Discovery draws $500m from credit facility as Olympics financials pushed to 2021
Discovery, the US media giant which owns pan-European sports broadcaster Eurosport, has borrowed $500 million to boost its cash position during the ongoing coronavirus pandemic.
The emergency has also prompted the company to withdraw its fiscal performance outlook for 2020, citing the as-yet “unknown impact” of the virus on its financial results and this week's postponement of the Tokyo 2020 Olympic Games until 2021.
Discovery holds European rights to the Olympics, and had budgeted for expenses related to the games to contribute to an operating income loss of between $175 million and $200 million in the third quarter of 2020.
However, as the games will no longer be held in that quarter, revenues and expenses related to the games have been pushed to 2021.
In a statement to the US Securities and Exchange Commission, Discovery, which operates a multitude of factual channels around the world, said: “On March 12, 2020, the company drew down $500 million under the credit facility to increase its cash position and maximise flexibility in light of the current uncertainty surrounding the impact of COVID-19.”
It added that the financial outlook presented on 27 February had been superseded by the pandemic causing “unprecedented economic uncertainty.”
Discovery continued: “As a result of the unknown impact of COVID-19 on the company’s financial results and the uncertainty related to its duration, as well as the impact of the postponement of the 2020 Olympic Games, the company is withdrawing its fiscal 2020 outlook.”
The Tokyo 2020 Olympics, now scheduled for 2021, will be the first summer games in Eurosport’s €1.3-billion ($1.4-billion) deal with the International Olympic Committee covering four Olympics to 2024.
The broadcaster was set to provide coverage of this year’s Olympics in 50 European countries (excluding Russia).
After the coronavirus prompted the postponement of the games, Discovery said in a statement on Tuesday that it “fully supports the IOC and the Tokyo 2020 Organising Committee’s plan to stage the Olympic Games in 2021 and to make every effort to ensure the well-being of spectators, athletes, staff and the international community. Our essential planning and deliverables are complete and will now shift into next year. We will continue to develop our products and offerings to best serve our customers and marketing partners in 2021."
In an earnings call with investors late last month, Discovery's chief financial officer Gunnar Wiedenfels said a cancellation of the 2020 Olympics "would not have an adverse impact on our finances. We took out insurance a long time ago… so we’re covered if the worst-case scenario happens."
In announcing financial results for 2019, Discovery stated that turnover at the International Networks division, which includes Eurosport, totalled $4.04 billion, down 3 per cent from $4.15 billion in the previous year.
Operating income before depreciation and amortisation (Oibda) came to $1.05 billion, a fall of 2 per cent, from the 2018 figure of $1.07 billion