Analyst Note| Neil Macker, CFA |
Discovery posted a mixed start to 2021 as first-quarter revenue was in-line while adjusted EBITDA fell short of FactSet consensus projections. Weak U.S. ad revenue on lower ratings limited revenue growth while investments in content and the launch of Discovery+ hit margins. Despite the struggles at the traditional business, investors appear to be focused on the streaming business with the launch of Discovery+ in January. The service ended the quarter with 13 million subscribers, a relatively strong start. We are maintaining our narrow moat and $39 fair value estimate.