DISC.A - Embedded Expectations Analysis - 2019 08 21
Discovery Communications (DISC.A:USA) currently trades below historical averages relative to UAFRS-based (Uniform) Earnings with a 9.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, which may be unwarranted given management's confidence about their international growth, market share, and advertising revenues.Specifically, management generated an excitement marker when saying their UKTV lifestyle business will add 2%-3% of international advertising revenue growth next quarter, and they are confident their market share across their top 10 international countries grew 5% this quarter. Furthermore, they are confident their audience delivery was up an average of 4% internationally and that they have content, brand credibility, and IP in every international country in which they operate. Moreover, they are confident 5G will provide future business opportunities and that their scale gives them an advantage when competing internationally. Finally, they are confident that they saw 5% U.S. affiliate growth in Q2.
Discovery, through its subsidiaries, is a media company that provides content across distribution platforms, including pay-television, free-to-air and broadcast television, and direct-to-consumer subscription products. The company's portfolio of networks includes nonfiction television brands such as Discovery Channel, HGTV, Food Network, TLC, Animal Planet, Science Channel, and MotorTrend . The company's portfolio includes Eurosport, a sports entertainment provider. The company classifies its operations in two segments: U.S. Networks, consisting of domestic television networks and digital content services, and International Networks, consisting of international television networks and digital content services.
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