ViacomCBS Reports Q4 and Full Year 2019 Results; Provides Strategic Update
- Full Year Revenue Increased 2%, Driven by Growth in Advertising, Affiliate and Content Licensing; Operating Income, Net Earnings and Diluted EPS Impacted by Q4- Transitional Q4 Included Merger-Related Expenses, As Well As Operating Items Expected to be Mitigated Through Benefits of the Combined Company- Moving Quickly on Integration: Consolidated Teams in Place; Increasing Annualized Run-Rate Cost Synergy Target to $750M from $500M- Go-Forward Strategy Will Unlock Incremental Value from Content, Revenue Lines and Streaming-- Expanded Portfolio of Platforms Increases Content ROI, Monetization Opportunities-- Domestic Streaming and Digital Video Business Already Generating Approximately $1.6B in Annual Revenue, with Significant Momentum Going ForwardNEW YORK--February 20, 2020--ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial results for the quarter and full year ended December 31st, 2019.
Statement from Bob Bakish, President & CEO“In less than three months since completing our merger, we have made significant progress integrating and transforming ViacomCBS. We see incredible opportunity to realize the full power of our position as one of the largest content producers and providers in the world. This is an exciting and valuable place to be at a time when demand for content has never been higher, and we will use our strength across genres, formats, demos and geographies to serve the largest addressable audience, on our own platforms and others.
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ViacomCBS is one of the largest content producers and providers in the world.In 2020, our priorities are maximizing the power of our content, unlocking more value from our biggest revenue lines and accelerating our momentum in streaming. With this as a backdrop, we’ve set clear targets for the year and are providing increased transparency around our business to demonstrate ViacomCBS’ ability to create shareholder value today, as we continue evolving and growing our business for tomorrow.”
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Domestic streaming and digital video business already generating approximately $1.6B in annual revenue, with significant momentum going forward.- Advertising revenue increased 2%, driven by 5% growth in domestic advertising sales, reflecting CBS’ broadcasts of Super Bowl LIII and the NCAA Division I Men’s Basketball Tournament’s national semifinals and championship games, as well as higher revenues from Advanced Marketing Solutions (“AMS”) which includes Pluto TV, partially offset by lower political ad spend.
- Affiliate revenue grew 3%, fueled by 20% growth in reverse compensation and retransmission, as well as strong subscription streaming revenue, which more than offset declines in pay TV subscribers.
- Content licensing revenue rose 5%, reflecting higher revenues from licensing library and original production to third parties.
- Domestic streaming and digital video business – which includes subscription revenue and digital video advertising – generated approximately $1.6B in revenue.
Q4- Affiliate revenue increased 1%, as strong growth in reverse compensation, retransmission and subscription streaming revenue more than offset declines in the pay TV landscape.
- Domestic advertising revenue was affected by significant declines in political advertising compared with the prior-year quarter.
- Domestic Cable Networks’ advertising revenue grew 9%, benefiting from AMS.
- Content licensing revenue declined 11% due to the timing and mix of deliveries.
STRATEGIC UPDATEViacomCBS is one of the largest content producers and providers in the world.
The company has a powerful content engine – including global production capabilities, and a vast library of premium TV and film titles – that spans all genres, formats, demographics and geographies. And, ViacomCBS has the ability and flexibility to monetize this content in a variety of models – across both owned and third-party platforms – which the company believes is a distinct and important competitive advantage.
ViacomCBS will capitalize on these strengths to serve the largest addressable audience – and, in the process, expand the value of that content for more people, more partners and on more platforms.
1. Maximize the Power of Content- Put the full power of the company behind its biggest priorities, while applying more rigor to managing content mix, investment and returns.
-- Focus on global, cross-company franchise management to get the most out of powerful IP.
-- Use ViacomCBS’ leadership positions off- and on-screen – and the company’s huge global footprint – to promote priorities.
-- Prioritize content investment in streaming and studio production – two growth areas – while also optimizing programming mix to improve content ROI.
2. Unlock Value from Biggest Revenue Lines- Drive growth across distribution, ad sales, content licensing and third-party studio production, enabled by the strength of the unified company’s asset base and its position as one of the most important partners in the media ecosystem.
-- Distribution: Combine must-have content across broadcast and cable with proven partnership model to drive growth and share.
-- Advertising: Benefit from leadership positions in linear and digital, and apply advanced advertising capabilities across expanded audience reach.
-- Content Licensing: Package TV and film to create new content licensing opportunities and better meet client needs; use low-risk, profitable studio production business to grow content and IP library for the long-term in an economically efficient way.
