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ViacomCBS added 4.3 million global streaming subscribers in its third quarter ended in September, driven by the Paramount+ service, to reach nearly 47 million global paid users, the entertainment company reported on Thursday.
It had ended the second quarter with more than 42 million global paid streaming customers after adding about 6.5 million in the April-June period. For the third quarter, analysts had on average forecast 3.9 million additions. In the first quarter, running from January through March, the company had added 6.0 million.
Management said on an earnings conference call that streaming subscriber growth in the current fourth quarter would come in ahead of the third quarter.
Quarterly streaming revenue surpassed $1 billion for the first time, ViacomCBS highlighted. The firm’s global streaming revenue jumped again in the latest quarter, including gains in subscription and advertising revenue, led by ad-supported streamer Pluto TV, which also added users in the latest period.
Also on Thursday, the conglomerate unveiled a new streaming distribution deal with T-Mobile. The wireless company will give new and existing customers on post-paid plans a free year of the advertising-supported tier of Paramount+. After a year, the service will automatically renew for $4.99 per month, or whatever price the service will then have.
In its third-quarter earnings report, ViacomCBS posted a 1 percent advertising revenue gain over the year-ago period, which had been hit by the coronavirus pandemic, and higher distribution revenue.
ViacomCBS’ total quarterly revenue came in slightly ahead of Wall Street estimates.
The conglomerate’s film unit benefited from the success of Paw Patrol: The Movie and more business for A Quiet Place Part II, which had debuted in the second quarter. But quarterly revenue fell 2 percent to $580 million on lower licensing revenue. Adjusted operating income before depreciation and amortization in the film unit declined by $16 million to $38 million, “reflecting lower profits from current year releases as a result of higher distribution costs, as well as distribution costs associated with anticipated releases.”
Wells Fargo analyst Steven Cahall in mid-October lowered his forecast for third-quarter global paid streaming user net additions from 5 million. “The rollout of international markets timing is the main driver behind our modest revision lower,” he explained. That lowered his global sub count estimate to 46.1 million as of the end of September.
ViacomCBS 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 beefed up and rebranded in the U.S. on March 4 as Paramount+, and Showtime OTT.
On Thursday’s earnings call, Bakish said “movies are a hit” for Paramount+ and key subscriber and engagement drivers for the service. He pointed to the recent Paw Patrol and Quiet Place films as examples.
And the CEO lauded what he called the biggest lineup of scripted originals on Paramount+ in the current fourth quarter, including the first South Park content for streaming.
For 2022, ViacomCBS management promised an investor day to provide an update on its streaming push and a new way to report its financials, including a separate streaming segment.
Asked about the future of the film unit, now led by Brian Robbins, Bakish said the new studio head was working on the slate. He added that the company was looking to “lean more into franchises” and a “multifaceted” model that includes streaming.
Addressing fourth-quarter advertising trends, the ViacomCBS mentioned a mix of headwinds, including due to global supply-chain issues putting pressure on ad spending, and positive trends.
Asked about the Department of Justice’s decision this week to move to block ViacomCBS’ planned sale of book publisher Simon & Schuster to Penguin Random House, Bakish reiterated a company statement that the challenge was “without merit,” arguing the deal would benefit consumers, authors and others.
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