Discovery beats estimates, revenues jump 11%

Despite the quarter's ongoing drama at Discovery Communications' (DISCA) Oprah Winfrey Network, the OWN parent company reported an 11% increase in revenues this morning to $1.067 billion, up $104 million, for Q2. International expansion was a major revenue driver, and rapid expansion at true crime cabler Investigation Discovery helped to push the company's 6% domestic revenue growth. Price per diluted share reached $0.62 - slightly higher than analyst predictions of $0.61. Affiliate fees were up 4%. ''Oprah was just with me last week at TCA, and she is in place as CEO already,'' said company CEO and prexy David Zaslav. ''We now have her creative team in place and a more robust lineup set for the fall and spring.'' Zaslav touted ''The Rosie Show,'' ''OWN Your Life'' (which will have ''significant new Oprah content''), and Jan. offering ''Oprah's Next Chapter.'' Peter Liguori, the company's COO, was until recently the interim head of OWN. ''Sheri and Eric are in there,'' said Zaslav. ''It frees Peter up to go spend more time with us.'' The increase in revenue is on schedule to hit a bump next quarter, according to outgoing CFO Brad Singer. Singer told analysts and investors on Thursday ayem's earnings call that he expected the company's adjusted operating income before depreciation and amortization (OIBDA) to drop to mid-single digits in Q3. Quizzed on the decrease, Singer blamed higher interest costs related to its bond offerings, a .5% increase in the company's tax rate, and underperformance among its joint venture cable channels. Accordingly, shareholder incentives are on the rise at the company: Discovery plans to boost per-share earnings with another billion dollars in stock buyback, doubling its current program. In Q2, Discovery repurchased 5.64 million shares at an aggregate purchase price of about $210 million. The figure represents roughly a third of the shares repurchased so far under the program. Expanded opportunities throughout the Americas gave Discovery a leg up this quarter. ''Latin America is a great example of a historically underpenetrated market that is delivering real growth,'' said Zaslav. The emerging middle class in countries like Brazil has given the company a foothold in that part of the world. Zaslav said that international CPMs, too, are on the rise. Investigation Discovery continues to grow - the net has moved from the number 26-ranked network in women 25-54 to the 18th ranked network over the course of the last year, Zaslav said. He added that the company hoped to increase ID's distribution from 80 to 100 million homes. ''It is one of the leading if not the leading network in viewing time,'' Liguori said. In a move that likely bodes ill for the future of 3D TV, Zaslav began discussing the company's joint ventures with the phrase ''our two joint ventures,'' and going on to discuss OWN and The Hub. Zaslav addressed hardware-dependent 3D cabler 3net (a j.v. with Sony and IMAX that broadcasts in 3D) later, during the questions portion of the call. ''3D, candidly, has been slower than we expected,'' he said. ''It's going to be driven by the sets and how quick consumers adapt to 3D. We've had a lot of good experience with it; if it transitions into a technology where you don't use glasses, we'll be there.'' But the ultimate responsibility for the net lies with the tech consumer, Zaslav admitted. ''There are markets where distributors feel like they have to hedge and have it just in case,'' he pointed out. ''But the market demand has not developed yet.'' Contact Sam Thielman at sam.thielman@variety.com