Discovery falls the most in 9 months as cord cutting persists

Signage is displayed on the exterior of Discovery Communications Inc. headquarters in Silver Spring, Maryland, U.S. (Bloomberg pic)

NEW YORK: Discovery Inc., home of channels like HGTV, Food Network and Animal Planet, fell the most in nine months after second-quarter results missed the lowest estimate and the company continued to lose subscribers.

Discovery, which bought Scripps Networks in March for $12 billion, is seeing slow growth in ad sales and subscriber fees as viewers drop cable for online options like Netflix and Hulu. The company’s networks, which also include the namesake channel, lost about 5% of their subscribers, with the biggest down 3%, Discovery said Tuesday.

Excluding the effects of the acquisition, domestic advertising sales and subscriber revenue grew 1%. International revenue grew 5%. Both represent a continued slowdown, according to Todd Juenger of Sanford C. Bernstein & Co.

“We honestly struggle to see a silver lining here,” said Juenger in a note. “It looks like the Scripps acquisition came just in time, as pro forma growth rates, including Scripps’s, are higher than legacy Discovery.”

One of cable billionaire John Malone’s major holdings, Discovery posted earnings that missed analysts’ estimates. Revenue increased 60% to $2.85 billion, reflecting the acquisition, essentially in line with estimates.

Discovery fell as much as 8.2% to $24.72 in New York, the biggest decline since November 2017. Shares of the Silver Spring, a Maryland-based company were up 20% this year through Monday.