ViacomCBS Reports Q2 2020 Earnings Results

  • Achieved Second Consecutive Quarter of Sequential Improvement in Operating Income, Adjusted OIBDA, Operating Cash Flow and Free Cash Flow, Demonstrating Financial Momentum and Commitment to Shareholder Value
  • Executed Significant Distribution Deals, Highlighting Progress in Unlocking Value-Creation Opportunities Across Combined Asset Base
  • Delivered Robust Growth in Streaming, with Record Revenue, Subscribers, MAUs and Consumption Across Free and Pay Services, Accelerating Adoption of Pluto TV Internationally and Significant Progress in Transforming CBS All Access into a Diversified Super Service
  • Increased Target for Annualized Merger-Related Cost Synergies, while Simultaneously Managing Costs in Response to COVID-19

NEW YORK--()--ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial results for the quarter ended June 30, 2020.

Statement from Bob Bakish, President & CEO

ViacomCBS delivered another solid quarter, with clear operational momentum and sequential improvement in key earnings and cash flow metrics. Despite the impact of COVID-19 on revenue in the quarter, we’re successfully managing through the effects of the pandemic, reaffirming the strength of our combined operations. Our results underscored our strong progress delivering on our value-creation initiatives, including integration cost synergies, expanded and new distribution agreements, as well as the rapid acceleration of our streaming business, where we achieved record users and revenue in free and pay while building toward the relaunch of our diversified super service.”

Q2 2020 RESULTS

Quarter Ended June 30

Six Months Ended June 30

 
GAAP

2020

2019

B/(W) %

2020

2019

B/(W) %

Revenues $

6,275

$

7,143

(12

)

% $

12,944

$

14,243

(9

)

%
Operating income

1,286

1,446

(11

)

2,203

3,250

(32

)

Net earnings from continuing operations attributable to ViacomCBS

478

971

(51

)

986

2,917

(66

)

Diluted EPS from continuing operations attributable to ViacomCBS

0.77

1.57

(51

)

1.6

4.73

(66

)

Operating cash flow

795

260

206

1,151

1,189

(3

)

 
Non-GAAP†
Adjusted OIBDA $

1,689

$

1,562

8

% $

2,952

$

3,101

(5

)

%
Adjusted net earnings from continuing operations attributable to ViacomCBS

769

912

(16

)

1,468

1,810

(19

)

Adjusted diluted EPS from continuing operations attributable to ViacomCBS

1.25

1.48

(16

)

2.38

2.93

(19

)

Free cash flow

714

185

286

1,019

1,047

(3

)

 
$ in millions, except per share amounts
† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.

OVERVIEW OF Q2 REVENUE

  • Affiliate revenue increased 2%, reflecting growth in station affiliation and retransmission fees, as well as subscription streaming revenue, which more than offset declines in pay-TV subscribers.
  • Advertising revenue declined 27% year-over-year, driven by the adverse effects of COVID-19 on global advertising demand, the comparison against the broadcast of the national semifinals and championship games of the NCAA Tournament in the prior-year quarter, as well as the cancellation and postponement of professional golf tournaments.
  • Domestic streaming and digital video revenue – which includes streaming subscription and digital video advertising revenue – rose to $489M, up 25% year-over-year, driven by 52% growth in streaming subscription revenue and robust growth in Pluto TV advertising revenue.
  • Content licensing revenue was relatively flat, primarily reflecting the licensing of domestic streaming rights to South Park, offset by significant licensing activity in the year ago quarter, as well as the timing of deliveries, which were affected by COVID-related production delays.
  • Theatrical revenue was immaterial in the quarter due to the closure of movie theaters in response to COVID-19.
  • Publishing revenue decreased 8%, mainly driven by lower print book sales as a result of the impact of COVID-19, partially offset by growth in sales of electronic and digital audiobooks.

