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NEW YORK–(BUSINESS WIRE)–ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial results for the quarter ended March 31st, 2020.
Statement from Bob Bakish, President & CEO
“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.”
Q1 2020 RESULTS
Quarter Ended March 31 |
|||||||||
2020 |
|
2019 |
|
|
B/(W) % |
||||
GAAP | |||||||||
Revenues |
$ |
6,669 |
$ |
7,100 |
(6 |
)% |
|||
Operating income* |
917 |
1,804 |
(49 |
) |
|||||
Net earnings from continuing operations attributable to ViacomCBS* |
508 |
1,946 |
(74 |
) |
|||||
Diluted EPS from continuing operations attributable to ViacomCBS |
0.82 |
3.15 |
(74 |
) |
|||||
Non-GAAP† | |||||||||
Adjusted OIBDA |
$ |
1,263 |
$ |
1,539 |
(18 |
)% |
|||
Adjusted net earnings from continuing operations attributable to ViacomCBS |
699 |
898 |
(22 |
) |
|||||
Adjusted diluted EPS from continuing operations attributable to ViacomCBS |
1.13 |
1.46 |
(23 |
) |
$ in millions, except per share amounts |
† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release. |
* Operating income and net earnings from continuing operations attributable to ViacomCBS for Q1 2019 include a gain on the sale of CBS Television City of $549 million ($386 million, net of tax). Net earnings from continuing operations attributable to ViacomCBS for Q1 2019 also includes a deferred tax benefit of $768 million associated with the reorganization of our international operations. |
OVERVIEW OF Q1 REVENUE
REVENUE BY TYPE
Quarter Ended March 31 |
||||||||||||
2020 |
|
2019 |
|
|
|
B/(W) % |
||||||
Advertising |
$ |
2,484 |
$ |
3,066 |
$ |
(582 |
) |
(19 |
)% |
|||
Domestic |
2,229 |
2,775 |
(546 |
) |
(20 |
) |
||||||
International |
255 |
291 |
(36 |
) |
(12 |
) |
||||||
Affiliate |
2,197 |
2,165 |
32 |
1 |
||||||||
Domestic |
2,046 |
1,993 |
53 |
3 |
||||||||
International |
151 |
172 |
(21 |
) |
(12 |
) |
||||||
Content Licensing |
1,594 |
1,465 |
129 |
9 |
||||||||
Theatrical |
167 |
172 |
(5 |
) |
(3 |
) |
||||||
Publishing |
170 |
164 |
6 |
4 |
||||||||
Other |
57 |
68 |
(11 |
) |
(16 |
) |
||||||
Total Revenues |
$ |
6,669 |
$ |
7,100 |
$ |
(431 |
) |
(6 |
)% |
$ in millions |
BALANCE SHEET & LIQUIDITY
† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release. |
RESPONSE TO COVID-19
In response to COVID-19, ViacomCBS focused on reinforcing financial flexibility and business continuity, while supporting its employees and communities.
Q1 STREAMING & DIGITAL VIDEO HIGHLIGHTS
In Q1, ViacomCBS delivered strong revenue growth, and saw record sign-ups and consumption across pay and free streaming.
− CBS All Access and Showtime OTT delivered record subscribers, sign-ups and consumption, reflecting original programming, including Star Trek: Picard and Homeland.
− In March, Pluto TV rolled out its most significant product upgrade, introducing a new interface, updated features and improved search capabilities for an enhanced user experience.
− Pluto TV expanded distribution in the US and internationally, including with XBOX, Roku, Verizon in April and TiVo in May. In the quarter, Pluto TV also launched in 17 countries in Latin America, with more than 12,000 hours of Spanish-language programming.
SURGE IN GROWTH IN APRIL
− 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.
REPORTING SEGMENTS
TV ENTERTAINMENT
⎯ Affiliate revenue rose 20%, fueled by increased station affiliation fees and retransmission revenues, as well as strong subscription streaming 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.
⎯ Content licensing revenue increased 2% due to growth in original studio production for third parties.
Quarter Ended March 31 |
|||||||||||||
2020 |
|
2019 |
|
|
|
B/(W) % |
|||||||
Revenues |
$ |
2,947 |
$ |
3,406 |
$ |
(459 |
) |
(13 |
)% |
||||
Advertising |
1,381 |
1,967 |
(586 |
) |
(30 |
) |
|||||||
Affiliate |
734 |
611 |
123 |
20 |
|||||||||
Content Licensing |
797 |
781 |
16 |
2 |
|||||||||
Other |
35 |
47 |
(12 |
) |
(26 |
) |
|||||||
Expenses |
2,374 |
2,664 |
290 |
11 |
|||||||||
Adjusted OIBDA |
$ |
573 |
$ |
742 |
$ |
(169 |
) |
(23 |
)% |
$ in millions |
CABLE NETWORKS
⎯ 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.
