EARNINGS CALL

ViacomCBS: Broadcast Stayed Strong In Pandemic

“The [second] quarter turned out better than we thought early. That was because we did see sequential improvement in each month of the quarter,” said President-CEO Bob Bakish in his conference call with Wall Street analysts Thursday morning.

The broadcasting segment at ViacomCBS saw revenues drop 22% in the second quarter as COVID-19 heavily impacted both advertising and content sales. Ad revenues fell 27% to $951 million. Meanwhile, affiliate revenues rose 22% to $751 million, fueled by higher retrans for the O&Os and higher reverse comp from affiliates.

“The quarter turned out better than we thought early. That was because we did see sequential improvement in each month of the quarter,” said President-CEO Bob Bakish in his conference call with Wall Street analysts Thursday morning.

“And simultaneously scatter pricing held strong — 25% or so better than the upfront. The softness we did see was very concentrated in terms of categories, but at the same time we saw some early signs of some others, notably pharma, insurance and financial,” he added.

The overall company reported that revenues were down 12% for the quarter to $6.28 billion. Operating income was off 11% to $1.29 billion,

“Segments have been impacted differently,” Bakish noted. “Broadcast, in the mix, is relatively strong. Cable seemed [to have] more relative softness — but, on the cable side we did take the opportunity to reduce ad loads to improve the experience. Local has also been tough, but things are getting better. In particular, auto is coming back in Q3 as factories have reopened. And we look forward to political being a significant driver in the second half,” the CEO said.

In line with what other media companies have been reporting, EVP-CFO Christina Spade told analysts: “We believe Q2 marked the bottom of the year-over-year rate of change for total company advertising revenue. We expect sequential improvement in the year-over-year rate of change in advertising revenue in Q3 and again in Q4.”

BRAND CONNECTIONS

The quarterly call was the last for Spade, as she ends a 23-year career with the company. New CFO Naveen Chopra, most recently at Amazon, takes over next week.

While still impacted by COVID-19, some normal operations are resuming at CBS. Big Brother has begun airing on CBS and Love Island will be added in late summer. Both The Late Show With Stephen Colbert and The Late Late Show With James Corden are due back in their studios next week — albeit without audiences. Both have been airing on CBS with creative content efforts anchored from the hosts’ homes.

PGA Golf was the first live sports programming to return to CBS, followed by boxing and soccer on various ViacomCBS platforms. NFL football is due back in the fall and, when asked about current contract negotiations, Bakish reiterated that “we value the NFL” and called the long relationship “mutually beneficial.” He claimed that ViacomCBS has the most distribution to offer the NFL across its broadcast, cable and streaming platforms.

“Streaming is probably the most material value-creation opportunity in the media today. Building off our momentum in user, subscriber and consumption growth across our streaming platforms, we will capitalize on our position across free and pay,” Bakish said.

CBS All Access last week added 20,000 episodes from the Viacom cable networks library. He also said CBS All Access is the only OTT service with a “massive volume” of live sports. Along with a growing slate of original programs, the value proposition for CBS All Access focuses on sports and news, including the local news produced by CBS affiliates, which have a financial stake in subscription sales.

Meanwhile, ViacomCBS is growing its Pluto free streaming service, which is advertising supported. Pluto is expanding internationally as ViacomCBS’s free streaming service, with a new pay service whose name has not been announced due to launch next year.


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