measurement of working
capital items from selling, general and administrative expense, which is a
component of operating income, to other income (expense), net. Prior period
amounts have been reclassified to conform to the current year presentation.
The total foreign currency reclassifications were a gain of $15 million for
the three months ended June 30, 2013. 

The Company uses Adjusted OIBDA 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 this
measure 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 losseson
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 net income as net income excluding the impact of
amortization of acquisition-related intangible assets and defines Adjusted EPS
as earnings excluding the impact of amortization of acquisition-related
intangible assets per diluted share. The Company believes Adjusted net income
and Adjusted EPS are relevant to investors because these metrics allow 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 net income, 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 10 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 second quarter results. To listen to the call, visit
http://discoverycommunications.com or dial 1-800-901-5213 inside the U.S. and
1-617-786-2962 outside of the U.S., using the following passcode: DISCA.

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 filed with the SEC on February 20, 2014.
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, statements regarding investing in our brands,
strategic growth initiatives, plans for stock repurchases and the full year
2014 outlook. 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 June 30,  Six Months Ended June 30,
                        2014             2013        2014          2013
Revenues:
Distribution            $   692          $  662      $  1,349      $  1,245
Advertising             844              749         1,533         1,257
Other                   74               56          139           121
Total revenues          1,610            1,467       3,021         2,623
Costs and expenses:
Costs of revenues,
excluding depreciation  515              437         997           779
and amortization
Selling, general and    406              394         815           759
administrative
Depreciation and        75               78          158           110
amortization
Restructuring charges   5                9           8             10
Gain on disposition     (31)             —           (31)          —
Total costs and         970              918         1,947         1,658
expenses
Operating income        640              549         1,074         965
Interest expense        (83)             (80)        (164)         (148)
Income (loss) from      8                (7)         21            (9)
equity investees, net
Other income, net       27               19          10            50
Income from continuing
operations before       592              481         941           858
income taxes
Provision for income    (208)            (181)       (326)         (327)
taxes
Net income              384              300         615           531
Net income
attributable to         (2)              —           (2)           —
noncontrolling
interests
Net income
attributable to
redeemable              (3)              —           (4)           —
noncontrolling
interests
Net income available
to Discovery            $   379          $  300      $  609        $  531
Communications, Inc.
Net income per share
available to Discovery
Communications, Inc.
stockholders:
Basic                   $   1.10         $  0.83     $  1.75       $  1.47
Diluted                 $   1.09         $  0.82     $  1.74       $  1.45
Weighted average
shares outstanding:
Basic                   343              359         346           361
Diluted                 346              363         349           365



DISCOVERY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)
                                              June 30, 2014  December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents                     $   372        $    408
Receivables, net                              1,525          1,371
Content rights, net                           318            277
Deferred income taxes                         81             73
Prepaid expenses and other current assets     275            281
Total current assets                          2,571          2,410
Noncurrent content rights, net                1,935          1,883
Property and equipment, net                   538            514
Goodwill                                      8,126          7,341
Intangible assets, net                        1,924          1,565
Equity method investments                     828            1,087
Other noncurrent assets                       183            179
Total assets                                  $   16,105     $    14,979
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                              $   226        $    141
Accrued liabilities                           945            992
Deferred revenues                             160            144
Current portion of debt                       1,029          17
Total current liabilities                     2,360          1,294
Noncurrent portion of debt                    6,045          6,482
Deferred income taxes                         769            637
Other noncurrent liabilities                  299            333
Total liabilities                             9,473          8,746
Redeemable noncontrolling interests           598            36
Equity:
Preferred stock                               2              2
Common stock                                  3              3
Additional paid-in capital                    6,865          6,826
Treasury stock, at cost                       (4,300)        (3,531)
Retained earnings                             3,499          2,892
Accumulated other comprehensive (loss)        (38)           4
income
Total Discovery Communications, Inc.          6,031          6,196
stockholders' equity
Noncontrolling interests                      3              1
Total equity                                  6,034          6,197
Total liabilities and equity                  $   16,105     $    14,979



DISCOVERY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
                                                     Six Months Ended June 30,
                                                     2014          2013
Operating Activities
Net income                                           $   615       $   531
Adjustments to reconcile net incometo cash provided
by operating activities:
Equity-based compensation expense                    33            84
Depreciation and amortization                        158           110
Content amortization and impairment expense          705           542
Gain on disposition                                  (31)          —
Remeasurement gain on previously held equity         (29)          (92)
interest
Equity in (earnings) losses of investee companies,
net of cash distributions                            (7)           13


