Discovery Tumbles Amid Q4 Earnings Miss as Costs Weigh

Discovery stock (NASDAQ:DISCA) plunged 7.8% in premarket trading Thursday after the company’s fourth quarter earnings fell short of estimates, weighed down by higher marketing costs for its expanding streaming business.

Adjusted profit per share came in at 8 cents compared to 42 cents in the same period last year and expectations of 83 cents this time.

All eyes are on the completion of the company’s $43-billion merger with AT&T’s (NYSE:T) WarnerMedia, a deal that’s expected to prepare Discovery to take on the likes of Netflix (NASDAQ:NFLX) and Disney+. The transaction is likely to close by end of June, the company said.

Total paid streaming subscribers including those from Discovery+ reached 22 million by the end of December 2021, up from 20 million in the third quarter, the company said.

Fourth quarter total revenue grew 10% to $3.2 billion. Distribution revenue growth in U.S. was 17%, while global advertising revenues rose 5% in the market. The company attributed this strength to its key markets and share gains. Selling, general, and administrative expenses jumped 28%.

In international business, advertising revenue jumped 10% and distribution revenue rose 2%.