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ViacomCBS (VIAC) Q3 Earnings Top Estimates, Revenues Fall Y/Y

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ViacomCBS’ (VIAC - Free Report) third-quarter 2020 adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate by 9.6%. The bottom line, however, declined 17.3% year over year.

Revenues of $6.11 billion beat the Zacks Consensus Estimate by 2% but fell 9% year over year.

Adjusted OIBDA decreased 12% from the year-ago quarter to $1.1 billion.

Selling, general and administrative expenses decreased 6.8% year over year to $1.37 billion.

ViacomCBS Inc. Price, Consensus and EPS Surprise

ViacomCBS Inc. Price, Consensus and EPS Surprise

ViacomCBS Inc. price-consensus-eps-surprise-chart | ViacomCBS Inc. Quote

Revenues by Type

Advertising revenues of $2.18 billion dropped 6% year over year. While Domestic revenues were down 5%, International revenues deteriorated 12%.

The year-over-year decline was primarily attributed to negative impact of coronavirus on global advertising demand.

However, Affiliate revenues of $2.36 billion climbed 10% year over year. Domestic revenues grew 11% while International revenues declined 2%.

Affiliate revenues benefited from strong growth in subscription streaming revenue, higher reverse compensation and retransmission fees, as well as expanded cable distribution.

Domestic streaming and digital-video revenues increased 56% year over year to $636 million, driven by 78% growth in streaming-subscription revenues and robust growth in Pluto TV-advertising revenues. Domestic streaming subscribers reached 17.9 million, up 72% year over year.

Pluto TV’s domestic monthly active users (MAUs) were 28.4 million, up 57% year over year. The platform’s total global MAUs reached 36 million.

During the quarter, Pluto TV signed new distribution agreements with LG and Sony PlayStation, extending its reach to more than 100 million additional devices worldwide.

Content-licensing revenues of $1.22 billion declined 33% year over year, reflecting a lower volume of licensing compared to the prior-year quarter and the adverse impacts of COVID-19. Coronavirus-induced production delays hurt top-line growth.

Theatrical revenues of ViacomCBS were immaterial in the reported quarter due to the closure or reduction in capacity of movie theaters in response to coronavirus.

Other revenues fell 26% year over year to $57 million.

Segment Details

ViacomCBS’ TV Entertainment revenues declined 4% year over year to $2.35 billion due to lower content-licensing revenues.

TV Entertainment’s adjusted OIBDA decreased 26% from the year-ago quarter to $343 million.

Cable Networks revenues of ViacomCBS declined 7% year over year to $3.06 billion due to the negative impact of coronavirus on the advertising market and lower content-licensing revenues.

Cable Networks’ adjusted OIBDA moved up 3% from the year-ago quarter to $866 million, as the decrease in revenues was more than offset by lower costs from the broadcast of fewer original programs during the quarter and the benefit of cost savings, including from restructuring activities.

ViacomCBS’ Filmed Entertainment revenues declined 31% year over year to $590 million.
Licensing revenues decreased 27% year over year to $418 million, as a result of lower revenues from the timing of the availability of programs produced for third parties and the licensing of catalog titles.

Adjusted OIBDA was $54 million, down 18% year over year, reflecting the decline in revenues, partially offset by lower distribution costs from fewer theatrical releases in the quarter.

Meanwhile, Publishing revenues of ViacomCBS were up 29% year over year to $279 million, as a result of higher print and digital book sales that were driven by strong releases during the quarter.

Bestselling titles for the quarter included Too Much and Never Enough: How My Family Created the World's Most Dangerous Man by Mary Trump and Rage by Bob Woodward.

Adjusted OIBDA increased 5% year over year to $58 million in the reported quarter.

Balance Sheet

As of Sep 30, 2020, ViacomCBS had cash and cash equivalents of $3.08 billion compared with $2.29 billion as of Jun 30, 2020. ViacomCBS had committed $3.5 billion revolving credit facility that remains undrawn.

Total debt as of Sep 30, 2020 was $19.72 billion compared with $20.07 billion as of Jun 30, 2020.

Cash flow from operating activities was $1.41 billion compared with $795 million in the previous quarter and $500 million in the year-ago quarter.

Free cash flow was $1.33 billion compared with $714 million in the previous quarter and $391 million in the year-ago quarter.

Q3 Developments

In September, ViacomCBS announced CBS All Access will be rebranded as Paramount+ in early 2021, as part of its transformation into a global streaming service that features content from ViacomCBS’ leading portfolio of brands.

In addition to the United States, ViacomCBS will bring Paramount+ to international markets, debuting in Australia, Latin America and the Nordics in 2021.

Post Q3 Developments

On Oct 8, ViacomCBS owned CBS Entertainment Group announced a new brand identity across all divisions and platforms including entertainment, news, sports, studios, stations, and syndication. Moreover, CBS Television Studios has also been renamed as CBS Studios.

Moreover, the company announced a new leadership structure for its global ecosystem of free and pay streaming services in an effort to strengthen cross-house content and franchise collaboration across ViacomCBS streaming ecosystem, ahead of Paramount+ launch in early 2021.

Zacks Rank and Stocks to Consider

ViacomCBS currently has a Zacks Rank #3 (Hold).

TEGNA (TGNA - Free Report) , Delta Apparel (DLA - Free Report) and Spectrum Brands Holdings (SPB - Free Report) are some better-ranked stocks in the broader Consumer & Discretionary sector. TEGNA and Delta Apparel sport a Zacks Rank #1 (Strong Buy) while Spectrum Brands carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TEGNA, Spectrum Brands and Delta Apparel are set to release quarterly results on Nov 9, Nov 11 and Nov 19 respectively.

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