Discovery Intl 3Q revenues up 24 %

MUMBAI: Discovery Holdings, which, owns a 50 per cent stake in Discovery Communications (DCI) has announced its results for the third quarter, ended 30 September 2005.

DCI's revenue of $639 million and operating cash flow of $171 million are 15 per cent and six per cent ahead of the same period a year ago, respectively.

Discovery International's revenue increased by 24 per cent due to increases in both subscriber fees and ad revenue as also,favourable exchange rates. Net ad revenue increased by 25 per cent primarily due to higher viewership in the

UK and an increased subscriber base in the UK and Europe. Net subscriber fees increased by 24 per cent due to increases in paying subscription units in Europe and Asia and international joint venture channels combined with contractual rate increases in certain markets.

Operating expenses increased by 26 per cent due to the previously announced investment in its Lifestyles category designed to develop and grow that market opportunity. Operating cash flow increased by 15 per cent due to the increased revenue. Excluding the effects of exchange rates, revenue increased by 23 per cent and operating cash flow increased by 23 per cent.

Revenue in the US, increased by 11 per cent due to increases in subscriber fees and advertising revenue. Net subscriber fees increased by 16 per cent as the US Networks had a 14 per cent increase in paying subscribers combined with contractual rate increases at most networks.

Free viewing periods related to a number of

US networks, principally networks that are carried on the digital tier, began expiring in 2004 and DCI is now recognising subscriber fees for those networks. Net subscriber fee increases were also attributable to lower launch support ammortisation, a contra-revenue item, as the result of extensions to certain affiliation agreements.

Net ad revenue increased by six per cent as higher ad sell-out and rates were partially offset by lower audience delivery at certain networks. Operating expenses increased by 12 per cent due to an increase in programming and marketing expenses across US networks. Operating cash flow increased by nine per cent to $165 million.

Revenue in its commerce, education and other divisions increased by 15 per cent, principally as a result of a 38 per cent increase in revenue at Discovery Education and a 10 per cent increase in average sales per store offset by a seven per cent decrease in the average number of stores. Discovery Education revenue increased due to acquisitions that were made over the past year and an increase in the number of schools purchasing its products and services.

The operating cash flow loss in its commerce, education and other divisions increased by $8 million, or 50 per cent, primarily due to the previously announced investment in Discovery Education. DCI's outstanding debt balance was $2.7 billion as of 30 September, 2005.

For 2005, revenue is expected to grow between 11-15 per cent. Operating cash flow is expected to grow by around five per cent. Operating income is expected to grow by 10 per cent.

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