Deferred income tax (benefit) expense                (73)          139
Launch amortization expense                          4             10
Loss from hedging instruments, net                   —             55
Other, net                                           18            18
Changes in operating assets and liabilities:
Receivables, net                                     (46)          (90)
Content rights                                       (806)         (680)
Accounts payable and accrued liabilities             (12)          (83)
Equity-based compensation liabilities                (81)          (61)
Income tax receivable                                54            9
Other, net                                           (29)          (35)
Cash provided by operating activities                473           470
Investing Activities
Purchases of property and equipment                  (58)          (54)
Business acquisitions, net of cash acquired          (321)         (1,832)
Hedging instruments, net                             —             (55)
Proceeds from disposition                            45            —
Distributions from equity method investees           41            4
Investments in equity method investees, net          (9)           (26)
Other investing activities, net                      (1)           (1)
Cash used in investing activities                    (303)         (1,964)
Financing Activities
Borrowings from debt, net of discount and issuance   409           1,186
costs
Commercial paper, net                                162           —
Principal repayments of capital lease obligations    (9)           (17)
Repurchases of common stock                          (769)         (265)
Repurchases of preferred stock                       —             (256)
Cash proceeds from equity-based plans, net           13            35
Other financing activities, net                      (7)           (3)
Cash (used in) provided by financing activities      (201)         680
Effect of exchange rate changes on cash and cash     (5)           (12)
equivalents
Net change in cash and cash equivalents              (36)          (826)
Cash and cash equivalents, beginning of period       408           1,201
Cash and cash equivalents, end of period             $   372       $   375



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; in millions)
               Three Months Ended June 30, 2014
               Adjusted
                                           Amortization
               Operating                   of
                             Depreciation                Mark-to-Market
               Income                      Deferred                      Other   Operating
               Before        and                         Equity-Based    (1)
                                           Launch                                Income
               Depreciation  Amortization                Compensation
               and                         Incentives

               Amortization
U.S. Networks  $   466       $   (3)       $   —         $    —          $ 31    $  494
International  297           (56)          (2)           —               (2)     237
Networks
Education      6             (1)           —             —               (1)     4
Corporate and  (75)          (15)          —             (3)             (2)     (95)
Eliminations
Total          $   694       $   (75)      $   (2)       $    (3)        $ 26    $  640
               Three Months Ended June 30, 2013
               Adjusted
                                           Amortization
               Operating                   of
                             Depreciation                Mark-to-Market
               Income                      Deferred                      Other   Operating
               Before        and                         Equity-Based    (1)
                                           Launch                                Income
               Depreciation  Amortization                Compensation
               and                         Incentives

               Amortization
U.S. Networks  $   472       $   (3)       $   (2)       $    —          $ (2)   $  465
International  249           (61)          (3)           —               (7)     178
Networks
Education      4             —             —             —               —       4
Corporate and  (72)          (14)          —             (12)            —       (98)
Eliminations
Total          $   653       $   (78)      $   (5)       $    (12)       $ (9)   $  549
1) For the three months ended June 30, 2014, amount represents a gain on disposition of
$31 million and restructuring charges of $5 million. For the three months ended June 30,
2013, amount represents restructuring charges of $9 million.



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; in millions)
               Six Months Ended June 30, 2014
               Adjusted
               Operating
                                           Amortization
               Income        Depreciation  of            Mark-to-Market
               Before        and           Deferred      Equity-Based    Other    Operating
                                                                         (1)      Income
               Depreciation  Amortization  Launch        Compensation

               and                         Incentives

               Amortization
U.S. Networks  $   849       $   (6)       $   —         $    —          $ 30     $  873
International  518           (120)         (4)           —               (3)      391
Networks
Education      12            (3)           —             —               (2)      7
Corporate and  (160)         (29)          —             (6)             (2)      (197)
Eliminations
Total          $   1,219     $   (158)     $   (4)       $    (6)        $ 23     $  1,074
               Six Months Ended June 30, 2013
               Adjusted
               Operating
                                           Amortization
               Income        Depreciation  of            Mark-to-Market
               Before        and           Deferred      Equity-Based    Other    Operating
                                                                         (1)      Income
               Depreciation  Amortization  Launch        Compensation

               and                         Incentives

               Amortization
U.S. Networks  $   849       $   (6)       $   (4)       $    —          $ (3)    $  836
International  436           (76)          (6)           —               (7)      347
Networks
Education      11            (1)           —             —               —        10
Corporate and  (143)         (27)          —             (58)            —        (228)
Eliminations
Total          $   1,153     $   (110)     $   (10)      $    (58)       $ (10)   $  965
(1) For the six months ended June 30, 2014, amount represents a gain on disposition of $31
million and restructuring charges of $8 million. For the six months ended June 30, 2013,
amount represents restructuring charges of $10 million.



