Discovery Slumps Most Since 2010 After ForecastDoni Bloomfield
Discovery Communications Inc., the owner of the TLC and Animal Planet cable channels, fell the most in 4 1/2 years after cutting its full-year revenue forecast.
The shares slumped 8.3 percent to $32.72 at 11:14 a.m. in New York. Earlier, they tumbled as much as 10 percent for the biggest intraday decline since May 2010.
Discovery, which gets about half its revenue from the U.S., said domestic advertising growth was hurt in the third quarter by a drop in distribution, according to a statement. Ad revenue growth of 1 percent in the U.S. in the period was the lowest on record as the company’s networks suffered ratings challenges, said Paul Sweeney, an analyst at Bloomberg Intelligence.
Total revenue for third quarter rose 14 percent to $1.57 billion, trailing the average of analysts’ estimates.
“Revenue results were weaker than our outlook,” Michael Morris, an analyst at Guggenheim Partners LLC, wrote in a research note today. Morris, who has a hold rating on the stock, said Discovery’s share repurchase of $298 million also trailed his forecast of $400 million.
Discovery, based in Silver Spring, Maryland, said 2014 revenue will be $6.3 billion to $6.35 billion, reduced from a previous forecast of $6.45 billion to $6.525 billion. Analysts projected $6.42 billion, the average of estimates compiled by Bloomberg.