⎯ Content licensing revenue increased 19%, driven by growth in original studio production for third parties.
Quarter Ended March 31 |
|||||||||||||
2020 |
|
2019 |
|
|
|
B/(W) % |
|||||||
Revenues |
$ |
2,858 |
$ |
2,902 |
$ |
(44 |
) |
(2 |
)% |
||||
Advertising |
1,117 |
1,115 |
2 |
– |
|||||||||
Affiliate |
1,463 |
1,554 |
(91 |
) |
(6 |
) |
|||||||
Content Licensing |
278 |
233 |
45 |
19 |
|||||||||
Expenses |
2,064 |
2,009 |
(55 |
) |
(3 |
) |
|||||||
Adjusted OIBDA |
$ |
794 |
$ |
893 |
$ |
(99 |
) |
(11 |
)% |
$ in millions |
FILMED ENTERTAINMENT
⎯ 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.
⎯ Home entertainment revenue rose 13%, driven by the mix of titles in release and higher sales of catalog titles.
⎯ Licensing revenue grew 18%, fueled by original studio productions for third parties, as well as the licensing of The Lovebirds to Netflix.
Quarter Ended March 31 |
|||||||||||||
2020 |
|
2019 |
|
|
|
B/(W) % |
|||||||
Revenues |
$ |
811 |
$ |
730 |
$ |
81 |
11 |
% | |||||
Theatrical |
167 |
172 |
(5 |
) |
(3 |
) |
|||||||
Home Entertainment |
174 |
154 |
20 |
13 |
|||||||||
Licensing |
442 |
375 |
67 |
18 |
|||||||||
Other |
28 |
29 |
(1 |
) |
(3 |
) |
|||||||
Expenses |
784 |
692 |
(92 |
) |
(13 |
) |
|||||||
Adjusted OIBDA |
$ |
27 |
$ |
38 |
$ |
(11 |
) |
(29 |
)% |
$ in millions |
PUBLISHING
Quarter Ended March 31 |
|||||||||||||
2020 |
|
2019 |
|
|
|
B/(W) % |
|||||||
Revenues |
$ |
170 |
$ |
164 |
$ |
6 |
4 |
% | |||||
Expenses |
151 |
145 |
(6 |
) |
(4 |
) |
|||||||
Adjusted OIBDA |
$ |
19 |
$ |
19 |
$ |
– |
– |
% |
$ in millions |
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.viacbs.com and follow @ViacomCBS on social platforms.
VIAC-IR
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements reflect our current expectations concerning future results and events; generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could,” “estimate” or other similar words or phrases; and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: the impact of the COVID-19 pandemic (and other widespread health emergencies or pandemics) and measures taken in response thereto; 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 on Form 10-K and reports on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not necessarily known. 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.
VIACOMCBS INC. AND SUBSIDIARIES |
|||||||
|
|||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(Unaudited; in millions, except per share amounts) |
|||||||
|
Quarter Ended |
||||||
|
March 31, |
||||||
|
2020 |
|
2019 |
||||
Revenues |
$ |
6,669 |
|
|
$ |
7,100 |
|
Costs and expenses: |
|
|
|
||||
Operating |
4,065 |
|
|
4,248 |
|
||
Selling, general and administrative |
1,341 |
|
|
1,313 |
|
||
Depreciation and amortization |
113 |
|
|
106 |
|
||
Restructuring and other corporate matters |
233 |
|
|
178 |
|
||
Total costs and expenses |
5,752 |
|
|
5,845 |
|
||
Gain on sale of assets |
— |
|
|
549 |
|
||
Operating income |
917 |
|
|
1,804 |
|
||
Interest expense |
(241 |
) |
|
(240 |
) |
||
Interest income |
14 |
|
|
19 |
|
||
Gain on marketable securities |
— |
|
|
38 |
|
||
Other items, net |
(33 |
) |
|
(28 |
) |
||
Earnings from continuing operations before income taxes and equity in loss of investee companies |
657 |
|
|
1,593 |
|
||
(Provision) benefit for income taxes |
(137 |
) |
|
376 |
|
||
Equity in loss of investee companies, net of tax |
(9 |
) |
|
(18 |
) |
||
Net earnings from continuing operations |
511 |
