COVID 19 Is Making 2020 Worse For ViacomCBS

ViacomCBS is proving that it’s a tough time to be the smallest major media company.

The company alerted Wall Street analysts Friday that it was abandoning its financial guidance for the year, reports The L-A Times.

“The impact of COVID-19 on ViacomCBS’ businesses — including the postponement of theatrical releases domestically and internationally, cancellation or rescheduling of sports events for which the company had broadcast rights, and production delays in television and filmed entertainment programming — could be material to the company’s operating results, cash flows and financial position,” ViacomCBS said in a regulatory filing. It noted that the media company would cut costs to help shore up its position.

It has been a bruising year for controlling shareholder Shari Redstone, who triumphed in her long-held plan to reunite her family’s two media companies — Viacom Inc. and CBS Corp. — in early December. She wanted to bring more heft and luster to the company her father built: Viacom, owner of cable channels Comedy Central, MTV, Nickelodeon, VH-1, BET and the struggling Paramount Pictures movie studio. Adding CBS, which boasts America’s most watched TV network, was intended to propel Viacom to greater heights.

But Wall Street didn’t share Redstone’s enthusiasm, and the coronavirus outbreak only added to the company’s woes. The stock has plummeted 68% since the two companies came together in early December, creating ViacomCBS.

After markets closed Friday, ViacomCBS announced that it had raised $2.5 billion in a debt offering that it hopes to close by Wednesday. The New York-based company said it would use the net proceeds for “general corporate purposes, which may include repayment of outstanding indebtedness.”

Wall Street greeted the news positively, sending ViacomCBS shares slightly higher in after-markets trading.

Nonetheless, Friday’s dual actions underscore the challenges facing the company, which relies heavily on advertising. In the last few months, ViacomCBS has announced plans to sell CBS’ historic headquarters in midtown Manhattan, a fortress known as Black Rock. It also intends to shed CBS’ iconic Simon & Schuster book publishing house. ViacomCBS plans to wait to sell Black Rock after the financial markets stabilize.

ViacomCBS’ disclosures came one day after the Redstone family investment vehicle, National Amusements Inc., announced that it restructured its agreements with lenders and refinanced its $125-million revolving credit facility. National Amusements had to cancel another $75 million line of credit for its NAI Entertainment Holdings Inc.