ViacomCBS Up Double Digits, Profit Slumps

ViacomCBS Inc, today reported financial results for the quarter ended March 31st, 2020.

The media company beat estimates by 17 cents a share, with quarterly earnings of $1.13 per share. Revenue also came in above estimates. ViacomCBS logged a 51% increase during the quarter in domestic streaming and digital video revenue.

Statement from Bob Bakish, President & CEO:

Bob Bakish

“ViacomCBS delivered solid results in our first full quarter, including sequential improvement on key financial metrics, as well as clear operating momentum. In the wake of the COVID-19 pandemic, we also took decisive action to fortify our balance sheet, protect our employees and help communities in need. And through new creative strategies and production models, we continue to deliver must-watch content that big audiences love. Importantly, we are just beginning to tap into the potential of our combined assets, and our growing scale, audience reach and earnings power will become even more apparent as the market rebounds and we put the power of our portfolio behind our streaming strategy. I thank ViacomCBS employees around the world for their adaptive creativity and continued focus on serving our audiences, commercial partners and shareholders amid these unprecedented circumstances.”

➤OVERVIEW OF Q1 REVENUE

• Advertising revenue declined 19% year-over-year, but increased 2% excluding a 21-percentage point unfavorable impact from the comparison against CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament in the prior year quarter. International advertising revenue included a 10-percentage point unfavorable F/X impact.
• Affiliate revenue increased 1%, reflecting growth in station affiliation and retransmission fees, as well as subscription streaming revenue, which more than offset declines in pay-TV subscribers. International affiliate revenue included an 8-percentage point unfavorable F/X impact.
• Domestic streaming and digital video revenue – which includes streaming subscription and digital video advertising revenue – grew to $471 million, up 51% year-over-year.
• Content licensing revenue grew 9%, fueled by growth in original studio production for third parties. Paramount Television Studios, CBS Television Studios and Cable Networks’ studios all benefited from strong content deliveries during the quarter.
• Theatrical revenue declined 3% as strong results from Sonic the Hedgehog were more than offset by prior year quarter revenues, which included carryover performance from Bumblebee.
• Publishing revenue rose 4%, driven by higher sales of electronic and digital audio books.

➤Q1 STREAMING & DIGITAL VIDEO HIGHLIGHTS

• Domestic streaming and digital video revenue – which includes streaming subscription and digital video advertising revenue – grew to $471 million, up 51% year-over-year
• Domestic streaming subscribers surpassed 13.5M, up 50% year-over-year.
• CBS All Access and Showtime OTT delivered record subscribers, sign-ups and consumption, reflecting original programming, including Star Trek: Picard and Homeland.
• In free, Pluto TV’s domestic monthly active users (MAUs) grew to a record of 24M+, an increase of 55% year-over-year.

➤SURGE IN GROWTH IN APRIL

• With more consumers at home, ViacomCBS streaming platforms had their best month, with accelerated subscriber growth and consumption, reinforcing consumer demand for its content.
• CBS All Access and Showtime OTT sign-ups, daily average streams and minutes watched all rose substantially, versus the prior month.
• Live TV and original programming, such as Star Trek: Discovery, Star Trek: Picard, The Good Fight and Survivor, drove consumption records in April on CBS All Access, with total streams and minutes watched up significantly.
• Showtime OTT delivered its best month ever in time watched and total streams. Viewers took advantage of the full catalogue, with streaming of original series, such as Homeland and Penny Dreadful: City of Angels, and movies growing +50% and +110% year-over-year, respectively.
• CBS All Access and Showtime OTT are seeing strong account activation, as well as consistent paid subscription conversion rates.

➤TV ENTERTAINMENT

• CBS will finish the broadcast season as America’s most-watched network for the 12th straight year. In the quarter, CBS had the top 2 dramas, 5 of the top 6 comedies and #1 news program, as well as 5 of the top 6 freshmen series.
• Revenue declined 13%, including a 20-percentage point unfavorable impact from the comparison against CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament in the prior year quarter. Excluding that impact, revenue increased 7%, driven by growth in affiliate, advertising and content licensing revenue.
• Advertising revenue decreased 30%, reflecting the comparison to CBS’ broadcast of Super Bowl LIII and the NCAA Tournament in the prior year quarter. Taken together, these two events had an unfavorable impact of 34 percentage points on advertising revenue compared to the prior year quarter. This impact was partially offset by higher political advertising sales and the broadcast of an additional NFL playoff game on CBS.

➤CABLE NETWORKS

• ViacomCBS grew share year-over-year in a majority of its cable networks and had the most top 30 original cable series with viewers 2-11 and 18-34.
• Revenue decreased 2% as higher streaming and studio production revenue was more than offset by linear subscriber declines.
• Advertising revenue was flat, including a 3-percentage point unfavorable F/X impact, as strong growth in domestic streaming and digital video advertising, which includes Pluto TV, offset lower linear advertising.
• Affiliate revenue fell 6% year-over-year, including a 1-percentage point unfavorable F/X impact, as growth in streaming was more than offset by linear subscriber declines. Importantly, the rate of change improved sequentially by 2 percentage points from Q4 2019.