Discovery+ bolstered D2C efforts in markets like India to drive growth: Gunnar Wiedenfels

The Discovery CFO told analysts during the Q3 2021 earnings conference call that the company plans to nourish its existing subscriber base with more content offering and product features

e4m by exchange4media Staff
Published: Nov 10, 2021 8:18 AM  | 3 min read
Gunnar Wiedenfels

Discovery CFO Gunnar Wiedenfels has said that the company's streaming service discovery+ continues to drive growth in markets like Poland, the Nordics, Italy, and India as it has doubled down on its direct-to-consumer efforts in these markets with a renewed and expanded content offering. He also said that the discovery+ service has exited the third quarter ended 30th September with 20 million D2C subscribers globally.

“We have added 15 million paying direct-to-consumer subscribers globally, finishing the third quarter with 20 million paying D2C subscribers. Since the start of our discovery+ journey, we have launched in over 25 new markets, notably in the U.S. and the U.K. and most recently, Canada and the Philippines with Brazil to come over the next few weeks. At the same time, we have continued to drive growth in markets like Poland, the Nordics, Italy, and India where we doubled down on our direct-to-consumer efforts with a renewed and expanded content offering,” he told analysts during the Q3 2021 earnings conference call.

Discovery finished the third quarter with $425 million in revenue from discovery+ or a $1.7 billion annualized run rate, with global D2C ARPU of $5 and $7 blended discovery+ ARPU in the US, which is supported by over $10 ARPU for the discovery+ Ad Lite product. The investment losses for the quarter were in the low $200 million range. Investment losses are expected to remain in that range in the fourth quarter as well.

“As always, we maintain a disciplined approach with respect to investing in direct-to-consumer initiatives. We are very focused on nourishing our existing subscriber base with an increasing content offering and new product features. At the same time, you should expect us to be guided by a rigorous analysis of customer lifetime value and subscriber acquisition costs to determine our marketing spend for new sub additions,” he added. 

For Q3, Discovery reported a 23% increase in total revenues at $3.15 billion compared to $2.56 billion. The company's net income dropped 48% to $156 million from $300 million. The company generated $705 million of free cash flow in the quarter. The company expects free cash flow to top $2.1 billion for the full year.
Total U.S. Networks revenues increased 12% to $1.85 billion compared to the prior-year quarter. Advertising revenue increased 5% primarily due to higher pricing while distribution revenue increased 21% primarily driven by discovery+ and increases in contractual affiliate rates, partially offset by a decline in linear subscribers.
Total International Networks revenues increased 44% to $1.29 billion compared to the prior-year quarter. Advertising revenue increased 28%, primarily driven by improved overall performance in all regions as advertising markets continued to recover from the impact of COVID-19, as well as benefiting from the broadcast of the Summer Olympics throughout Europe.

Distribution revenue increased 7%, or 6% ex-FX, primarily due to higher Next Generation Revenues driven by discovery+ subscriber growth, partially offset by lower contractual affiliate rates in some European markets. Other revenues increased to $290 million, driven by sublicensing of Olympics sports rights to broadcast networks throughout Euro.

Discovery expects to close the merger deal with WarnerMedia by mid-2022. “As we work toward closing the WarnerMedia transaction mid-2022, we have redirected our experienced Integration and Transformation Office to hit the ground running. And as we refine our strategic review and integration plans and as we develop our synergy capture plans further, we are as enthusiastic as ever about the prospects of combining these two world-class portfolios and franchises.”

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