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Why Discovery Stock Fell 12% in March

By Demitri Kalogeropoulos – Apr 9, 2018 at 9:20AM

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Investors aren't optimistic that its new, larger content portfolio will lead to a quick turnaround for the business.

What happened

TV network giant Discovery (DISC.A) shed 12% last month compared to a 3% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

Data source: YCharts.

That drop contributed to a tough run for shareholders, with the stock trailing the broader market by a wide margin over the past five years.

So what

Investors had plenty of news to digest in March. Some of the stock's decline, for example, likely had to do with the $1.3 billion write-off that Discovery announced in late February. That news took some shine off a fourth-quarter earnings report that included encouraging growth in its core advertising business.

A woman watches TV on the couch.

Image source: Getty Images.

Then, in early March, Discovery completed its $15 billion acquisition of Scripps Networks Interactive to become one of the biggest pay-tv networks in the world.

Now what

Discovery is hoping that this bold buyout will help it navigate a TV advertising landscape that's being pressured as consumers drift away from cable television packages and toward internet-delivered entertainment. With Scripps under its control, the company boasts a massive library of content and the means to produce new shows at a pace that few rivals can match. Now it's up to Discovery to capitalize on those assets.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Warner Bros. Discovery, Inc. Stock Quote
Warner Bros. Discovery, Inc.
DISC.A

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