|
|
1,951 |
|
||
Net earnings from discontinued operations, net of tax |
8 |
|
|
13 |
|
||
Net earnings (ViacomCBS and noncontrolling interests) |
519 |
|
|
1,964 |
|
||
Net earnings attributable to noncontrolling interests |
(3 |
) |
|
(5 |
) |
||
Net earnings attributable to ViacomCBS |
$ |
516 |
|
|
$ |
1,959 |
|
|
|
|
|
||||
Amounts attributable to ViacomCBS: |
|
|
|
||||
Net earnings from continuing operations |
$ |
508 |
|
|
$ |
1,946 |
|
Net earnings from discontinued operations, net of tax |
8 |
|
|
13 |
|
||
Net earnings attributable to ViacomCBS |
$ |
516 |
|
|
$ |
1,959 |
|
|
|
|
|
||||
Basic net earnings per common share attributable to ViacomCBS: |
|
|
|
||||
Net earnings from continuing operations |
$ |
.83 |
|
|
$ |
3.17 |
|
Net earnings from discontinued operations |
$ |
.01 |
|
|
$ |
.02 |
|
Net earnings |
$ |
.84 |
|
|
$ |
3.20 |
|
|
|
|
|
||||
Diluted net earnings per common share attributable to ViacomCBS: |
|
|
|
||||
Net earnings from continuing operations |
$ |
.82 |
|
|
$ |
3.15 |
|
Net earnings from discontinued operations |
$ |
.01 |
|
|
$ |
.02 |
|
Net earnings |
$ |
.84 |
|
|
$ |
3.18 |
|
|
|
|
|
||||
Weighted average number of common shares outstanding: |
|
|
|
||||
Basic |
614 |
|
|
613 |
|
||
Diluted |
616 |
|
|
617 |
|
VIACOMCBS INC. AND SUBSIDIARIES |
||||||||
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited; in millions, except per share amounts) |
||||||||
|
At |
|
At |
|||||
|
March 31, 2020 |
|
December 31, 2019 |
|||||
ASSETS |
|
|
|
|
||||
Current Assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
589 |
|
|
$ |
632 |
|
Receivables, net |
|
7,199 |
|
|
7,206 |
|
||
Programming and other inventory |
|
1,431 |
|
|
2,876 |
|
||
Prepaid and other current assets |
|
1,187 |
|
|
1,188 |
|
||
Total current assets |
|
10,406 |
|
|
11,902 |
|
||
Property and equipment, net |
|
2,028 |
|
|
2,085 |
|
||
Programming and other inventory |
|
9,983 |
|
|
8,652 |
|
||
Goodwill |
|
16,950 |
|
|
16,980 |
|
||
Intangible assets, net |
|
2,968 |
|
|
2,993 |
|
||
Operating lease assets |
|
1,874 |
|
|
1,939 |
|
||
Deferred income tax assets, net |
|
931 |
|
|
939 |
|
||
Other assets |
|
3,882 |
|
|
4,006 |
|
||
Assets held for sale |
|
23 |
|
|
23 |
|
||
Total Assets |
|
$ |
49,045 |
|
|
$ |
49,519 |
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current Liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
673 |
|
|
$ |
667 |
|
Accrued expenses |
|
1,401 |
|
|
1,760 |
|
||
Participants’ share and royalties payable |
|
2,086 |
|
|
1,977 |
|
||
Accrued programming and production costs |
|
1,493 |
|
|
1,500 |
|
||
Deferred revenues |
|
691 |
|
|
739 |
|
||
Debt |
|
532 |
|
|
717 |
|
||
Other current liabilities |
|
1,655 |
|
|
1,688 |
|
||
Total current liabilities |
|
8,531 |
|
|
9,048 |
|
||
Long-term debt |
|
18,005 |
|
|
18,002 |
|
||
Participants’ share and royalties payable |
|
1,556 |
|
|
1,546 |
|
||
Pension and postretirement benefit obligations |
|
2,092 |
|
|
2,121 |
|
||
Deferred income tax liabilities, net |
|
639 |
|
|
500 |
|
||
Operating lease liabilities |
|
1,841 |
|
|
1,909 |
|
||
Program rights obligations |
|
316 |
|
|
356 |
|
||
Other liabilities |
|
2,274 |
|
|
2,494 |
|
||
Redeemable noncontrolling interest |
|
270 |
|
|
254 |
|
||
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
ViacomCBS stockholders’ equity: |
|
|
|
|
||||
Class A Common Stock, par value $.001 per share; 55 shares authorized; 52 (2020 and 2019) shares issued |
|
— |
|
|
— |
|
||
