You venture into the unknown nearly every day -- busting myths one scientific fact at a time, while watching Mythbusters on the Discovery Channel. Your family even visits the Seven Wonders of the World from the comfort of your couch. The shows that cover these topics, along with many more like them, are created by the world's largest non-fiction media company, Discovery Communications
Discovery produces the kind of profitable entertainment that's enjoyed by all ages, all over the world. If you never miss an episode of Deadliest Catch, can't get enough of Man vs. Wild, or dutifully plan your schedule around Shark Week, then you're among the 1.5 billion subscribers already enjoying Discovery Communications.
Alluring content or not, an increasing number of viewers are trading costly cable TV subscriptions for Web-based programming -- a trend that could threaten Discovery's subscriber-based way of life. One-half of U.S. consumers now watch at least some TV content online. Discovery, meanwhile, derives nearly 50% of its annual revenue from affiliate fees paid for by cable providers. The other half comes from advertising revenue and royalties on exclusive merchandise sales.
Content providers like Discovery and Walt Disney
Making the move to digital
Discovery's strategic joint-ventures enhance its portfolio of digital media services, including HowStuffWorks.com, Discovery Mobile, and the first 24-hour 3-D network. This year, the company's online media properties, composed of 16 U.S. brand destinations, reached 24 million cumulative unique monthly visitors, according to comScore. Digital outlets increased distribution revenue 4% for the company's second-quarter earnings. Revenue from Discovery's digital media business comes from online advertising sales, sponsorships, and subscriber fees for access to Web content.
A passport to profits
Discovery's far-reaching spread of content makes it hard to believe there's room for further growth. But the media giant's ability to easily translate content into 42 languages continues to fuel its popularity overseas. Revenue generated outside the United States has increased from $120 million in 2007 to more than $540 million.
Last quarter, Discovery's global subscriber base grew by 15%, which stimulated an 11% rise in affiliate growth -- powered by international programming fees and 25% advertising growth. This plays out well for the company's business model, which continues to benefit from Discovery's efforts abroad.
From Discovery's growing success across international platforms to its commitment to digital distribution, we can expect great things from this media powerhouse going forward. Discovery was a Motley Fool Stock Advisor pick last year, and I think it's still a buy today. Are you a fan of any Discovery TV shows? Tell me about it in the comments below.
- Add Discovery to My Watchlist (it's free!).
Fool contributor Tamara Rutter owns shares of Apple, Disney, and Discovery. Follow her on Twitter, @TamaraRutter, for more Foolish insight. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Netflix, Amazon.com, Discovery Communications, Apple, and Walt Disney, creating a bull call spread position in Apple, and creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.