REVENUE BY TYPE

Quarter Ended June 30

Six Months Ended June 30

 

2020

2019

$ B/(W) %

2020

2019

$ B/(W) %

Advertising $

1,934

$

2,645

$

(711

)

(27

)

% $

4,418

$

5,711

$

(1,293

)

(23

)

%

Domestic

1,730

2,290

(560

)

(24

)

3,959

5,065

(1,106

)

(22

)

International

204

355

(151

)

(43

)

459

646

(187

)

(29

)

Affiliate

2,194

2,155

39

2

4,391

4,320

71

2

Domestic

2,034

1,986

48

2

4,080

3,979

101

3

International

160

169

(9

)

(5

)

311

341

(30

)

(9

)

Content Licensing

1,902

1,909

(7

)

-

3,496

3,374

122

4

Theatrical

3

152

(149

)

(98

)

170

324

(154

)

(48

)

Publishing

200

218

(18

)

(8

)

370

382

(12

)

(3

)

Other

42

64

(22

)

(34

)

99

132

(33

)

(25

)

Total Revenues $

6,275

$

7,143

$

(868

)

(12

)

% $

12,944

$

14,243

$

(1,299

)

(9

)

%
 
$ in millions

BALANCE SHEET & LIQUIDITY

  • In Q2, ViacomCBS raised $4.5B of capital and used the proceeds to redeem $2.8B of near-term maturities, including a $340M redemption that settled on July 10, 2020. These transactions reinforced the company’s strong financial position, adding $1.7B to its cash balance with no maturities due until 2022.
  • As of June 30, 2020, taking into account the benefit of the company’s full run-rate merger-related cost synergies, its debt to Adjusted OIBDA ratio calculated to 3.3x. On a net basis, taking into consideration its $2.3B cash balance as of June 30, 2020, this ratio calculated to 2.9x, unchanged from the end of 2019.
  • ViacomCBS continued to strengthen its financial position and demonstrate its commitment to creating shareholder value, with $795M of Operating Cash Flow and $714M of Free Cash Flow† generated in the quarter.
  • The company’s committed $3.5B revolving credit facility remains undrawn.

† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.

SPOTLIGHT ON DISTRIBUTION & STREAMING

In Q2, ViacomCBS delivered significant multiplatform distribution wins and strong domestic streaming and digital video revenue growth, with record sign-ups and consumption across its free and pay services.

DISTRIBUTION HIGHLIGHTS

  • In April, ViacomCBS signed a comprehensive, multiplatform partnership with Verizon, spanning pay TV, connected television and mobile – including a significant expansion of Pluto TV’s footprint.
  • In May, the company announced a new deal with YouTube TV, which renewed CBS and Showtime early and brought Viacom’s cable networks to the service.
  • More recently, in July ViacomCBS announced a multi-year renewal with DISH and Sling TV, marking its third cross-company renewal and further demonstrating the value of ViacomCBS content.
  • The company also continued to benefit from strong reverse compensation and recently signed agreements with Sinclair and Cox.

STREAMING & DIGITAL VIDEO HIGHLIGHTS

  • Domestic streaming and digital video revenue rose to $489M, up 25% year-over-year, driven by 52% growth in streaming subscription revenue.
  • Domestic pay streaming subscribers reached 16.2M, up 74% year-over-year.
    • CBS All Access continued to break records, with its paid subscribers, streams and minutes watched reaching all-time highs in the quarter.
      • Original programming, titles from Paramount Pictures and children’s content from Nickelodeon drove strong subscriber acquisitions and engagement.
    • Showtime OTT delivered its best quarter ever in sign-ups, streams and minutes watched, driven by original programming, including Homeland, Billions and The Chi.
  • In free, Pluto TV continued to build on its strong momentum in the US and internationally:
    • Pluto TV maintained its position as the #1 ad-supported streaming TV service in the US, with its domestic monthly active users (MAUs) growing to 26.5M, up 61% year-over-year.
    • Despite the impact of COVID-19, Pluto TV continued to deliver robust advertising revenue growth in the quarter.
    • In April, Pluto TV entered 17 Latin American markets and achieved robust adoption. In addition to its presence in Europe, this expansion brought Pluto TV’s total international MAUs to 6.5M, with its total global MAUs reaching 33M.
    • Additionally, Pluto TV continued to increase its distribution through multiplatform deals with Verizon, TiVo and LG, and expand its offering with more than 100,000 hours of content now available.