3. Accelerate Momentum in Streaming- Take a differentiated approach that builds on ViacomCBS’ unique foundation in streaming, plays to its strengths and fulfills unmet audience and partner needs.
- Complement the company’s leading free Pluto TV and premium pay Showtime OTT offerings by adding a broad pay offering, built on the foundation of CBS All Access.
-- Offerings in free, broad pay and premium pay provides opportunity to serve largest potential consumer market while providing benefits in subscriber acquisition, churn and lifetime value.
-- New broad pay “House of Brands” product will expand CBS All Access by adding the company’s scaled assets in film and TV, including world-renowned brands, and reaffirm and expand the value of entertainment, news and sports – through on-demand and live experiences – for audiences around the world.
-- Go-to-market strategy includes partnerships with both traditional and new distributors, domestically and internationally.
TV ENTERTAINMENTFINANCIAL RESULTS- Full year revenue increased 8%, with growth across each of the segment’s main revenue lines.
- Full year Adjusted OIBDA decreased 1%, as a result of increased content investment and higher costs associated with the growth and expansion of streaming services, partially offset by higher revenues.
- Fourth quarter revenue declined 1%, as higher affiliate revenue was more than offset by lower political advertising sales and content licensing, compared to the prior year quarter.
- Fourth quarter Adjusted OIBDA declined, reflecting lower political advertising, content licensing and higher expenses.
OPERATIONAL HIGHLIGHTSViewing Performance and Programming:- CBS will conclude the broadcast season as America’s most-watched network for the 12th consecutive year, and season-to-date has the most top 30 regularly scheduled broadcast programs.
- CBS remained #1 in daytime and late night, and, among broadcast networks for viewers 2+, had 5 of the top 10 non-sports programs, and 5 of the top 6 freshman series.
- On CBS, the NFL finished the 2019-20 season as the most-watched season in three years.
Affiliate and Subscription Growth:- In January, ViacomCBS announced a renewed carriage agreement with Comcast, including retransmission of 23 CBS-owned TV stations in 15 major markets across the US. As part of the agreement, CBS All Access will be available on Xfinity X1 and Flex platforms.
- In January, the premiere of Star Trek: Picard on CBS All Access broke internal records for total streams and subscriber signups.
Studio Production:- CBS Television Studios continued to grow, with 79 shows ordered to or in production – a 23% increase from the previous year.
CABLE NETWORKSFINANCIAL RESULTS- Full year revenue declined 2%, as higher streaming and studio production revenue was more than offset by a decrease in linear subscribers and an approximate 200 bps unfavorable F/X impact.
- Full year Adjusted OIBDA decreased 19%, driven by lower revenues and increased costs, including higher investment in content and advertising and promotional expenses.
- Fourth quarter revenue declined 2% as linear subscriber declines more than offset growth from OTT services.
- Fourth quarter Adjusted OIBDA reflects increased investment in programming and OTT.
OPERATIONAL HIGHLIGHTSViewing Performance and Programming:- Cable Networks’ total portfolio grew share for the full year, and owned more top 30 cable series in the quarter than any other cable family among key demos.
-- Showtime was the #1 premium network on Sunday nights in the quarter.
-- Comedy Central had its 11th straight quarter of YOY share growth – its best streak ever. In January, the launch of Awkwafina is Nora From Queens was the network’s best series premiere in 3 years.
-- Paramount Network marked its 5th consecutive quarter of YOY share growth and finished the year with its largest YOY share gain in 14 years.
-- Internationally, Telefe remained #1 in ratings, while Channel 5, Network 10, MTV and Paramount Network grew YOY share in the quarter.
Studio Production:- Awesomeness’ production of To All the Boys: P.S. I Still Love You premiered on Netflix in February.
- New productions for Quibi include MTV’s Punk’d and Singled Out, Comedy Central’s Reno 911 and Awesomeness’ One Night Forever.
FILMED ENTERTAINMENTFINANCIAL RESULTS- Full year revenue grew 1%, principally driven by licensing, which was partially offset by lower theatrical revenues.
- Full year Adjusted OIBDA grew to $80M, principally driven by profits from licensing of films.
- Fourth quarter revenue was impacted by current year slate performance and the number and mix of film titles compared to the prior year.
- Fourth quarter Adjusted OIBDA was an outlier when compared to the prior 8 quarters of YOY Adjusted OIBDA improvement.
