UPDATE 3-Discovery cuts 2012 revenue outlook after earnings miss

* Now sees FY revenue of $4.48-$4.53 billion

* Sees FY net income of $975 mln to $1.025 bln

* 3rd-qtr EPS 57 cents vs Street view 63 cents

* Stock down 3.6 percent

Nov 6 (Reuters) - Discovery Communications Inc said it was optimistic about prospects for ad sales in the fourth quarter even as it cut its revenue outlook and reported lower-than-expected third-quarter earnings due to a stronger dollar and higher taxes.

The company, whose cable networks include Discovery Channel, TLC and Animal Planet, benefited from advertising sales at home and abroad that topped expectations in the third quarter.

``Current ad market trends continue to be encouraging,'' Chief Financial Officer Andrew Warren said on a call with analysts. He expects high-single-digit advertising growth in the current quarter.

``The fourth quarter is also off to a great start, with October viewership up 13 percent in prime time,'' he said.

But third-quarter distribution revenue in the United States - revenue received from deals with other cable, satellite and TV networks that show it channels - declined.

Discovery, which is active in more than 200 countries, trimmed its 2012 outlook as it expects foreign exchange to continue to weigh on its business.

Foreign exchange ``has been a real bad guy for us this year. We have so many different moving currencies that affect us,'' Warren said, adding that this reduced earnings before interest, taxes, depreciation and amortization by ``multi tens of millions'' of dollars.

As a result, and due to higher costs related to its stock compensation plan and the sale of its Creative Sound business, Discovery now expects full-year revenue of $4.48 billion to $4.53 billion, down from a previous forecast of $4.55 billion to $4.65 billion.

``Our stock has been performing so well that we now have higher expenses for stock compensation,'' a spokeswoman said. That reduced third-quarter net earnings by about $20 million, the company said.

Warren said Discovery had a higher-than-normal tax rate in the third quarter, primarily due to restructuring in its international operations. He said the restructuring will ultimately lower its effective tax rate but will marginally raise the rate for the next several quarters.

The company, which has a joint venture with Oprah Winfrey's OWN network, forecast full-year net income of $975 million to $1.025 billion.

Analysts, on average, anticipate full-year revenue of $4.56 billion and net income of $1.056 billion.

``Growth is still robust, but less than initially envisioned,'' said Lazard analyst Barton Crockett.

John Janedis, an analyst at UBS, said some regions abroad fared slightly worse than expected in the third quarter.

``We think pockets of Europe and Asia were a little weaker than we anticipated,'' he said. He expects Discovery shares to be volatile

Discovery shares, up 45 percent this year through Monday, were down 3.6 percent to $57.27 in midday trading on Tuesday.

Third-quarter net income fell more than 10 percent to $214 million, or 57 cents a share, missing the average Wall Street estimate of 63 cents a share, according to Thomson Reuters I/B/E/S.

Third-quarter net income a year earlier was boosted by a distribution deal with Netflix.

The latest results included an after-tax loss of $9 million from discontinued operations due to the sale of the Creative Sound Services business, Warren said.

Revenue was little changed at $1.08 billion, compared analysts' average forecast of $1.09 billion.

Discovery said advertising revenue in the United States rose 7 percent, while distribution revenue fell 14 percent.

International Networks revenue increased 7 percent.

Advertising revenue in local currencies increased 10 percent ``primarily from higher pricing across most regions, particularly at free to air networks in Western Europe,'' Discovery said.

But Nomura analysts said international advertising growth was weaker than expected. Discovery's international advertising growth was 3 percent, versus Nomura estimates of 8 percent.

Discovery said it purchased $454 million of stock during the third quarter and $104 million in October, prompting analysts at Evercore to raise the estimate for overall share repurchases to $1.5 billion in 2012 from $1.3 billion.