ON TRACK FOR SUPER SERVICE RELAUNCH

  • In July, ViacomCBS unveiled the first major step in transforming CBS All Access into a rebranded super service and remains on track to relaunch this differentiated streaming product in early 2021.
    • In a significant content expansion, the company added more than 3,500 episodes from the ViacomCBS portfolio, spanning series from BET, Comedy Central, MTV, Nickelodeon, Smithsonian and more. This brings the CBS All Access library to more than 20,000 episodes and movies.
    • CBS All Access will be home to a growing slate of new original and exclusive movies and series, including:
      • Big Brother Live Feeds, The Stand and the animated series Star Trek: Lower Decks
      • The SpongeBob Movie: Sponge on the Run and Kamp Koral, a new original kid’s series premiering in 2021 and the first spinoff derived from SpongeBob SquarePants, one of ViacomCBS’ biggest franchises
  • In addition to its vast library and original content offering, CBS All Access will feature compelling live programming, spanning news, tentpole events and a critical mass of live sports, including:
    • Live streams of local CBS stations nationwide and CBSN, CBS News' rapidly growing 24/7 digital news service
    • The Super Bowl, The Grammy Awards, The Academy of Country Music Awards, The Tony Awards and more
    • Major sporting events from golf to football to basketball, plus UEFA club competitions, as the exclusive streaming home to the UEFA Champions League, UEFA Europa League and UEFA Europa Conference League in the US

REPORTING SEGMENTS

TV ENTERTAINMENT

  • CBS finished the broadcast season as America’s most-watched network for the 12th straight year and was #1 in all key dayparts, including Prime, Late Night and Daytime, for the 3rd straight season.
  • Revenue declined 22%, primarily driven by the impact of COVID-19 on the advertising market and lower content licensing revenue.
    • Affiliate revenue rose 22%, fueled by growth in station affiliation fees and retransmission revenue, as well as strong subscription streaming revenue.
    • Advertising revenue decreased 27%, reflecting the adverse effects of COVID-19 on advertising demand, the comparison against the broadcast of the national semifinals and championship games of the NCAA Tournament in the prior-year quarter, and the cancellation and postponement of professional golf tournaments.
    • Content licensing revenue declined 44% mainly due to comparisons against several significant licensing agreements in the prior-year quarter, as well as fewer programming deliveries as a result of COVID-related production delays and the timing of deliveries of programs produced for third parties.
  • Adjusted OIBDA decreased 36%, mainly as a result of the revenue decline, partially offset by lower production and programming costs from COVID-related production delays and the mix of primetime programming. Advertising and promotion costs were also lower, reflecting the broadcast of fewer original programs due to COVID-19.

Quarter Ended June 30

Six Months Ended June 30

 

2020

2019

$ B/(W) %

2020

2019

$ B/(W) %

Revenue $

2,287

$

2,938

$

(651

)

(22

)

% $

5,234

$

6,344

$

(1,110

)

(17

)

%
Advertising

951

1,309

(358

)

(27

)

2,332

3,276

(944

)

(29

)

Affiliate

751

616

135

22

1,485

1,227

258

21

Content Licensing

544

966

(422

)

(44

)

1,341

1,747

(406

)

(23

)

Other

41

47

(6

)

(13

)

76

94

(18

)

(19

)

Expenses

1,895

2,325

430

18

4,269

4,989

720

14

Adjusted OIBDA $

392

$

613

$

(221

)

(36

)

% $

965

$

1,355

$

(390

)

(29

)

