EARNINGS CALL

ViacomCBS Touts Upfront, CBS Shows Returning

The rate of decline for total advertising dropped to only 6% in the third quarter from a 27% drop in the second quarter. This year’s upfront was unlike any other, but CEO Bob Bakish said he is satisfied with the outcome. “We were up low-single-digits on price, and we were very careful with volume, holding back inventory so that we had inventory to sell in scatter. And … the scatter market today is very robust.”

Advertising is recovering from COVID-19 disruptions at ViacomCBS for both broadcast and cable, as President-CEO Bob Bakish paints a bright picture going forward. After announcing third quarter results Friday morning that beat the Wall Street consensus, Bakish hailed the launch of the fall programming slate on CBS following a successful upfront selling season.

The rate of decline for total advertising dropped to only 6% in the third quarter from a 27% drop in the second quarter. “Improvements were seen across the board — in broadcast, cable, sports, national, local, digital and international. And the scatter market was robust, with strong activity across key categories,” said the CEO.

“Speaking of categories, we’ve also seen certain COVID-impacted industries, like auto and retail, gradually return, which reflects improvement in the economy and the significant value our portfolio brings to advertisers to drive their own business recovery,” Bakish told analysts.

“Importantly, as we look forward, the return of CBS’s stable fall schedule is upon us, with several scripted series already on air, and more premier dates coming up. Add to that the NFL, the SEC and The Masters. Our content position is strong. This dynamic, paired with a successful upfront and a hot political category, should provide further benefit in the fourth quarter,” Bakish said.

“The improvement in advertising trends has been broad-based across broadcast and cable,” new CFO Naveen Chopra said in his first conference call for the company. “But we are especially encouraged by the increasing contribution from the inventory included in EyeQ,” the company’s connected video advertising platform that acts as a single transactional point of entry for digital video content from ViacomCBS-owned Pluto TV and from its portfolio of broadcast, entertainment, news and sports networks.

“The recovery in Q3 also benefitted from an improvement in scatter pricing, owing to firming marketplace demand. In terms of key categories, pharma remained strong, and we’ve seen improvement in automotive, financial services and retail,” said Chopra, adding that political was “very robust” in the quarter.

BRAND CONNECTIONS

This year’s upfront was unlike any other, but Bakish told Bank of America analyst Jessica Reif Ehrlich he is satisfied with the outcome.

“Doing an upfront — a virtual upfront in fact — in the middle of COVID-19 was something no one had ever experienced before, but I’m really happy with where we ended up. The team did a phenomenal job, really benefitting from our asset base. We were up low-single-digits on price, and we were very careful with volume, holding back inventory so that we had inventory to sell in scatter. And … the scatter market today is very robust. We’re seeing historically high premiums versus the upfront — higher than pre-COVID, by the way. We’re seeing scatter in broadcast [up] double-digits and in cable in high-singles. So that market’s robust. You want to have inventory to play there, and we will,” Bakish said.

As ViacomCBS prepares to expand and rebrand CBS AllAccess in 2021 as Paramount+, Bakish told Wall Street that the offering has a unique value proposition in the streaming world.

“It’s going to be a truly differentiated and compelling offering, unlike anything that’s out there today. As a reminder, Paramount+ is building on CBS AllAccess, a product that already has strong momentum as seen in the metrics for the third quarter. Paramount+ is going to be live sports, breaking news and a mountain of entertainment. Look at live sports: It includes the NFL, the SEC, UEFA, PGA Golf, the NCAA, and more. On the breaking news side, it’ll be live CBS News at any time from CBSN, live local news from the CBS stations, key news shows like 60 Minutes, and more to be announced,” Bakish told the analysts. And that “mountain of entertainment” content will include programming from the breadth of Viacom and CBS brands, including both original programming and video-on-demand from the extensive program libraries.


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