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NEWLY ACQUIRED BUSINESSES^(1)
(unaudited; amounts in millions)
              Three months ended June 30,
              2014                        2014           2013
              International   2014        International  International

              Networks As     Newly       Networks Ex-   Networks       %
                              Acquired                                  Change
              Reported                    Acquisitions   As Reported
                              Businesses
Revenues:
            $    373        $   29      $   344        $   314        10  %
Distribution
            397             18          $   379        322            18  %
Advertising
 Other      32              8           $   24         16             50  %
Total         $    802        $   55      $   747        $   652        15  %
Revenues
Adjusted      $    297        $   16      $   281        $   249        13  %
OIBDA
              Three months ended June 30,
              2014                                       2013
                              2014
              TotalCompany               2014 Total     TotalCompany
                              Newly                                     %
              As Reported     Acquired    Company Ex-    As Reported    Change
                                          Acquisitions
                              Businesses
Revenues:
            $    692        $   29      $   663        $   662        —   %
Distribution
            844             18          $   826        749            10  %
Advertising
 Other      74              8           $   66         56             18  %
Total         $    1,610      $   55      $   1,555      $   1,467      6   %
Revenues
Adjusted      $    694        $   16      $   678        $   653        4   %
OIBDA
              Six months ended June 30,
              2014                        2014           2013
              International   2014
                                          International  International
              Networks As     Newly                      Networks As    %
                              Acquired    Networks Ex-                  Change
              Reported                    Acquisitions   Reported
                              Businesses
Revenues:
            $    711        $   75      $   636        $   589        8   %
Distribution
            713             146         $   567        474            20  %
Advertising
 Other      49              13          $   36         33             9   %
Total         $    1,473      $   234     $   1,239      $   1,096      13  %
Revenues
Adjusted      $    518        $   35      $   483        $   436        11  %
OIBDA
              Six months ended June 30,
              2014                                       2013
                              2014
              Total Company               2014 Total     Total Company
                              Newly       Company Ex-                   %
              As Reported     Acquired    Acquisitions   As Reported    Change

                              Businesses
Revenues:
            $    1,349      $   75      $   1,274      $   1,245      2   %
Distribution
            1,533           146         $   1,387      1,257          10  %
Advertising
 Other      139             13          $   126        121            4   %
Total         $    3,021      $   234     $   2,787      $   2,623      6   %
Revenues
Adjusted      $    1,219      $   35      $   1,184      $   1,153      3   %
OIBDA
(1) For the three months ended June 30, 2014 newly acquired businesses include
Eurosport International, in which Discovery took a controlling stake in May
2014, and for the six months ended June 30, 2014 newly acquired businesses
include Eurosport International and first quarter results from SBS Nordic,
which Discovery acquired in April 2013. This reconciliation does not take into
account other one-time items such as foreign exchange and licensing revenues.



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
SELECTED FINANCIAL DETAIL
(unaudited; in millions)
CALCULATION OF FREE CASH FLOW
                        Three Months Ended June 30,  Six Months Ended June 30,
                        2014       2013    Change    2014       2013    Change
Cash provided by        $  232     $ 339   $ (107)   $  473     $ 470   $ 3
operating activities
Purchases of property   (30)       (28)    (2)       (58)       (54)    (4)
and equipment
Free cash flow          $  202     $ 311   $ (109)   $  415     $ 416   $ (1)



RECONCILIATION OF 2014 OUTLOOK TO GAAP MEASURES
                                                          Full Year 2014
Adjusted net income available to Discovery                $ 1,340  To $ 1,400
Communications, Inc. stockholders
Less Amortization of acquisition-related intangible       115      To 125
assets, net of tax
Net income available to Discovery Communications, Inc.    1,225    To 1,275
stockholders
Interest expense, net                                     340      To 330
Depreciation and amortization                             355      To 345
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, equity earnings (losses) in unconsolidated 565      To 575
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                                            $ 2,600  To $ 2,650