%
 
$ in millions

CABLE NETWORKS

  • In the quarter, ViacomCBS had the #1 share of viewers among P2+, P2-11, P12-17, P12-34, P18-34, P18-49, P25-54 and P2-49 and owned more top-30 cable networks than any other media family; Showtime also had the top scripted show on premium cable for the second consecutive quarter and the top 3 scripted shows year-to-date.
  • Revenue increased 2% reflecting growth from the licensing of domestic streaming rights to South Park, partially offset by weakness in the advertising market as a result of COVID-19, as well as lower affiliate revenue.
    • Affiliate revenue decreased 6%, as growth in subscription streaming was more than offset by linear subscriber declines.
    • Advertising revenue declined 26%, primarily driven by the adverse effects of COVID-19, which more than offset growth in streaming and digital video advertising revenue.
    • Content licensing revenue increased 175%, driven by the licensing of domestic streaming rights to South Park.
  • Adjusted OIBDA grew 30%, driven by lower programming costs primarily due to scheduling changes and the cancellation of events as a result of COVID-19, lower advertising and promotion costs resulting from the broadcast of fewer original programs during the quarter and the increase in revenues.

Quarter Ended June 30

Six Months Ended June 30

 

2020

2019

$ B/(W) %

2020

2019

$ B/(W) %

Revenue $

3,232

$

3,176

$

56

2

% $

6,090

$

6,078

$

12

-

%
Advertising

992

1,347

(355

)

(26

)

2,109

2,462

(353

)

(14

)

Affiliate

1,443

1,539

(96

)

(6

)

2,906

3,093

(187

)

(6

)

Content Licensing

797

290

507

175

1,075

523

552

106

Expenses

1,947

2,187

240

11

4,011

4,196

185

4

Adjusted OIBDA $

1,285

$

989

$

296

30

% $

2,079

$

1,882

$

197

10

%
 
$ in millions

FILMED ENTERTAINMENT

  • Despite softness driven by production limitations and theater closures, ViacomCBS continued to monetize its vast library and integrated Miramax films into its offering.
  • Revenue decreased 26% as a result of the closure of movie theaters throughout the quarter, as well as the timing of licensing revenues.
    • Theatrical revenue was immaterial in the quarter due to the closure of movie theaters in response to COVID-19.
    • Home entertainment revenue rose 30%, driven by the mix of titles in release, including Sonic the Hedgehog, and higher sales of catalog titles.
    • Licensing revenue decreased 20% due to lower revenues from licensing of catalog titles, as well as the timing of deliveries of programs produced for third parties.
  • Adjusted OIBDA increased 22%, reflecting lower distribution costs resulting from the absence of theatrical releases in the quarter, as well as the strong performance of Sonic the Hedgehog in the home entertainment market.

Quarter Ended June 30

Six Months Ended June 30

 

2020

2019

$ B/(W) %

2020

2019

$ B/(W) %

Revenue $

647

$

877

$

(230

)

(26

)

% $

1,458

$

1,607

$

(149

)

(9

)

%
Theatrical

3

152

(149

)

(98

)

170

324

(154

)

(48

)

Home Entertainment

209

161

48

30

383

315

68

22

Licensing

434

540

(106

)

(20

)

876

915

(39

)

(4

)

Other

1

24

(23

)

(96

)

29

53

(24

)

(45

)

Expenses

531

782

251

32

1,315

1,474

159

11

Adjusted OIBDA $

116

$

95

$

21

22

% $

143

$

133

$

10

8

%
 
$ in millions

PUBLISHING

  • Bestselling titles for the quarter included John Bolton’s The Room Where It Happened and Stephen King’s If It Bleeds.
  • Publishing revenue decreased 8%, primarily driven by lower print book sales as a result of the impact of COVID-19, partially offset by growth in sales of electronic and digital audiobooks.
  • Adjusted OIBDA increased 9%, as the decrease in revenue was more than offset by lower production and distribution costs associated with the decline in print book sales and the mix of titles.