OPERATIONAL HIGHLIGHTSParamount Pictures:- While the Q4 film slate performance was soft, highly anticipated releases in 2020’s expanded slate:
-- Currently in theatres, Sonic the Hedgehog has grossed over $116M in worldwide box office in its opening weekend, holding the record for the best debut of a film based on a video game.
-- The SpongeBob Movie: Sponge on the Run, A Quiet Place Part II, Top Gun: Maverick coming in Q2.
Paramount Television Studios:- Paramount Television Studios also continued to expand, with 27 shows ordered to, in production or on air.
- New series premieres include:
- On USA Network: Briarpatch in February
- On BET: Season 2 of Boomerang on March 11th
- On Spectrum’s On Demand platform: Paradise Lost on April 13th
- On Apple TV+: Home Before Dark and Defending Jacob in April
Strategic Investment:- In December, ViacomCBS announced an agreement with beIN Media Group to acquire a 49% stake in MIRAMAX.
-- As part of the deal, Paramount entered into an exclusive, long-term distribution agreement for MIRAMAX’s award-winning 700+ film library and a first-look agreement to develop, produce, finance and distribute new film and television projects based on its IP.
PUBLISHINGFINANCIAL RESULTS- Full year revenue declined 1%, primarily reflecting lower print book sales, partially offset by 7% growth in digital.
- Full year Adjusted OIBDA decreased 7%, reflecting the decline in revenue and higher costs from the mix of titles.
OPERATIONAL HIGHLIGHTS- Bestselling titles for the quarter included Stephen King’s The Institute, Alex DeMille’s The Deserter, and the relaunch of Joy of Cooking.
- For the year, bestselling titles included the “relaunch” as an author of Howard Stern with Howard Stern Comes Again, Stephen King’s The Institute and David McCullough’s The Pioneers.
- The Audio division also saw significant growth for the year from the world-class productions of titles, including The Mueller Report.
You can read ViacomCBS's Q4 and Full Year 2019 Results press release in full, including tables of Viacom's statements and balance sheets, here on
ir.viacbs.com.
ABOUT VIACOMCBSViacomCBS (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 U.S. 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.viacbs.com and follow @ViacomCBS on social platforms.
VIAC-IR
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTSThis communication contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect our current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause future results, performance or achievements to differ. These risks, uncertainties and other factors include, among others: technological developments, alternative content offerings and their effects in our markets and on consumer behavior; the impact on our advertising revenues of changes in consumers’ content viewership, deficiencies in audience measurement and advertising market conditions; the public acceptance of our brands, programming, films, published content and other entertainment content on the various platforms on which they are distributed; increased costs for programming, films and other rights; the loss of key talent; competition for content, audiences, advertising and distribution in consolidating industries; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of our content; the risks and costs associated with the integration of the CBS Corporation and Viacom Inc. businesses and investments in new businesses, products, services and technologies; evolving cybersecurity and similar risks; the failure, destruction or breach of critical satellites or facilities; content theft; domestic and global political, economic and/or regulatory factors affecting our businesses generally; volatility in capital markets or a decrease in our debt ratings; strikes and other union activity; fluctuations in our results due to the timing, mix, number and availability of our films and other programming; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; liabilities related to discontinued operations and former businesses; potential conflicts of interest arising from our ownership structure with a controlling stockholder; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our most recent Annual Report and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this communication are made only as of the date of this communication, and we do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.
From the
ViacomCBS Newsroom:
OUR PATH FORWARD AS VIACOMCBS†
FEB 20, 2020
By Bob Bakish
"We have a plan to get there…now comes the fun part of executing it."
Less than three months ago, we merged to become ViacomCBS, one of the largest content producers and providers in the world. We’ve since made great progress to integrate and transform the business as we move quickly to unlock the full power of this company organizationally, operationally and financially.
Today, during our first-ever ViacomCBS earnings call, I outlined our strategy for delivering greater value in 2020, focusing on three priorities:
Maximize the power of our content;
Unlock more value from our biggest revenue lines; and
Accelerate our momentum in streaming and digital video
First, we’re focused on increasing the value of our content, IP and franchises across our portfolio, and applying more rigor to managing our content mix, investment and returns.
With our portfolio combined, we now have a powerful promotional platform to showcase our biggest content priorities, from franchises to football. We’re also developing global, cross-company franchise opportunities. For example, on the heels of the launch of Star Trek: Picard on CBS All Access – which broke our records for total streams and subscriber sign-ups – we’re extending the Star Trek franchise across the house. Building on the success of Discovery and Picard, we have two additional series in production at CBS All Access and Nickelodeon, with two more series in development; a series of Picard novels rolling out at Simon & Schuster; and a highly anticipated new Star Trek feature film at Paramount.