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,065 (2020) and 1,064 (2019) shares issued |
|
1 |
|
|
1 |
|
||
Additional paid-in capital |
|
29,633 |
|
|
29,590 |
|
||
Treasury stock, at cost; 502 (2020) and 501 (2019) Class B shares |
|
(22,958 |
) |
|
(22,908 |
) |
||
Retained earnings |
|
8,827 |
|
|
8,494 |
|
||
Accumulated other comprehensive loss |
|
(2,054 |
) |
|
(1,970 |
) |
||
Total ViacomCBS stockholders’ equity |
|
13,449 |
|
|
13,207 |
|
||
Noncontrolling interests |
|
72 |
|
|
82 |
|
||
Total Equity |
|
13,521 |
|
|
13,289 |
|
||
Total Liabilities and Equity |
|
$ |
49,045 |
|
|
$ |
49,519 |
|
VIACOMCBS INC. AND SUBSIDIARIES |
|||||||
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(Unaudited; in millions) |
|||||||
|
Quarter Ended |
||||||
|
March 31, |
||||||
|
2020 |
|
2019 |
||||
Operating Activities: |
|
|
|
||||
Net earnings (ViacomCBS and noncontrolling interests) |
$ |
519 |
|
|
$ |
1,964 |
|
Less: Net earnings from discontinued operations, net of tax |
8 |
|
|
13 |
|
||
Net earnings from continuing operations |
511 |
|
|
1,951 |
|
||
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
113 |
|
|
106 |
|
||
Deferred tax provision (benefit) |
149 |
|
|
(571 |
) |
||
Stock-based compensation |
88 |
|
|
56 |
|
||
Gain on sale of assets |
— |
|
|
(549 |
) |
||
Gain on marketable securities |
— |
|
|
(38 |
) |
||
Equity in loss of investee companies, net of tax and distributions |
9 |
|
|
17 |
|
||
Change in assets and liabilities |
(514 |
) |
|
(43 |
) |
||
Net cash flow provided by operating activities |
356 |
|
|
929 |
|
||
Investing Activities: |
|
|
|
||||
Investments |
(46 |
) |
|
(99 |
) |
||
Capital expenditures |
(51 |
) |
|
(67 |
) |
||
Acquisitions, net of cash acquired |
— |
|
|
(359 |
) |
||
Proceeds from dispositions |
146 |
|
|
741 |
|
||
Other investing activities |
— |
|
|
3 |
|
||
Net cash flow provided by investing activities |
49 |
|
|
219 |
|
||
Financing Activities: |
|
|
|
||||
Repayments of short-term debt borrowings, net |
(186 |
) |
|
(674 |
) |
||
Proceeds from issuance of senior notes |
— |
|
|
493 |
|
||
Repayment of notes and debentures |
— |
|
|
(600 |
) |
||
Dividends |
(152 |
) |
|
(150 |
) |
||
Purchase of Company common stock |
(58 |
) |
|
(14 |
) |
||
Payment of payroll taxes in lieu of issuing shares for stock-based compensation |
(50 |
) |
|
(41 |
) |
||
Other financing activities |
(33 |
) |
|
(32 |
) |
||
Net cash flow used for financing activities |
(479 |
) |
|
(1,018 |
) |
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(29 |
) |
|
1 |
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash |
(103 |
) |
|
131 |
|
||
Cash, cash equivalents and restricted cash at beginning of period (includes $202 (2020) and $120 (2019) of restricted cash) |
834 |
|
|
976 |
|
||
Cash, cash equivalents and restricted cash at end of period (includes $142 (2020) and $121 (2019) of restricted cash) |
$ |
731 |
|
|
$ |
1,107 |
|
Contacts
Press:
Justin Dini
Executive Vice President, Corporate Communications
(212) 846-2724
justin.dini@viacbs.com
Justin Blaber
Senior Director, Corporate Communications
(212) 846-3139
justin.blaber@viacom.com
Pranita Sookai
Director, Corporate Communications
(212) 846-7553
pranita.sookai@viacom.com
Investors:
Anthony DiClemente
Executive Vice President, Investor Relations
(212) 846-5208
anthony.diclemente@viacbs.com
Jaime Morris
Vice President, Investor Relations
(212) 846-5237
jaime.morris@viacbs.com
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