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ViacomCBS reports q4 and full year 2020 earnings results

Statement from Bob Bakish, President & CEO
“We started 2020 with clear goals: unlock the power of our combination, build robust operating momentum and accelerate our streaming strategy – and we delivered. In Q4, despite the ongoing impacts of COVID-19, we finished the year with strong advertising and affiliate results that demonstrate the strength of our core businesses and achieved incredible growth across our linked streaming ecosystem, reaching nearly 30 million global subscribers and over 43 million Pluto TV global MAUs. At today’s streaming investor event, we look forward to showcasing our opportunity to expand our position and bring ViacomCBS content and brands to streaming audiences around the world.”

Q4 & FULL YEAR 2020 RESULTS*


Quarter Ended December 31
Full Year Ended December 31
GAAP 2020 2019 B/(W) % 2020 2019 B/(W) %
Revenues $ 6,874 $ 6,656 3 % $ 25,285 $ 26,998 (6 ) %
Operating income (loss) 1,083 (44 ) N/M 4,139 4,146
Net earnings from continuing operations attributable to ViacomCBS (loss) 783 (302 ) N/M 2,305 3,168 (27 )
Diluted EPS from continuing operations attributable to ViacomCBS 1.26 (0.49 ) N/M 3.73 5.13 (27 )
Operating cash flow from continuing operations (339 ) (530 ) 36 2,215 1,171 89
Non-GAAP†
Adjusted OIBDA $ 1,183 $ 1,131 5 % $ 5,132 $ 5,393 (5 ) %
Adjusted net earnings from continuing operations attributable to ViacomCBS 645 570 13 2,595 2,983 (13 )
Adjusted diluted EPS from continuing operations attributable to ViacomCBS 1.04 0.92 13 4.20 4.83 (13 )
Free cash flow (453 ) (629 ) 28 1,891 826 129

$ in millions, except per share amounts
† Non-GAAP measures are detailed in the Supplemental Disclosures at the end of this release.
*During the fourth quarter of 2020, ViacomCBS entered into an agreement to sell Simon & Schuster, which was previously reported as the Publishing segment. Simon & Schuster has been presented as a discontinued operation in the company’s consolidated financial statements for all periods.
N/M = Not Meaningful

OVERVIEW OF Q4 REVENUE
REVENUE BY TYPE
Affiliate revenue increased 13% year-over-year, driven by strong growth in streaming subscription revenue, higher reverse compensation and retransmission fees, as well as expanded distribution.

Advertising revenue grew 4% year-over-year, reflecting higher streaming advertising and political advertising sales, which more than offset the adverse effects of COVID-19.

Content licensing revenue decreased 3% year-over-year, reflecting a lower volume of licensing due to COVID-related production delays.

Quarter Ended December 31 Full Year Ended December 31
2020 2019 $ B/W % 2020 2019 $ B/W %
Advertising $ 3,145 $ 3,030 $ 115 4 % $ 9,751 $ 11,074 $ (1,323 ) (12 ) %
Domestic 2,700 2,635 65 2 8,567 9,716 (1,149 ) (12 )
International 445 395 50 13 1,184 1,358 (174 ) (13 )
Affiliate 2,410 2,133 277 13 9,166 8,602 564 7
Domestic 2,239 1,975 264 13 8,521 7,937 584 7
International 171 158 13 8 645 665 (20 ) (3 )
Content Licensing 1,246 1,281 (35 ) (3 ) 5,963 6,483 (520 ) (8 )
Theatrical 4 129 (125 ) (97 ) 180 547 (367 ) (67 )
Other 69 83 (14 ) (17 ) 225 292 (67 ) (23 )
Total Revenues $ 6,874 $ 6,656 $ 218 3 % $ 25,285 $ 26,998 $ (1,713 ) (6 ) %
$ in millions

SPOTLIGHT ON STREAMING
In Q4, ViacomCBS delivered robust global streaming & digital video revenue and user growth across its premium, pay and free services.

