Discovery Communications (NASDAQ:DISCA) is a leading provider of Pay-TV programming with an emphasis on lower cost, fully owned, non-fiction content that appeals to passionate global audiences. The company’s shares have declined due to earnings headwinds from moderating international growth, negative currency impacts on reported results and the well-chronicled challenges for domestic television advertising. More importantly, multiples for media content companies have compressed significantly due to longer-term concerns about the health of the ad -supported, Pay-TV ecosystem. Discovery has several unique advantages, starting with its robust and growing content library and its unmatched international footprint. Strong capital allocation also has been a Discovery hallmark and will be increasingly important over the next several years. The company recently laid out a three-year roadmap that we think is realistic and reflects the challenges ahead. From today’s price the stock has above average return potential, as the company executes on its achievable stated plans.
From Wallace Weitz (Trades, Portfolio)'s 3Q 2015 commentary.
