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Discovery taps into $500m credit facility amid ‘unknown’ Covid-19 impact

US-based media group Discovery has borrowed $500m (€456.9m) under its credit facility as it seeks to tackle the impact of the Covid-19 pandemic.

In a filing to the US Securities and Exchange Commission, Discovery said that the “unknown impact” of the outbreak – plus Tuesday’s postponement of Tokyo’s 2020 summer Olympic and Paralympic Games – had forced it to retract its full-year 2020 performance outlook.

Discovery said: “On March 12, 2020, the company drew down $500m under the credit facility to increase its cash position and maximise flexibility in light of the current uncertainty surrounding the impact of Covid-19.”

However, the company stressed that any concerns over its financial status should be assuaged by the fact it has $1.55bn in cash on its balance sheet and access to a $2.5bn revolving credit facility.

It is estimated that the Olympics-driven operating loss will result in a financial hit of between $175m and $200m in the third quarter.

In the wake of the decision from the International Olympic Committee and Tokyo 2020 earlier this week, Discovery, which holds the Olympics media rights in Europe (excluding Russia), said 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”.

Discovery added: “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.”

The broadcaster holds the rights in Europe (excluding Russia) from 2018 to 2024 in a deal worth €1.3bn ($1.38bn). Discovery last month presented its fourth-quarter and full-year financial results. International Networks, the business unit that houses assets including Eurosport, reported full-year revenues of $4.04bn, a three-per-cent year-on-year fall.

International Networks’ full-year adjusted operating income before depreciation and amortisation (OIBDA) dropped by 2 per cent to $1.06bn. Excluding foreign currency effects, the figure rose by eight per cent.

Full-year advertising revenues at the International Networks division totalled $1.8bn, a two-per-cent uplift (or eight-per-cent increase excluding foreign currency effects). Distribution revenues were just under $2.1bn, a one-per-cent rise (or seven per cent excluding foreign currency effects).

International Networks’ fourth-quarter revenues were $1.12bn, up three-per-cent. This was comprised of $546m in advertising revenues (up two per cent), $531m in distribution revenues (up five per cent) and $42m in ‘other’ revenues (down nine per cent).