Q4 GLOBAL HIGHLIGHTS*

Global streaming & digital video revenue increased 71% year-over-year to $888M, driven by 74% growth in streaming subscription revenue and 69% streaming advertising revenue growth.

Domestic streaming & digital video revenue growth accelerated from 56% in Q3 to 72% in Q4, resulting in revenue of $845M.

Global streaming subscribers rose to nearly 30M, up 56% year-over-year.

Domestic streaming subscribers reached 19.2M, up 71% year-over-year.

CBS All Access and SHOWTIME OTT delivered their best quarter ever in sign-ups.

CBS All Access’ momentum was driven by demand for sports content, including the NFL, UEFA and SEC, as well as original programming, including Star Trek: Discovery and The Stand, and content from ViacomCBS cable brands.

SHOWTIME OTT benefitted from strong demand for original programming, including the premieres of Shameless and the limited series Your Honor, as well as theatricals.

Pluto TV grew its global monthly active users (MAUs) to 43M, up 80% year-over-year.

Pluto TV’s domestic MAUs increased to 30.1M, up 34% year-over-year, and more than doubled its advertising revenue in the quarter.

User engagement increased, with strong growth in total viewing minutes and average monthly watch time per user, including across connected TVs and mobile devices.

Internationally, Pluto TV MAUs grew to 12.9M, including expanding in Spain and Brazil during the quarter.

Pluto TV also closed new global distribution agreements with Samsung and Google.

Beginning Q1 2021, streaming & digital video revenue will be presented as global streaming revenue, including global revenue from advertising on the company’s pay and free streaming services, subscription fees for its pay streaming services, and advertising and subscriptions for its other digital video products. Global subscribers include customers who access the company’s domestic or international streaming services, either directly through its owned and operated apps and websites, or through third-party distributors. Streaming metrics are as of December 31, 2020.

STREAMING & DIGITAL VIDEO REVENUE

GLOBAL (Includes Domestic Revenue) 2020 2019 $ B/W %
Quarter Ended December 31 $ 888 $ 519 $369 71 %
Full Year Ended December 31 $ 2,561 $ 1,714 $847 49 %
DOMESTIC 2020 2019 $ B/W %
Quarter Ended December 31 $ 845 $ 492 $354 72 %
Full Year Ended December 31 $ 2,458 $ 1,632 $826 51 %
$ in millions

REPORTING SEGMENTS
TV ENTERTAINMENT
In Q4, CBS was the most-watched network in Daytime and Late Night and claimed the quarter’s top drama, news magazine and 4 of the top 5 comedies, as well as the top new comedy series.

Q4 2020 revenue benefitted from strong affiliate revenue growth, which was offset by lower content licensing revenue.

Affiliate revenue increased 23% year-over-year, driven by growth in reverse compensation and retransmission fees, as well as robust streaming subscription revenue from CBS All Access.

Advertising revenue declined 1% year-over-year, reflecting the impacts from the delayed start of the fall broadcast season and the sale of CNET Media Group, which was offset by record growth in political advertising.

Content licensing revenue decreased 20% year-over-year due to a lower volume of licensing from COVID-related production delays.

Adjusted OIBDA decreased 12% year-over-year mainly because of increased expenses to support the growth and expansion of CBS All Access.

Quarter Ended December 31 Full Year Ended December 31
2020 2019 $ B/W % 2020 2019 $ B/W %
Revenue $ 3,112 $ 3,126 $ (14 ) % $ $ 11,924 $ (1,224 ) (10 ) %
Advertising 1,650 1,669 (19 ) (1

)

5,035 6,008 (973 ) (16 )
Affiliate 841 682 159 23 3,129 2,550 579 23
Content Licensing 573 715 (142 ) (20 ) 2,369 3,157 (788 ) (25 )
Other 48 60 (12 ) (20 ) 167 209 (42 ) (20 )
Expenses 2,563 2,501 (62 ) (2 ) 8,843 9,481 638 7
Adjusted OIBDA $ 549 $ 625 $ (76 ) (12 ) % $ 1,857 $ 2,443 $ (586 ) (24 ) %
$ in millions

CABLE NETWORKS

In Q4, ViacomCBS owned the most top 30 cable networks among viewers 18-49 and 9 of the top 10 original series with kids 2-11; Showtime also had 2 of the top 4 scripted shows on premium cable in the quarter.

