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ViacomCBS
reported a really stable quarter of streaming-subscriber positive factors on Tuesday, however that development didn’t come cheaply.
The corporate ramped up spending on content material and advertising and marketing for its Paramount+ and different companies, miserable earnings within the fourth quarter. Legacy TV and promoting companies plugged alongside, and received’t be elevating any eyebrows, however there stays lots for each the bulls and the bears to level to within the firm’s outcomes and trajectory.
Simply don’t name it ViacomCBS anymore: The corporate will quickly be renamed Paramount World, Chairwoman Shari Redstone stated at an investor occasion on Tuesday. ViacomCBS inventory (ticker: VIAC) was down greater than 3% in after-hours buying and selling on Tuesday.
On Tuesday night, ViacomCBS reported 26 cents in adjusted earnings per share for the fourth quarter. That was down 75% from the identical interval a yr earlier and effectively behind the 43 cents that Wall Avenue analysts have been anticipating.
Income was $8.0 billion, up 16%, comfortably greater than the $7.5 billion consensus estimate. Administration’s most popular revenue measure, adjusted working revenue earlier than depreciation and amortization, or Oibda, got here in at $557 million, down 53% from a yr earlier. Analysts had been anticipating about $700 million in adjusted Oibda on common.
Like each media firm pivoting to streaming nowadays, ViacomCBS’ subscriber efficiency will get loads of scrutiny each quarter. Tuesday’s earnings launch was adopted by a flashy investor occasion previewing new content material coming to Paramount+ within the close to and not-so-near future. The occasion started with a video clip of Redstone and CEO Bob Bakish starring in a car-chase scene involving the ‘Bumblebee’ Chevrolet Camaro from The Transformers franchise and several other robotic pursuers.
For the ultimate three months of 2021, ViacomCBS’ Paramount+ and Showtime streaming companies added a internet 9.4 million subscribers, to achieve a mixed 56 million globally. Analysts had been anticipating 6.4 million internet provides on common.
Throughout Tuesday’s investor occasion, Bakish stated that ViacomCBS now expects to have 100 million streaming subscribers by the tip of 2024—up from the 65 million to 75 million it stated final yr that traders can anticipate.
ViacomCBS’ advertising-supported streaming service Pluto had 64 million month-to-month energetic customers final quarter, up by 10 million. Wall Avenue analysts’ common forecast had been for development of 4.2 million MAUs, however the calls have been all around the map. Administration expects to have 100 million to 120 million MAUs on Pluto TV by the tip of 2024.
For the ultimate interval of 2021 reported on Tuesday, ViacomCBS’s streaming revenues from subscriptions and promoting hit $1.3 billion, up 48% yr over yr and a quarterly report. The corporate doesn’t disclose bottom-line outcomes from its streaming enterprise. However with all of administration’s emphasis on streaming-content investments, these are prone to have been unfavourable.
Chief Monetary Officer Naveen Chopra stated on Tuesday that the corporate can have no less than $9 billion in direct-to-consumer income in 2024, up from earlier steering for $6 billion.
Beginning with the present quarter, ViacomCBS will change the way in which it stories to place extra concentrate on its direct-to-consumer future—along with its rebranding as Paramount. It should disclose its outcomes for 3 segments: direct-to-consumer, TV, and film theaters. Below the brand new reporting construction, streaming income would have been about $1.1 billion with an adjusted Oibda lack of $502 million within the fourth quarter, the corporate stated on Tuesday.
ViacomCBS’ legacy companies didn’t make a splash within the quarter. The biggest contributor to revenues was promoting, which was up 1% to $2.6 billion. Affiliate charges—which cable and satellite tv for pc TV suppliers pay to ViacomCBS to incorporate its channels like Nickelodeon, MTV, and Comedy Central of their bundles—rose 2% to $2.1 billion.
Income from content material licensing—which incorporates new and catalog motion pictures and TV sequence offered to different firms—have been $1.9 billion, up 45%. Lastly, movie-theater revenues remained depressed by the pandemic as few new movies got here out: Theatrical gross sales have been simply $39 million final quarter.
ViacomCBS deserves credit score for the fast progress it has made in rising its nascent streaming companies in a comparatively brief interval. A flurry of recent content material on Paramount+ and the corporate’s different companies—plus worldwide launches in additional markets this yr and a coming European three way partnership with
Comcast
‘s (CMCSA) Sky—ought to hold new subscribers coming. However the enterprise at this time continues to be virtually fully that of a legacy TV and film studio firm, with streaming earnings far off and much from assured.
ViacomCBS inventory traded for simply 9.5 occasions 2022 earnings at Tuesday’s shut, and bears will say it’s low-cost for a motive.
Cable TV is a melting ice dice as cord-cutting continues, with affiliate price fee will increase solely in a position to delay the inevitable decline of that income stream. The film enterprise isn’t what it was earlier than the pandemic.
And streaming development is sweet to see, however subscriber positive factors alone don’t put meals on the desk. ViacomCBS wants to point out that the brand new viewers will stick round and yield earnings, too.
Some traders fear that ViacomCBS received’t be capable of play with the massive canine within the streaming business. Rivals with a lot deeper pockets embody
Netflix
(NFLX),
Walt Disney
(DIS), and the soon-to-be-implemented mixture of
Discovery
(
DISCA
) with
AT&T
‘s (T) WarnerMedia.
ViacomCBS inventory has misplaced 37% after dividends over the previous yr via Tuesday’s shut. It was down greater than 65% from a March 2021 excessive above $100, whereas the
S&P 500
had returned about 13%.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
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