ViacomCBS Reports Q2 2021 Earnings Results

• Grew Global Streaming Revenue 92% Year-Over-Year, Driven by Robust Growth in Subscriptions and Advertising
  • Added 6.5M Global Streaming Subscribers to Reach Over 42M in the Quarter, and Realized 82% Year-Over-Year Growth in Streaming Subscription Revenue, Fueled by the Diverse Global Content Offering of Paramount+
  • Generated 102% Year-Over-Year Growth in Streaming Advertising Revenue, Largely Driven by Pluto TV, Which More Than Doubled Revenue for the Fourth Consecutive Quarter
• Increased Total Company Revenue 8% Year-Over-Year, Including 24% Growth in Advertising Revenue and 9% Growth in Affiliate Revenue Year-Over-Year
• Recently Announced Comprehensive, Multi-Year Distribution Agreements with Charter Communications and Cox Communications for Continued Carriage of ViacomCBS Content and Streaming Services
• Expanding Paramount+ Footprint Internationally to Include the UK, Ireland, Italy, Germany, Switzerland & Austria, as Part of Innovative New Sky Partnership

ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial results for the quarter ended June 30, 2021.

STATEMENT FROM BOB BAKISH, PRESIDENT & CEO

“In a quarter of strong business performance, including growth in advertising and affiliate, streaming was a standout. We continued to accelerate our global streaming momentum and delivered phenomenal results across our flagship streaming services. For the second consecutive quarter, Paramount+ fueled more than 6 million additions to our global streaming subscription base, which now reaches over 42 million. This growth was driven by the power of the service’s differentiated content strategy and expanding content slate. Looking ahead, we're excited about our opportunity to build on this momentum, as we scale Paramount+'s content offerings across genres and expand our reach with global audiences.”

OVERVIEW OF Q2 REVENUE

REVENUE BY TYPE

• Advertising revenue grew 24% year-over-year, driven by CBS’ broadcasts of 2021 sporting events for which there were no comparable broadcasts in the prior-year period as a result of COVID-19, and an improved advertising market.
• Affiliate revenue increased 9% year-over-year, reflecting expanded distribution and higher reverse compensation and retransmission fees.
• Streaming revenue rose 92% year-over-year:
  • Streaming advertising revenue more than doubled, growing 102% year-over-year, driven by growth in advertising on Pluto TV, Paramount+ and other digital video platforms.
  • Streaming subscription revenue grew 82% year-over-year, reflecting strong subscriber growth across the company’s subscription services.
• Theatrical revenue reflects the release of A Quiet Place Part II in the second quarter of 2021, while there were no releases in the prior-year period as a result of COVID-19.
• Licensing and other revenue decreased 36% year-over-year, primarily reflecting the licensing of the domestic streaming rights to South Park in the prior year and the impact on film licensing from the absence of theatrical releases throughout most of 2020 and the first quarter of 2021 due to COVID-19.

GLOBAL STREAMING HIGHLIGHTS

• Global streaming subscribers rose to more than 42M, adding 6.5M subscribers in the quarter.
  • Subscriber additions in the quarter were led by Paramount+.
    • Domestically, Paramount+ originals drove strong subscriber sign-ups and engagement.
      • The top drivers of sign-ups included the new iCarly series, Infinite, UEFA Champions League, The Challenge: All Stars and Why Women Kill.
      • Engagement reached an all-time high in the quarter, driven by Infinite, SpongeBob SquarePants, the new iCarly series, NCIS and The SpongeBob Movie: Sponge on the Run.
      • Total viewing hours and watch time per active subscriber grew quarter-over-quarter.
    • Internationally, Paramount+ launches to date have had strong momentum, led by its progress in Latin America.
    • Paramount+ to launch in Australia and New Zealand this August and in key European markets, including the UK, Ireland, Italy, Germany, Switzerland and Austria in 2022 as part of new Sky partnership.
  • SHOWTIME OTT delivered strong growth in sign-ups and engagement, driven by originals, including The Chi, Shameless and City on a Hill.
• Global expansion and domestic growth helped global Pluto TV MAUs exceed 52M in the quarter and revenue surge 169% year-over-year, more than doubling for the fourth quarter in a row.
  • Domestic watch-time per user grew 45% year-over-year.

REPORTING SEGMENTS

TV ENTERTAINMENT

• In Q2, CBS was the most-watched network in Prime, Daytime and Late Night and claimed the quarter’s top broadcast series, top 3 dramas, top 6 comedies and top news magazine.
• Revenue grew 23% year-over-year, reflecting growth across all revenue streams.
  • Advertising revenue increased 24% year-over-year, reflecting CBS’ broadcast of the national semi-finals and championship games of the NCAA Tournament and professional golf tournaments, as well as an improved advertising market, partially offset by lower ratings.
  • Affiliate revenue grew 10% year-over-year, driven by growth in reverse compensation and retransmission fee revenue.
  • Streaming revenue rose 81% year-over-year, reflecting subscriber growth at Paramount+, as well as advertising growth from Paramount+ and other digital video platforms.
  • Licensing and other revenue increased 16% year-over-year, primarily driven by a higher volume of programming licensed internationally and produced for third-party broadcasters.
• Adjusted OIBDA decreased 45% year-over-year, reflecting the company’s increased investment in Paramount+.