Q4 2020 revenue increased 11% year-over-year, driven by growth in content licensing, affiliate and advertising revenue.

Affiliate revenue increased 8% year-over-year, fueled by growth in streaming subscription revenue, including from SHOWTIME OTT, as well as expanded distribution and contractual rate increases, partially offset by linear subscriber declines.

Advertising revenue rose 8% year-over-year, reflecting growth in streaming advertising revenue from Pluto TV as well as higher pricing, which more than offset lower linear impressions.

Content licensing revenue increased 48% year-over-year, driven by growth from the licensing of library programming.

Adjusted OIBDA grew 1% year-over-year as a result of the increase in revenue and savings from restructuring activities, which was mostly offset by increased expenses for programming, participations, advertising and promotions, including to support the growth of the company’s streaming services.

STREAMING & DIGITAL VIDEO REVENUE

GLOBAL (Includes Domestic Revenue) 2020 2019 $ B/W %
Quarter Ended December 31 $ 888 $ 519 $369 71 %
Full Year Ended December 31 $ 2,561 $ 1,714 $847 49 %
DOMESTIC 2020 2019 $ B/W %
Quarter Ended December 31 $ 845 $ 492 $354 72 %
Full Year Ended December 31 $ 2,458 $ 1,632 $826 51 %
$ in millions

FILMED ENTERTAINMENT
Q4 2020 revenue decreased 3% year-over-year, reflecting the decline in theatrical revenue, partially offset by growth in licensing and home entertainment revenue.

Theatrical revenue was immaterial in the quarter as a result of the closure or reduction in capacity of movie theaters in response to COVID-19.

Home entertainment revenue increased 14% year-over-year, driven by higher sales of catalog and Miramax titles.

Licensing revenue grew 39% year-over-year due to higher licensing of catalog titles.

Adjusted OIBDA was $18M compared to a loss of $119M in the prior year quarter as lower revenue was more than offset by lower distribution costs from fewer theatrical releases.

Quarter Ended December 31 Full Year Ended December 31
2020 2019 $ B/W % 2020 2019 $ B/W %
Advertising $ 3,145 $ 3,030 $ 115 4 % $ 9,751 $ 11,074 $ (1,323 ) (12 ) %
Domestic 2,700 2,635 65 2 8,567 9,716 (1,149 ) (12 )
International 445 395 50 13 1,184 1,358 (174 ) (13 )
Affiliate 2,410 2,133 277 13 9,166 8,602 564 7
Domestic 2,239 1,975 264 13 8,521 7,937 584 7
International 171 158 13 8 645 665 (20 ) (3 )
Content Licensing 1,246 1,281 (35 ) (3 ) 5,963 6,483 (520 ) (8 )
Theatrical 4 129 (125 ) (97 ) 180 547 (367 ) (67 )
Other 69 83 (14 ) (17 ) 225 292 (67 ) (23 )
Total Revenues $ 6,874 $ 6,656 $ 218 3 % $ 25,285 $ 26,998 $ (1,713 ) (6 ) %
$ in millions

N/M = Not Meaningful

BALANCE SHEET & LIQUIDITY
For the full year, ViacomCBS generated $2.2B of operating cash flow from continuing operations and $1.9B of free cash flow†, benefiting from the timing of production spending and cost savings.

In Q4, as expected, the ramp up in production spend led to negative operating cash flow from continuing operations of $339 million and negative free cash flow† of $453 million.

As of December 31, 2020, the company had $3B of cash on its balance sheet and a committed $3.5B revolving credit facility that remains undrawn. VIAC-IR

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