NEW YORK--(BUSINESS WIRE)--ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial results for the quarter ended June 30, 2020.

Statement from Bob Bakish, President & CEO

“ViacomCBS delivered another solid quarter, with clear operational momentum and sequential improvement in key earnings and cash flow metrics. Despite the impact of COVID-19 on revenue in the quarter, we’re successfully managing through the effects of the pandemic, reaffirming the strength of our combined operations. Our results underscored our strong progress delivering on our value-creation initiatives, including integration cost synergies, expanded and new distribution agreements, as well as the rapid acceleration of our streaming business, where we achieved record users and revenue in free and pay while building toward the relaunch of our diversified super service.”

OVERVIEW OF Q2 REVENUE

• Affiliate revenue increased 2%, reflecting growth in station affiliation and retransmission fees, as well as subscription streaming revenue, which more than offset declines in pay-TV subscribers.
• Advertising revenue declined 27% year-over-year, driven by the adverse effects of COVID-19 on global advertising demand, the comparison against the broadcast of the national semifinals and championship games of the NCAA Tournament in the prior-year quarter, as well as the cancellation and postponement of professional golf tournaments.
• Domestic streaming and digital video revenue – which includes streaming subscription and digital video advertising revenue – rose to $489M, up 25% year-over-year, driven by 52% growth in streaming subscription revenue and robust growth in Pluto TV advertising revenue.
• Content licensing revenue was relatively flat, primarily reflecting the licensing of domestic streaming rights to South Park, offset by significant licensing activity in the year ago quarter, as well as the timing of deliveries, which were affected by COVID-related production delays.
• Theatrical revenue was immaterial in the quarter due to the closure of movie theaters in response to COVID-19.
• Publishing revenue decreased 8%, mainly driven by lower print book sales as a result of the impact of COVID-19, partially offset by growth in sales of electronic and digital audiobooks.

BALANCE SHEET & LIQUIDITY

• In Q2, ViacomCBS raised $4.5B of capital and used the proceeds to redeem $2.8B of near-term maturities, including a $340M redemption that settled on July 10, 2020. These transactions reinforced the company’s strong financial position, adding $1.7B to its cash balance with no maturities due until 2022.
• As of June 30, 2020, taking into account the benefit of the company’s full run-rate merger-related cost synergies, its debt to Adjusted OIBDA ratio calculated to 3.3x. On a net basis, taking into consideration its $2.3B cash balance as of June 30, 2020, this ratio calculated to 2.9x, unchanged from the end of 2019.
• ViacomCBS continued to strengthen its financial position and demonstrate its commitment to creating shareholder value, with $795M of Operating Cash Flow and $714M of Free Cash Flow† generated in the quarter.
• The company’s committed $3.5B revolving credit facility remains undrawn.

SPOTLIGHT ON DISTRIBUTION & STREAMING

In Q2, ViacomCBS delivered significant multiplatform distribution wins and strong domestic streaming and digital video revenue growth, with record sign-ups and consumption across its free and pay services.

DISTRIBUTION HIGHLIGHTS

• In April, ViacomCBS signed a comprehensive, multiplatform partnership with Verizon, spanning pay TV, connected television and mobile – including a significant expansion of Pluto TV’s footprint.
• In May, the company announced a new deal with YouTube TV, which renewed CBS and Showtime early and brought Viacom’s cable networks to the service.
• More recently, in July ViacomCBS announced a multi-year renewal with DISH and Sling TV, marking its third cross-company renewal and further demonstrating the value of ViacomCBS content.
• The company also continued to benefit from strong reverse compensation and recently signed agreements with Sinclair and Cox.

STREAMING & DIGITAL VIDEO HIGHLIGHTS

• Domestic streaming and digital video revenue rose to $489M, up 25% year-over-year, driven by 52% growth in streaming subscription revenue.
• Domestic pay streaming subscribers reached 16.2M, up 74% year-over-year.
  • CBS All Access continued to break records, with its paid subscribers, streams and minutes watched reaching all-time highs in the quarter.
    • Original programming, titles from Paramount Pictures and children’s content from Nickelodeon drove strong subscriber acquisitions and engagement.
  • Showtime OTT delivered its best quarter ever in sign-ups, streams and minutes watched, driven by original programming, including Homeland, Billions and The Chi.
• In free, Pluto TV continued to build on its strong momentum in the US and internationally:
  • Pluto TV maintained its position as the #1 ad-supported streaming TV service in the US, with its domestic monthly active users (MAUs) growing to 26.5M, up 61% year-over-year.
  • Despite the impact of COVID-19, Pluto TV continued to deliver robust advertising revenue growth in the quarter.
  • In April, Pluto TV entered 17 Latin American markets and achieved robust adoption. In addition to its presence in Europe, this expansion brought Pluto TV’s total international MAUs to 6.5M, with its total global MAUs reaching 33M.
  • Additionally, Pluto TV continued to increase its distribution through multiplatform deals with Verizon, TiVo and LG, and expand its offering with more than 100,000 hours of content now available.