CABLE NETWORKS

• In Q2, ViacomCBS had the most programs among the top 25 original cable series with P18-34 and P2-11 than any other cable family.
• Revenue increased 8% year-over-year, primarily driven by higher streaming, advertising and affiliate revenue, partially offset by lower licensing revenue.
  • Advertising revenue increased 24% year-over-year, largely driven by an improved advertising market and a 4-percentage point favorable impact of foreign exchange rate changes, partially offset by lower ratings.
  • Affiliate revenue grew 9% year-over-year, reflecting expanded vMVPD distribution and rate increases, partially offset by subscriber declines.
  • Streaming revenue increased 98% year-over-year, largely fueled by advertising revenue growth from Pluto TV, as well as growth in subscribers for subscription streaming services, including SHOWTIME OTT and BET+.
  • Licensing and other revenue decreased 48% year-over-year, primarily reflecting the licensing of the domestic streaming rights to South Park in the prior-year quarter, partially offset by revenue from the licensing of programming to Paramount+.
• Adjusted OIBDA declined 12% year-over-year, reflecting the benefit to 2020 from the domestic licensing of South Park and an increased investment in content, partially offset by the above-mentioned revenue increases.

FILMED ENTERTAINMENT

• Revenue grew 3% year-over-year, primarily driven by current quarter theatrical releases, partially offset by lower licensing revenue.
  • Theatrical revenue reflects the release of A Quiet Place Part II.
  • Licensing and other revenue decreased 17% year-over-year because of lower home entertainment revenue as a result of the absence of theatrical releases due to COVID-19.
• Adjusted OIBDA declined 38% year-over-year, reflecting distribution costs associated with current quarter theatrical releases and other anticipated releases later in 2021.

BALANCE SHEET & LIQUIDITY

• As of June 30, 2021, the company had $5.4B of cash on its balance sheet and a committed $3.5B revolving credit facility that remains undrawn.

ABOUT VIACOMCBS

ViacomCBS (NASDAQ: VIAC; VIACA) is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide. Driven by iconic consumer brands, its portfolio includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+, Pluto TV and Simon & Schuster, among others. The company delivers the largest share of the U.S. television audience and boasts one of the industry’s most important and extensive libraries of TV and film titles. In addition to offering innovative streaming services and digital video products, ViacomCBS provides powerful capabilities in production, distribution and advertising solutions for partners on five continents.

For more information about ViacomCBS, please visit www.viacomcbs.com and follow @ViacomCBS on social platforms.

VIAC-IR

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This communication contains both historical and forward-looking statements, including statements related to our future results and performance. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements reflect our current expectations concerning future results and events; generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could,” “estimate” or other similar words or phrases; and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: changes in consumer behavior, as well as evolving technologies, distribution platforms and packaging; the impact on our advertising revenues of changes in consumers’ content viewership, deficiencies in audience measurement and advertising market conditions; our ability to maintain attractive brands and our reputation, and to offer popular programming and other content; increased costs for programming, films and other rights; competition for content, audiences, advertising and distribution; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of our content; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; the risks and costs associated with the integration of the CBS Corporation and Viacom Inc. businesses and investments in new businesses, products, services and technologies, including our streaming initiatives; evolving business continuity, cybersecurity, privacy and data protection and similar risks; content infringement; the impact of COVID-19 (and other widespread health emergencies or pandemics) and measures taken in response thereto; domestic and global political, economic and/or regulatory factors affecting our businesses generally; liabilities related to discontinued operations and former businesses; the loss of key talent and strikes and other union activity; potential conflicts of interest arising from our ownership structure with a controlling stockholder; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our most recent Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not necessarily known. The forward-looking statements included in this communication are made only as of the date of this communication, and we do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES
(Unaudited; in millions, except per share amounts)

Results for the three and six months ended June 30, 2021 and 2020 included certain items identified as affecting comparability. Adjusted operating income before depreciation and amortization (“Adjusted OIBDA”), adjusted earnings from continuing operations before income taxes, adjusted provision for income taxes, adjusted net earnings from continuing operations attributable to ViacomCBS, and adjusted diluted EPS from continuing operations (together, the “adjusted measures”) exclude the impact of these items and are measures of performance not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We use these measures to, among other things, evaluate our operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of our operational strength and business performance. In addition, we use Adjusted OIBDA to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by our management; provide a clearer perspective on our underlying performance; and make it easier for investors, analysts and peers to compare our operating performance to other companies in our industry and to compare our year-over-year results.

Because the adjusted measures are measures of performance not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, earnings from continuing operations before income taxes, provision/benefit for income taxes, net earnings from continuing operations attributable to ViacomCBS or diluted EPS from continuing operations, as applicable, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.

The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.

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