ViacomCBS Reports Q3 2020 Earnings Results

11/6/20

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

Statement from Bob Bakish, President & CEO

“As we near the first anniversary of the ViacomCBS merger, I’m thrilled about the way our organization has come together to realize the power of the combination and seize our unique global opportunity in streaming. This quarter, we achieved strong user growth across our streaming platforms as we continue to build our linked ecosystem of pay and free services – with big steps taken, including the preview and brand reveal of Paramount+ ahead of its launch in early 2021, and more recently, the unification of our global streaming organization. Our company’s transformation is ahead of schedule and we are incredibly excited by the opportunities ahead.”

OVERVIEW OF Q3 REVENUE

REVENUE BY TYPE

  • Affiliate revenue increased 10% year-over-year, fueled by strong growth in subscription streaming revenue, higher reverse compensation and retransmission fees, as well as expanded cable distribution.
  • Advertising revenue sequentially improved to a decline of 6% year-over-year. The year-over-year decline was primarily driven by the adverse effects of COVID-19, including lower demand in the advertising market.
  • Content licensing revenue decreased 33% year-over-year, reflecting a lower volume of licensing compared to the prior-year quarter, driven by the timing of program availabilities and the adverse impacts of COVID-19.
  • Theatrical revenue was immaterial in the quarter due to the closure or reduction in capacity of movie theaters in response to COVID-19.
  • Publishing revenue rose 29% year-over-year as a result of higher print and digital book sales that were driven by strong releases during the quarter, including Too Much and Never Enough: How My Family Created the World's Most Dangerous Man by Mary Trump and Rage by Bob Woodward.

BALANCE SHEET & LIQUIDITY

  • ViacomCBS generated $1.4B of Operating Cash Flow and $1.3B of Free Cash Flow† in the quarter, benefiting from the timing of production spending and cost savings.
  • The company maintained significant financial flexibility, with $3.1B of cash on its balance sheet and a committed $3.5B revolving credit facility that remains undrawn.

† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.

SPOTLIGHT ON STREAMING

In Q3, ViacomCBS drove significant domestic streaming and digital video revenue growth, with robust sign-ups across its pay and free services as it moves toward the launch of Paramount+

STREAMING & DIGITAL VIDEO HIGHLIGHTS

  • Domestic streaming and digital video revenue increased to $636M, up 56% year-over-year, driven by 78% growth in subscription streaming revenue and strong double-digit digital video advertising growth.
  • Domestic streaming subscribers reached 17.9M, up 72% year-over-year.

? CBS All Access and Showtime OTT had significant growth in sign-ups both sequentially and year-over-year.

  • CBS All Access benefited from strong demand for sports content, including UEFA and the NFL, as well as its broad selection of entertainment content, including live TV, reality series, content from ViacomCBS cable brands and original programming.
  • Showtime OTT’s strong quarter was driven by original programming, including the third season of The Chi, the continued strength of Billions and the final season of Homeland.
  • In free, Pluto TV grew its domestic monthly active users (MAUs) to 28.4M, up 57% year-over-year, and more than doubled its advertising revenue in the quarter.

? Internationally, Pluto TV MAUs grew to 7.5M, bringing its total global MAUs to nearly 36M.

? Building on its international expansion, Pluto TV launched in Spain in October, with upcoming launches in Brazil, France and Italy.

? Pluto TV also signed new distribution agreements with LG and Sony PlayStation, extending its reach to an additional 100M+ devices worldwide.

  • In October, ViacomCBS announced Tom Ryan as President and CEO of its new global streaming organization, integrating both its pay and free streaming businesses while enhancing its ability to leverage its content strength and cross-company franchises.

ON TRACK FOR PARAMOUNT+ LAUNCH

  • In September, ViacomCBS announced CBS All Access will be rebranded as Paramount+ in early 2021, as part of its transformation into a global streaming service that features content from ViacomCBS’ leading portfolio of brands.

? Building on Paramount’s iconic brand and legacy of storytelling, Paramount+ will feature a unique combination of live sports, breaking news and a mountain of entertainment content, spanning more than 30,000 episodes and movies.

