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ViacomCBS Tops Wall Street’s Expectations in First Full Quarter as Recombined Company

Paramount’s ”Sonic“ quarter almost keeps pace with last year’s ”Bumblebee“ quarter

ViacomCBS celebrated its first full quarter as a recombined company by beating media analysts’ estimates for Q1 2020 revenue and earnings. Unfortunately, both of those metrics declined from the prior year.

Wall Street forecast earnings per share (EPS) of 94 cents on $6.58 billion in revenue, according to a consensus estimate compiled by Yahoo Finance. ViacomCBS actually reported adjusted EPS of $1.13 on $6.67 billion in revenue. That revenue figure was down 6% from the comparable quarter last year, per-share earnings declined 23%.

The company posted a net income of $508 million, a 74% decrease from Q1 2019’s net earnings of $1.946 billion.

Ad sales dropped 19% versus the comparable year-ago quarter, which included CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament. (The annual March Madness event was canceled this year due to the coronavirus pandemic.) Excluding that tough self-comparison, ViacomCBS says ad sales would have been up 2%.

Year over year, theatrical revenue dipped 3%. This quarter’s box office results, buoyed by the February release of Paramount’s “Sonic the Hedgehog,” couldn’t keep pace with Q1 2019’s “Bumblebee” ticket sales. “Bumblebee” was a Christmastime 2018 release.

CBS All Access and Showtime’s OTT service streaming surpassed 13.5 million subscribers this quarter, up 50% from the comparable period last year. On the free side, Pluto TV’s domestic monthly active users (MAUs) grew to a record of 24 million, +55% year-over-year. Overall, total revenue from streaming and digital video in the U.S. — which includes sub revenues and ad sales revenue from Pluto, among other digital assets — grew to $471 million, +51% from Q1 2019.

ViacomCBS says its streaming platforms had their “best month” ever in April, with more people home due to the coronavirus leading to increased subscriber growth and consumption.

U.S. affiliate revenue increased 1% in Q1, “reflecting growth in station affiliation and retransmission fees, as well as subscription streaming revenue, which more than offset declines in pay-TV subscribers,” according to ViacomCBS. Abroad, affiliate sales were down 12%.

Overall, ViacomCBS’ revenue from its TV segment was down 13%.

Content licensing sales were up 9%, thanks to original studio production for third parties. Publishing was +4%, driven by higher sales of electronic and digital audio books.

“ViacomCBS delivered solid results in our first full quarter, including sequential improvement on key financial metrics, as well as clear operating momentum,” ViacomCBS president and CEO Bob Bakish said in a prepared statement accompanying the financials. “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.”

ViacomCBS stock closed Wednesday afternoon at $14.88 per share, down 3.6% from where it opened that morning at $15.41. The regular trading day for the U.S. stock markets open at 9:30 a.m. ET.

The newly recombined company is still in the midst of cutting costs and streamlining its business after finalizing its re-merging in December. In late February, ViacomCBS announced plans with New York state to lay off 117 East Coast staffers across 11 divisions, with Pop TV being among the first hit by the cuts.

Late last month, ViacomCBS — which was formed by the recombining of Viacom Inc. and CBS Corp. — laid off at least 100 employees, including top execs such as Smithsonian Network president Tom Hayden and Comedy Central head of content and creative enterprises Sarah Babineau.

Viacom and CBS announced their long-awaited merger, valuing the combined company at roughly $12 billion, last summer. When ViacomCBS reported its first earnings as a recombined company back in February, it revealed it now expects to have $750 million in synergy savings by getting rid of overlapping corporate operations and other savings.

ViacomCBS, like many companies, is also weathering the impact of the ongoing coronavirus pandemic. In March, in attempts to cushion the financial blow brought by the pandemic, ViacomCBS raised $2.5 billion after agreeing to sell two separate debt notes, both with a total value of $1.25 billion each.

Bakish and other ViacomCBS executives will host a conference call at 8:30 a.m. ET to discuss the first-quarter earnings in greater detail.

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