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Discovery Benefits From Portfolio Strength and Partnerships

Zacks

Discovery DISCA is benefiting from its content portfolio strength post the Scripps Networks’ buyout and partnership with the likes of PGA TOUR.

Notably, portfolio strength is a major growth driver behind the stock price momentum. The stock has returned 26% over the past year outperforming the industry’s rise of 14.2%.



Additionally, post Scripps Networks’ buyout, scope for cross promotional content offerings has increased for Discovery, which has strengthened its industry position and ratings. This is supported by the fact that the company currently has the “second largest share of TV viewing” in the United States after Comcast CMCSA owned NBC Universal, per the company.

Further, the Scripps buyout not only expanded Discovery’s product portfolio but also its international footprint, helping it reach people across 220 countries and territories in 50 different languages.

Discovery’s Premium Content Bodes Well

Discovery continues to hold its ground and attract users through its premium content offerings. The company’s European sports network, EuroSport, has exclusive sports rights across many European markets, making Discovery the premier destination for sports.

Notably, EuroSport won most of the “European multiplatform broadcast and distribution rights” for four Olympic Games between 2018 and 2024. Additionally, EuroSport also has rights to prominent pro leagues in soccer and tennis among others.

Moreover, Discovery entered into a 12-year agreement with PGA TOUR worth about $2 billion to manage TV and digital rights for golf events in territories outside the United States. The deal also included the launch of an on-demand video streaming service, GOLFTV, which is a one-stop shop for all golf-related content.

Notably, GOLFTV will present more than 2,000 hours of live action each year and exclusive premium content after its launch on Jan 1, 2019 in certain markets.

To further boost its golf content offerings, GOLFTV recently announced an exclusive multi-year partnership with Tiger Woods. The “80-time PGA TOUR winner and 14-time Major champion” will collaborate with the platform for programming unique content, a first of its kind collaboration for Woods.

Discovery, Inc. Revenue (TTM)

Discovery, Inc. Revenue (TTM) | Discovery, Inc. Quote

Deals to Boost Revenues

Discovery’s premium content is helping it win deals to distribute its content worldwide. This is expected to positively contribute to the top line.

Discovery recently entered into a joint venture with The Enthusiast Network (TEN) for automotive media, which marks its entry into the direct-to-consumer offerings space. Additionally, the company strengthened its direct-to-consumer service by expanding partnership with ProSieben in Germany.

Moreover, Discovery’s partnerships with the likes of AT&T T, Hulu, Sling TV and Bilibili BILI are helping it rapidly penetrate the online viewing market. This is expected to boost distribution revenues, which increased 30.8% year over year to $1.15 billion in third-quarter 2018.

However, acquisition related costs and continued investments in new businesses may hurt profitability.

Discovery currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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