Discovery Communications reported another positive surprise, making it three straight quarters. Revenue matched expectations but superb performance on costs allowed EBITDA to come at $381 million vs. analyst estimates ranging from $341 million to $356 million. EPS were in line after adjusting for one-time but would have been higher if not for a high tax rate and non-cash stock based compensation.

The operating performance was even better than it appears as the company took an $11 million write-off on German programming and foreign exchange again pressured results. Excluding forex, revenues rose 3% and EBITDA rose 17%, a truly outstanding performance given the economic and advertising environment and far better than its peers.

Domestic advertising rose 2% in the second quarter, the only media company so far to be in positive territory and about 700 basis points better than the industry average. Strong ratings, good branding, and excellent management are driving the performance.

Discovery raised guidance for EBITDA slightly even as it eliminated the contribution of Discovery Kids network, which is now part of a joint venture with Hasbro.

The shares are trading off slightly this morning in a weak market following in the footsteps of last week's action in media stocks that reported decent to good results. Yesterday, DISCA shares spiked into the close to finish at a 52 week high – yes, that is correct, the stock is above its price prior to the September 2008 crash, 50% above , in fact.

While estimates have firmed from last fall, most of the advance in the shares is due to expansion of the shares valuation as investors grow more confident in the company's long-term growth and reward the stock for the amazing financial results it has produced through the worst recession ever for media. My stretch target for the stock had been the upper $20s. With the stock approaching that level but for now, I am comfortable holding the shares given the outstanding relative operating momentum and management team.