Retrans, Reverse Comp Surge For ViacomCBS

While advertising declined 2% globally in the fourth quarter for the reunited ViacomCBS, affiliate income was up 1%. Much of that was due to gains in retrans for the CBS O&Os and for the CBS Network share of retrans paid to affiliate stations, or reverse comp. In all, ViacomCBS CFO Christina Spade told Wall Street analysts this morning that retrans and reverse comp revenues grew 25% from a year earlier in the final quarter of 2019.

Look for retrans/reverse comp to continue as growth drivers this year, she said, along with political advertising, which is expected to come in at record levels in 2020. Excluding the impact of political and the Super Bowl, advertising revenues (across broadcast, cable and streaming) are projected to grow by a low single-digit percentage this year. Affiliate revenues (MVPDs, virtual MVPDs, retrans and reverse comp) are also expected to increase in the low single digits.

President-CEO Bob Bakish was extremely bullish on streaming opportunities in has discussion with Wall Street analysts. He detailed a three-tiered strategy, with Pluto as the ad-supported free service and Showtime as the premium subscription component. In between is “broad-pay” CBS All Access, which is about to benefit from content growth through the addition of Viacom and Paramount titles. He pointed to the broad value of entertainment, news and sports content as more people move to streaming platforms for live and on-demand programming.

“This differentiated offering will provide the powerful combination of live-linear, via over 200 local CBS stations, plus on-demand content spanning news, sports, films, drama, reality, kids and more,” Bakish said.

The CEO plans to make use of what he calls “the largest broadcast footprint in the world” to power the growth of ViacomCBS’s appeal to viewers and advertisers. Bakish says the company’s live, local news and sports is a “must have” for program distributors. He noted that the recently completed carriage deal with Comcast includes putting CBS All Access on the giant MVPD’s set-top boxes for the first time.

Look for ViacomCBS to create tie-ins ahead of the CBS broadcast of the Super Bowl next February. And noting the contract negotiations beginning with the NFL, one analyst wanted to know if Bakish wanted a football deal so badly that he would do one that is “uneconomic” for the company. His response avoided the economics of the NFL relationship with broadcasters.

“The NFL and CBS are longstanding partners. As a combined company, ViacomCBS is even better positioned to deliver value to that franchise. You know the NFL values our broadcast reach and high-quality production, and you know the combined company has young adult reach, both linear and streaming, as well as international abilities, both of which are key to NFL development, and thus important to the league.

“We are going to do some stuff around the NFL in the months ahead as we prep for Super Bowl 55, leveraging our platforms — that’s obviously a February ’21 event,” Bakish answered. “And to be clear, as a combined company we absolutely have the financial resources to get a deal done, and we do believe it’s important to the company, and I feel good about getting a deal done.”