When it comes to more effectively managing our content mix, investment and returns, we are prioritizing our spend in streaming and studio production – two key growth areas – while keeping our linear TV content spend levels consistent with last year. We’re also boosting cross-company use of our IP to improve ROI and attract new audiences in a cost-effective way.
This strategy is already in place at Showtime, which will air a special season of VH1’s RuPaul’s Drag Race All Stars on a first-window basis – a move we think will help drive Showtime subscriber growth and further strengthen the return on investment in this franchise. We see an even bigger opportunity to better monetize some of Showtime’s “plex” channels, which is why we’ll be rebranding and relaunching Showcase as SHO*BET. This channel will feature African American scripted series from Showtime and BET, as well as popular movies and specials, helping us benefit from the growing demand for premium African American content across platforms.
Maximizing the power of our content is strongly tied to our second 2020 priority: Unlocking more value from our biggest revenue lines.
In distribution, our leading broadcast and entertainment brands, and strength in live, local, news and sports, makes ViacomCBS a must-have. And by working with distribution partners to deepen our relationships through advanced advertising, broadband products and more, we can continue to serve the largest addressable market and grow share in the face of industry macro-trends. We’ve already seen the benefit of our combined portfolio in the recent renewal of our carriage agreement with Comcast, which brings CBS All Access to set-top boxes for the first time. And thanks to Paramount, we’re also critical to the film distribution ecosystem. Look no further than our most recent release, Sonic the Hedgehog, which delivered the biggest box office opening ever for a video game adaptation at more than $70 million domestically.
We’re also a must-buy for advertisers thanks to our leadership in U.S. reach across linear and digital, as well as our advanced ad capabilities, which were a key driver of our domestic cable networks’ ad growth in Q4 and full year 2019. This momentum positions us well for the next Upfront, especially as we apply Viacom’s advanced ad business across CBS’ massive audience reach, and as we continue to expand our premium digital video inventory, already amongst the largest in the industry.
We are an essential content licensing partner too. Along with an extensive library of IP to leverage, we now have a single content licensing sales force in place. This team will focus on extracting incremental benefit through the packaging of film and TV, tailoring offerings to better meet client needs while supporting our own platforms. Likewise, we will also continue to drive greater value from our third-party studio production, a quickly scaling and fundamentally profitable business that allows our key franchises to reach more consumers, and enables us to efficiently grow our content and IP library for the long-term.
Finally, our third 2020 priority is to accelerate our momentum in streaming. This starts with us building on our strong foundation in ad-supported streaming through Pluto TV – a leading free streaming TV service in the U.S. with over 22 million monthly active users – as well as in pay streaming, where our offerings account for more than 11 million domestic subscribers – up over 50% year-on-year. We’re also making strides to expand these services internationally. Pluto is available in the U.K., Germany, Austria and Switzerland, and launches in Latin America next month, while CBS All Access is available in Canada and Australia, as are our Paramount+ and Noggin products in numerous territories.
Beyond usage, our streaming foundation is also financial. In 2019, our domestic streaming and digital video business – which includes subscription revenue and digital video advertising – delivered approximately $1.6B billion in revenue, which we expect to grow between 35 to 40 percent this year.
Of course, the opportunity is much, much larger. Our go-forward streaming strategy is rooted in the belief that the streaming world will evolve similarly to linear, as defined by free, broad pay and premium pay segments. And, just like in linear, we’ll have robust offerings in each, allowing us to migrate consumers across price points through promotion and bundling, and increase subscriber acquisition, retention and lifetime value.
With Pluto TV as our free offering and Showtime OTT as our premium pay product, we will expand CBS All Access to serve the broad pay streaming segment. This differentiated service will reaffirm and grow the value of entertainment, news and sports content – through on demand and live experiences – for audiences worldwide. In effect, it will be a combined “House of Brands” product, with content added from Nickelodeon, Comedy Central, MTV, BET and Smithsonian, along with popular Paramount films. Importantly, we will make this offering compatible with the evolving distribution landscape to broaden our partnerships across the traditional and OTT spaces, including mobile.
As we look at our road ahead in 2020, I am confident in our ability to capitalize on our status as one of the biggest content providers in the world and become the most important partner in the media ecosystem. For the year, we expect to accelerate our revenue growth by mid-single-digits, reflecting strength across our business segments. We have a plan to get there…now comes the fun part of executing it.
†See
ViacomCBS Q4 2019 earnings release for information regarding our use of non-GAAP financial measures and forward-looking statements.
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