ViacomCBS added about 6.5 million global streaming subscribers in its second quarter, driven by the Paramount+ service, which debuted such originals as iCarly and Paramount movie Infinite in the period, to reach more than 42 million global paid streaming users, the entertainment company said Thursday.
The company also reported an advertising revenue gain over the year-ago period, which had been hit by the coronavirus pandemic to record a decline to $1.93 billion after reaching $2.65 billion in the second quarter of 2019. “Advertising revenue grew 24 percent year-over-year, driven by CBS’ broadcasts of 2021 sporting events for which there were no comparable broadcasts in the prior-year period as a result of COVID-19, and an improved advertising market,” the company said.
Related Stories
The company, led by CEO Bob Bakish, shared the latest data in its earnings report for the three-month period ending June before the market open. In the first quarter, it had added 6 million paying streaming users to reach 36 million.
The firm’s global streaming revenue jumped 92 percent in the latest quarter, including an 80 percent gain in subscription and 102 percent improvement in advertising revenue, led by Pluto TV.
The firm was created in December 2019 via the recombination of Viacom and CBS Corp. Its paying streaming services are led by the former CBS All-Access, which showed this year’s Super Bowl, that beefed up and rebranded in the U.S. on March 4 as Paramount+, and Showtime OTT. They and smaller services had reached nearly 30 million global subscribers as of the end of 2020.
Advertising-supported streaming service Pluto TV also added users.
“In an overall challenging backdrop for streaming, we expect strong second-quarter net adds for ViacomCBS as increased content, international market launches and exclusive sports lead the way,” Morgan Stanley analyst Benjamin Swinburne wrote in his earnings preview report. “Offsetting higher top-line, however, is higher expected investment spend.”
He explained: “App download data combined with second-quarter international launches lead us to raise our second-quarter net adds estimates (from 4.5 million to 6.5 million) ahead of consensus. In particular, a full quarter in the U.S. of the new Paramount+ combined with solid programming and exclusive sports (including at Showtime) appear to have driven strong net adds despite the reopening and seasonal headwinds all streaming services are facing.”
Bakish has said that a $4.99-a-month version of Paramount+ with advertising, which launched in June following March’s launch of the $9.99 ad-free version, will appeal to more, including cost-sensitive, consumers.
ViacomCBS said at its film unit second-quarter revenue grew 3 percent, “primarily driven by current-quarter theatrical releases, partially offset by lower licensing revenue.” The key theatrical release was A Quiet Place Part II. Licensing and other revenue fell 17 percent due to lower home entertainment revenue “as a result of the absence of theatrical releases due to COVID-19.” Film adjusted operating income before depreciation and amortization (OIBDA) declined 38 percent, “reflecting distribution costs associated with current-quarter theatrical releases and other anticipated releases later in 2021.”
Quarterly TV Entertainment unit revenue grew 23 percent, “reflecting growth across all revenue streams.” Advertising revenue jumped 24 percent, “reflecting CBS’ broadcast of the national semifinals and championship games of the NCAA Tournament and professional golf tournaments, as well as an improved advertising market, partially offset by lower ratings.” Affiliate revenue rose 10 percent amid growth in reverse compensation and retransmission fee revenue. And licensing and other revenue increased 16 percent thanks to a higher volume of programming licensed internationally and produced for third-party broadcasters. Adjusted OIBDA dropped 45 percent though, “reflecting the company’s increased investment in Paramount+.”
Cable networks unit revenue increased 8 percent in the second quarter amid higher streaming, advertising and affiliate revenue, partially offset by lower licensing revenue. Advertising revenue jumped 24 percent. Affiliate revenue grew 9 percent year-over-year despite subscriber declines. Licensing and other revenue fell 48 percent, reflecting “the licensing of the domestic streaming rights to South Park in the prior-year quarter, partially offset by revenue from the licensing of programming to Paramount+.” Adjusted OIBDA fell 12 percent, “reflecting the benefit to 2020 from the domestic licensing of South Park and an increased investment in content, partially offset by the above-mentioned revenue increases.”
Management struck bullish tones. “While it is early days, Paramount+ is clearly working,” said Bakish during Thursday’s earnings conference call, calling Infinite “one of the top engagement drivers,” the UEFA Champions League “one of the top acquisition drivers” and the iCarly reboot a “total home run.”
Discussing the upfront, he highlighted “historic levels of linear pricing increases” and described it as confirmation of the strength of the merged ViacomCBS and its brands and franchises. Saying his team would “drive that franchise machine” at Nickelodeon and other company brands, Bakish said: “We have got a very significant franchise plan ahead of us.”
Bakish wrapped up Thursday’s call by arguing that ViacomCBS has “really strong operating momentum, we have amazing content and we have a streaming strategy that is really delivering.” Shortly after the market open, the company’s stock was up 2.3 percent at $39.68.