NET INCOME AVAILABLE TO DISCOVERY COMMUNICATIONS, INC. STOCKHOLDERS
                        Three Months Ended June 30,  Six Months Ended June 30,
                        2014            2013         2014            2013
Net Income              $   384         $   300      $   615         $  531
Net income attributable
to noncontrolling       (2)             —            (2)             —
interests
Net income attributable
to redeemable           (3)             —            (4)             —
noncontrolling
interests
Net income available to
Discovery               379             300          609             531
Communications, Inc.
Redeemable
noncontrolling interest (2)             (3)          (1)             (1)
adjustments to
redemption value
Stock dividends to      (1)             —            (1)             —
preferred interests
Net income available to
Discovery               $   376         $   297      $   607         $  530
Communications, Inc.
stockholders



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
SELECTED FINANCIAL DETAIL
(unaudited; in millions)
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED NET EARNINGS PER DILUTED SHARE
                      Three Months Ended June 30,    Six Months Ended June 30,
                      2014         2013     Change   2014     2013     Change
Net Income available
to Discovery          $   379      $ 300    $ 79     $ 609    $ 531    $ 78
Communications, Inc.
Amortization of
acquisition-related   26           33       (7)      60       34       26
intangible assets,
net of tax
Adjusted Net Income   $   405      $ 333    $ 72     $ 669    $ 565    $ 104
                      Three Months Ended June 30,    Six Months Ended June 30,
                      2014         2013     Change   2014     2013     Change
Diluted earnings per
share available to
Discovery             $   1.09     $ 0.82   $ 0.27   $ 1.74   $ 1.45   $ 0.29
Communications, Inc.
stockholders
Amortization of
acquisition-related   0.07         0.09     (0.02)   0.17     0.09     0.08
intangible assets,
net of tax
Adjusted earnings     $   1.16     $ 0.91   $ 0.25   $ 1.91   $ 1.54   $ 0.37
per diluted share
                      Last Twelve Months Ended June
                      30,
                      2014         2013     Change
Diluted earnings per
share available to
Discovery             $   3.26     $ 2.60   $ 0.66
Communications, Inc.
stockholders
Amortization of
acquisition-related   0.36         0.09     0.27
intangible assets,
net of tax
Adjusted earnings     $   3.62     $ 2.69   $ 0.93
per diluted share



DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
SELECTED FINANCIAL DETAIL
(unaudited; in millions)
BORROWINGS
                                                                 June 30, 2014
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
2.375% Senior Notes, euro denominated, annual interest, due      409
March 2022
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                                        171
Commercial paper                                                 162
Total debt                                                       7,092
Unamortized discount                                             (18)
Debt, net                                                        7,074
Current portion of debt                                          (1,029)
Noncurrent portion of debt                                       $   6,045



EQUITY-BASED COMPENSATION
                             June 30, 2014
                             Total Units  Weighted     Vested Units   Weighted
Long-Term
                             Outstanding  Average      Outstanding    Average
Incentive Plans
                             (in       Grant Price  (in millions)  Grant
                             millions)                                Price
Unit Awards                  0.6          $41.17       —              $—
Stock Appreciation Rights    6.0          74.74        —              —
Stock Options                7.9          42.57        5.8            32.87
Performance-based            2.3          64.20        0.5            35.29
Restricted Stock Units
Service-based Restricted     0.9          68.04        —              —
Stock Units
Total Equity-based           17.7         $57.53       6.3            $33.06
Compensation Plans



SHARE COUNT ROLL FORWARD                          Common   Preferred  Total
(Basic shares, in millions)
Total shares outstanding as of December 31, 2013  234.30   114.50     348.80
Shares repurchased                                (10.13)  —          (10.13)
Shares issued – equity-based compensation         0.99     —          0.99
Preferred stock dividend                          —        0.05       0.05
Total shares outstanding as of June 30, 2014      225.16   114.55     339.71



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SOURCE Discovery Communications, Inc.

Website: http://discoverycommunications.com
Contact: Corporate Communications, Catherine Frymark, (240) 662-2934,
catherine_frymark@discovery.com; Investor Relations, Craig Felenstein, (212)
548-5109, craig_felenstein@discovery.com
 
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