? Paramount+ will also include an expansive slate of exclusive, original series from brands including BET, CBS, Comedy Central, MTV, Nickelodeon, Paramount Pictures and more.

? Announced originals include SpongeBob spin-off, Kamp Koral, The Offer, a limited series with never-revealed experiences of making The Godfather, Lioness, The Real Criminal Minds and more.

  • Marking a major milestone in the company’s streaming evolution, Paramount+, together with Showtime OTT and Pluto TV, is creating an ecosystem of compelling offerings across pay and free streaming.
  • In addition to the US, ViacomCBS will bring Paramount+ to international markets, debuting in Australia, Latin America and the Nordics in 2021.

REPORTING SEGMENTS

TV ENTERTAINMENT

  • CBS was once again the most-watched network across Primetime, Daytime and Late Night during the 2019-2020 broadcast year, with the top 3 dramas, 8 of the top 10 comedies and 5 of the top 6 returning new series.
  • Revenue declined 4% year-over-year, primarily due to lower content licensing revenue, partially offset by growth in affiliate revenue.

? Affiliate revenue increased 25% year-over-year, fueled by growth in reverse compensation and retransmission fees, as well as strong subscription streaming revenue.

? Advertising revenue decreased 1% year-over-year, reflecting the timing of sporting events and lower demand in the advertising market due to the adverse effects of COVID-19, largely offset by strength in political advertising.

? Content licensing revenue declined 35% year-over-year as a result of a lower volume of licensing compared to the prior-year quarter, driven by the timing of program availabilities and the adverse impacts of COVID-19.

  • Adjusted OIBDA decreased 26% year-over-year mainly due to the decline in revenue.

CABLE NETWORKS

  • In the quarter, ViacomCBS maintained leadership as the #1 portfolio in share of viewing, with more top 30 cable networks than any other media family.
  • Showtime also had 2 of the top 5 scripted shows on premium cable in the quarter and the top 2 scripted shows year-to-date.
  • Revenue declined 7% year-over-year due to lower advertising and content licensing revenue, partially offset by growth in affiliate revenue.

? Affiliate revenue increased 4% year-over-year, driven by growth in subscription streaming revenue, expanded carriage with YouTube TV and contractual rate increases, partially offset by linear subscriber declines.

? Advertising revenue decreased 11% year-over-year, primarily reflecting weakness in the advertising market as a result of COVID-19, which more than offset growth in streaming and digital video advertising and higher pricing.

? Content licensing revenue declined 26% year-over-year because of a lower volume of licensing compared to the prior-year quarter, driven by the timing of program availabilities.

  • Adjusted OIBDA grew 3% year-over-year as the decrease in revenue was more than offset by lower costs from the broadcast of fewer original programs during the quarter and the benefit of cost savings, including from restructuring activities.

FILMED ENTERTAINMENT

  • Revenue decreased 31% year-over-year, reflecting the decline in licensing and theatrical revenue.

?Theatrical revenue was immaterial in the quarter due to the closure or reduction in capacity of movie theaters in response to COVID-19.

?Home entertainment revenue decreased 2% year-over-year, driven by fewer theatrical releases in 2020, primarily offset by higher sales of catalog and Miramax titles.

?Licensing revenue decreased 27% year-over-year, as a result of lower revenue from the timing of the availability of programs produced for third parties and the licensing of catalog titles.

  • Adjusted OIBDA decreased 18% year-over-year, reflecting the decline in revenue, partially offset by lower distribution costs from fewer theatrical releases in the quarter.

PUBLISHING

  • Publishing revenue rose 29% year-over-year, as a result of higher print and digital book sales that were driven by strong releases during the quarter.
  • Bestselling titles for the quarter included Too Much and Never Enough: How My Family Created the World's Most Dangerous Man by Mary Trump and Rage by Bob Woodward.
  • Adjusted OIBDA grew 5% year-over-year as strong revenue growth was partially offset by higher author expenses and costs associated with 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.

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