Cord-cutting, fewer political ads add up to poor ViacomCBS Q4 | Major Businesses | Business
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Just less than three months after the merger of CBS and Viacom, the combined company has announced its first quarterly results for Q4 2019 and has come up somewhat short on expectations.

ViacomCBS logo 5Dec2019For the three month period ended 31 December 2019, ViacomCBS posted revenues of $6.871 billion, a 3% fall on an annual basis driven by a number of factors.

Affiliate revenue in the quarter increased 1%, due to what the to what the company strong growth in reverse compensation, retransmission and subscription streaming revenue which more offset declines in the pay-TV landscape. Worse for the merged company was that US advertising revenue was affected by what were described as significant declines in political advertising compared with the prior-year quarter. While Cable Networks’ advertising revenue grew 9%, benefiting from Advanced Marketing Solutions (AMS) but content licensing revenue declined 11% due to the timing and mix of deliveries.

For the year, revenues totalled $27.812 billion, a rise of 2% compared with the same time in 2018. Advertising revenue increased 2%, driven by 5% growth in domestic advertising sales, reflecting the CBS broadcasts of Super Bowl LIII and the NCAA Division I Men’s Basketball Tournament’s national semi-finals and championship games, as well as higher revenues from AMS which includes Pluto TV. It was all though partially offset by lower political ad spend.

Yearly Affiliate revenue grew 3%, fuelled by 20% growth in reverse compensation and retransmission, as well as strong subscription streaming revenue, which as in the case of Q4 offset declines in pay-TV subscribers.

Content licensing revenue rose 5% on an annual basis, reflecting said Viacom CBS higher revenues from licensing library and original production to third parties. In an interesting note to the future for the company, US streaming and digital video business – which includes subscription revenue and digital video advertising – generated approximately $1.6 billion in revenue.

Despite the ups and down reported in the quarter, the company expressed a bullish outlook for 2020. It said that fundamentally it was one of the largest content producers and providers in the world with a powerful content engine – including global production capabilities, and a vast library of premium TV and film titles – that spans all genres, formats, demographics and geographies. It claimed what it called a ‘distinct and important’ competitive advantage in the fact that it had the ability and flexibility to monetise this content in a variety of models – across both owned and third-party platforms.

Indeed the company had a three point plan for success in 2020, namely: maximise the power of content; unlock value from biggest revenue lines; accelerate momentum in streaming. In the latter regard it would complement the company’s free Pluto TV and premium pay Showtime OTT offerings by adding a broad pay offering, built on the foundation of CBS All Access.

“In 2020, our priorities are maximising the power of our content, unlocking more value from our biggest revenue lines and accelerating our momentum in streaming,” commented ViacomCBS president and CEO Bob Bakish. “With this as a backdrop, we’ve set clear targets for the year and are providing increased transparency around our business to demonstrate ViacomCBS’ ability to create shareholder value today, as we continue evolving and growing our business for tomorrow.”