ON TRACK FOR SUPER SERVICE RELAUNCH

• In July, ViacomCBS unveiled the first major step in transforming CBS All Access into a rebranded super service and remains on track to relaunch this differentiated streaming product in early 2021.
  • In a significant content expansion, the company added more than 3,500 episodes from the ViacomCBS portfolio, spanning series from BET, Comedy Central, MTV, Nickelodeon, Smithsonian and more. This brings the CBS All Access library to more than 20,000 episodes and movies.
  • CBS All Access will be home to a growing slate of new original and exclusive movies and series, including:
    • Big Brother Live Feeds, The Stand andthe animated series Star Trek: Lower Decks
    • The SpongeBob Movie: Sponge on the Run and Kamp Koral, a new original kid’s series premiering in 2021 and the first spinoff derived from SpongeBob SquarePants, one of ViacomCBS’ biggest franchises
• In addition to its vast library and original content offering, CBS All Access will feature compelling live programming, spanning news, tentpole events and a critical mass of live sports, including:
  • Live streams of local CBS stations nationwide and CBSN, CBS News' rapidly growing 24/7 digital news service
  • The Super Bowl, The Grammy Awards, The Academy of Country Music Awards, The Tony Awards and more
  • Major sporting events from golf to football to basketball, plus UEFA club competitions, as the exclusive streaming home to the UEFA Champions League, UEFA Europa League and UEFA Europa Conference League in the US

REPORTING SEGMENTS

TV ENTERTAINMENT

• CBS finished the broadcast season as America’s most-watched network for the 12th straight year and was #1 in all key dayparts, including Prime, Late Night and Daytime, for the 3rd straight season.
• Revenue declined 22%, primarily driven by the impact of COVID-19 on the advertising market and lower content licensing revenue.
  • Affiliate revenue rose 22%, fueled by growth in station affiliation fees and retransmission revenue, as well as strong subscription streaming revenue.
  • Advertising revenue decreased 27%, reflecting the adverse effects of COVID-19 on advertising demand, the comparison against the broadcast of the national semifinals and championship games of the NCAA Tournament in the prior-year quarter, and the cancellation and postponement of professional golf tournaments.
  • Content licensing revenue declined 44% mainly due to comparisons against several significant licensing agreements in the prior-year quarter, as well as fewer programming deliveries as a result of COVID-related production delays and the timing of deliveries of programs produced for third parties.
• Adjusted OIBDA decreased 36%, mainly as a result of the revenue decline, partially offset by lower production and programming costs from COVID-related production delays and the mix of primetime programming. Advertising and promotion costs were also lower, reflecting the broadcast of fewer original programs due to COVID-19.

CABLE NETWORKS

• In the quarter, ViacomCBS had the #1 share of viewers among P2+, P2-11, P12-17, P12-34, P18-34, P18-49, P25-54 and P2-49 and owned more top-30 cable networks than any other media family; Showtime also had the top scripted show on premium cable for the second consecutive quarter and the top 3 scripted shows year-to-date.
• Revenue increased 2% reflecting growth from the licensing of domestic streaming rights to South Park, partially offset by weakness in the advertising market as a result of COVID-19, as well as lower affiliate revenue.
  • Affiliate revenue decreased 6%, as growth in subscription streaming was more than offset by linear subscriber declines.
  • Advertising revenue declined 26%, primarily driven by the adverse effects of COVID-19, which more than offset growth in streaming and digital video advertising revenue.
  • Content licensing revenue increased 175%, driven by the licensing of domestic streaming rights to South Park.
• Adjusted OIBDA grew 30%, driven by lower programming costs primarily due to scheduling changes and the cancellation of events as a result of COVID-19, lower advertising and promotion costs resulting from the broadcast of fewer original programs during the quarter and the increase in revenues.

FILMED ENTERTAINMENT

• Despite softness driven by production limitations and theater closures, ViacomCBS continued to monetize its vast library and integrated Miramax films into its offering.
• Revenue decreased 26% as a result of the closure of movie theaters throughout the quarter, as well as the timing of licensing revenues.
  • Theatrical revenue was immaterial in the quarter due to the closure of movie theaters in response to COVID-19.
  • Home entertainment revenue rose 30%, driven by the mix of titles in release, including Sonic the Hedgehog, and higher sales of catalog titles.
  • Licensing revenue decreased 20% due to lower revenues from licensing of catalog titles, as well as the timing of deliveries of programs produced for third parties.
• Adjusted OIBDA increased 22%, reflecting lower distribution costs resulting from the absence of theatrical releases in the quarter, as well as the strong performance of Sonic the Hedgehog in the home entertainment market.

PUBLISHING

• Bestselling titles for the quarter included John Bolton’s The Room Where It Happened and Stephen King’s If It Bleeds.
• Publishing revenue decreased 8%, primarily driven by lower print book sales as a result of the impact of COVID-19, partially offset by growth in sales of electronic and digital audiobooks.
• Adjusted OIBDA increased 9%, as the decrease in revenue was more than offset by lower production and distribution costs associated with the decline in print book sales and the mix of titles.

ABOUT VIACOMCBS

ViacomCBS (NASDAQ: VIAC; VIACA) is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide. Driven by iconic consumer brands, its portfolio includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, CBS All Access, Pluto TV and Simon & Schuster, among others. The company delivers the largest share of the US television audience and boasts one of the industry’s most important and extensive libraries of TV and film titles. In addition to offering innovative streaming services and digital video products, ViacomCBS provides powerful capabilities in production, distribution and advertising solutions for partners on five continents.

For more information about ViacomCBS, please visit www.viacomcbs.com and follow @ViacomCBS on social platforms.