Discovery Communications saw its profit fall in the fourth quarter because of a number of one-time charges, despite seeing modest gains in advertising and distribution revenues.
On Tuesday, Discovery reported a net income loss of $1.14 billion, or $1.99 per share, attributable to an after-tax goodwill impairment charge at its European operations, and a $59 million transaction cost related to its pending acquisition of Scripps Networks. This comes on the same day that Discovery announced it received clearance from the U.S. Department of Justice for the proposed cash-and-stock purchase of the Food Network and HGTV owner, first announced in July, and valued at $14.6 billion.
“We are pleased to have passed this significant regulatory milestone on our path to acquire Scripps Networks Interactive,” David Zaslav, president and CEO of Discovery, said in a statement. “The conclusion of the Department of Justice’s investigation is an integral step toward closing our transaction. We look forward to combining these two great companies to the benefit of our enthusiast audiences around the world.”
Discovery obtained the greenlight for the transaction from the European Commission earlier this month. The deal is still subject to review in Ireland and other customary closing conditions, but is expected to close by the end of the first quarter this year.
For the fourth quarter, the TLC and Animal Planet owner saw revenues climb 11 percent year over year to $1.86 billion, thanks to 13 percent growth at its international properties and 10 percent growth at its U.S. networks.
“Solid global advertising and distribution revenue growth helped us achieve our 2017 strategic and financial objectives,” Zaslav noted. “Additionally, we remain excited by the prospects for a combined Discovery and Scripps Networks.”
Discovery’s U.S. networks saw total revenues jump 10 percent for the quarter to $892 million, driven by 7 percent distribution growth and 8 percent in advertising growth. The company said advertising revenue was strong at its TLC and ID networks, but total subscriptions to its portfolio of networks dropped by 5 percent for the quarter.
Revenues at Discovery’s international properties rose 13 percent to $927 million for the quarter. Distribution revenues were up 10 percent, mainly due to higher contract rates in Europe after further investments in sports content and higher contractual rates in Latin America. Advertising revenue was up 5 percent, which the company attributed to higher volume and pricing in key markets in Europe and higher volume in Latin America.