ViacomCBS’s (VIAC - Free Report) first-quarter 2020 adjusted earnings of $1.13 per share beat the Zacks Consensus Estimate by 18.9%. The bottom line, however, declined 23% year over year.
Revenues of $6.67 billion lagged the Zacks Consensus Estimate by 3.5% and also fell 6% year over year.
Adjusted OIBDA decreased 18% from the year-ago quarter to $1.26 billion.
Selling, general and administrative (SG&A) expenses inched up 2.1% year over year to $1.34 billion.
Revenues by Type
Advertising revenues of $2.48 billion dropped 19% year over year. While Domestic revenues were down 20%, International revenues deteriorated 12%.
Ad revenues increased 2% year over year excluding a 21% impact resulting from comparisons to the Super Bowl and the NCAA Tournament in the year-ago quarter.
However, Affiliate revenues of $2.19 billion climbed 1% year over year. Domestic revenues grew 2% while International revenues declined 12%.
Affiliate revenues benefited from 18% growth in reverse compensation and retransmission as well as strong subscription streaming revenues.
Domestic streaming and digital video revenues inclusive of streaming subscription and digital video advertising revenues surged 51% year over year to $471 million. Domestic streaming subscribers surpassed 13.5 million, up 50% year over year.
Pluto TV’s domestic monthly active users (MAUs) were more than 24 million, up 55% year over year. Pluto TV expanded distribution in the United States and internationally with XBOX, Roku (ROKU - Free Report) , Verizon in April and TiVo in May.
In the reported quarter, Pluto TV was launched across 17 countries in Latin America with more than 12,000 hours of Spanish language programming.
Content Licensing revenues of $1.59 billion increased 9% year over year, driven by growth in original studio production for third parties.
Publishing revenues were up 4% year over year to $170 million, driven by higher sales of electronic and digital audio books.
Theatrical revenues of $167 million dipped 3% year over year. Strong performance from Sonic the Hedgehog was more than offset by the year-ago quarter’s higher contribution from Bumblebee.
Other revenues fell 16% year over year to $57 million.
TV Entertainment revenues declined 13% year over year to $2.95 billion due to an unfavorable comparison with CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament in the year-ago quarter.
TV Entertainment’s adjusted OIBDA decreased 23% from the year-ago quarter to $573 million.
Cable Networks revenues slid 2% year over year to $2.86 billion. Linear subscriber declines more than offset higher streaming and studio production revenues.
Cable Networks’ adjusted OIBDA decreased 11% from the year-ago quarter to $794 million.
Filmed Entertainment revenues ascended 11% year over year to $811 million. Adjusted OIBDA was $27 million, down 29% year over year.
Publishing revenues rose 4% year over year to $170 million. Adjusted OIBDA stayed at $19 million in the reported quarter.
As of Mar 31, 2020, cash and cash equivalents were $589 million compared with $632 million as of Dec 31, 2019.
Total debt as of Mar 31, 2020 was $18.54 billion compared with $18.72 billion as of Dec 31, 2019.
Cash flow from operating activities was $356 million compared with $929 million in the year-ago quarter. Free cash flow was $305 million compared with $862 million in the year-ago quarter.
Post Q1 Developments
In April, ViacomCBS raised $2.5 billion of capital through a 5- and a 10-year bond offering.
Moreover, on May 4, 2020, the company redeemed all its outstanding 4.30% senior notes due Feb 15, 2021. ViacomCBS will redeem all its outstanding 4.50% senior notes due Mar 1, 2021 on May 18, 2020.
ViacomCBS has access to a committed and undrawn $3.5-billion revolving credit facility and other sources of liquidity.
Zacks Rank & Stocks to Consider
ViacomCBS currently carries a Zacks Rank #4 (Sell).
Electronic Arts (EA - Free Report) and Netflix (NFLX - Free Report) are two better-ranked stocks in the broader consumer discretionary sector. While Electronic Arts sports a Zacks Rank #1 (Strong Buy), Netflix has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for EA and Netflix is pegged at 8.2% and 30%, respectively.
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