Quarter Ended June 30

Six Months Ended June 30

 

2020

2019

$ B/(W) %

2020

2019

$ B/(W) %

Revenue $

200

$

218

$

(18

)

(8

)

% $

370

$

382

$

(12

)

(3

)

%
Expenses

162

183

21

11

313

328

15

5

Adjusted OIBDA $

38

$

35

$

3

9

% $

57

$

54

$

3

6

%
 
$ in millions

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, CBS All Access, Pluto TV and Simon & Schuster, among others. The company delivers the largest share of the US 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 STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This communication contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. 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: the impact of the COVID-19 pandemic (and other widespread health emergencies or pandemics) and measures taken in response thereto; technological developments, alternative content offerings and their effects in our markets and on consumer behavior; the impact on our advertising revenues of changes in consumers’ content viewership, deficiencies in audience measurement and advertising market conditions; the public acceptance of our brands, programming, films, published content and other entertainment content on the various platforms on which they are distributed; increased costs for programming, films and other rights; the loss of key talent; competition for content, audiences, advertising and distribution in consolidating industries; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of our content; 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; evolving cybersecurity and similar risks; the failure, destruction or breach of critical satellites or facilities; content theft; domestic and global political, economic and/or regulatory factors affecting our businesses generally; volatility in capital markets or a decrease in our debt ratings; strikes and other union activity; fluctuations in our results due to the timing, mix, number and availability of our films and other programming; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; liabilities related to discontinued operations and former businesses; 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.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

 

 

Quarter Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2020

 

2019

 

2020

 

2019

Revenues

$

6,275

 

 

$

7,143

 

 

$

12,944

 

 

$

14,243

 

Costs and expenses:

 

 

 

 

 

 

 

Operating

3,485

 

 

4,210

 

 

7,550

 

 

8,458

 

Selling, general and administrative

1,222

 

 

1,371

 

 

2,563

 

 

2,684

 

Depreciation and amortization

124

 

 

109

 

 

237

 

 

215

 

Restructuring and other corporate matters

158

 

 

7

 

 

391

 

 

185

 

Total costs and expenses

4,989

 

 

5,697

 

 

10,741

 

 

11,542

 

Gain on sale of assets

 

 

 

 

 

 

549

 

Operating income

1,286

 

 

1,446

 

 

2,203

 

 

3,250

 

Interest expense

(263

)

 

(237

)

 

(504

)

 

(477

)

Interest income

11

 

 

15

 

 

25

 

 

34

 

Loss on extinguishment of debt

(103

)

 

 

 

(103

)

 

 

Other items, net

6

 

 

15

 

 

(27

)

 

25

 

Earnings from continuing operations before income taxes and equity in loss of investee companies

937

 

 

1,239

 

 

1,594

 

 

2,832

 

(Provision) benefit for income taxes

(202

)

 

(241

)

 

(339

)

 

135

 

Equity in loss of investee companies, net of tax

(12

)

 

(21

)

 

(21

)

 

(39

)

Net earnings from continuing operations

723

 

 

977

 

 

1,234

 

 

2,928

 

Net earnings from discontinued operations, net of tax

3

 

 

6

 

 

11

 

 

19

 

Net earnings (ViacomCBS and noncontrolling interests)

726

 

 

983

 

 

1,245

 

 

2,947

 

Net earnings attributable to noncontrolling interests

(245

)

 

(6

)

 

(248

)

 

(11

)

Net earnings attributable to ViacomCBS

$

481

 

 

$

977

 

 

$

997

 

 

$

2,936

 

 

 

 

 

 

 

 

 

Amounts attributable to ViacomCBS:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

478

 

 

$

971

 

 

$

986

 

 

$

2,917

 

Net earnings from discontinued operations, net of tax

3

 

 

6

 

 

11

 

 

19

 

Net earnings attributable to ViacomCBS

$

481

 

 

$

977

 

 

$

997

 

 

$

2,936

 

 

 

 

 

 

 

 

 

Basic net earnings per common share attributable to ViacomCBS:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

.78

 

 

$

1.58

 

 

$

1.60

 

 

$

4.74

 

Net earnings from discontinued operations

$

 

 

$

.01

 

 

$

.02

 

 

$

.03

 

Net earnings

$

.78

 

 

$

1.59

 

 

$

1.62

 

 

$

4.77

 

 

 

 

 

 

 

 

 

Diluted net earnings per common share attributable to ViacomCBS:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

.77

 

 

$

1.57

 

 

$

1.60

 

 

$

4.73

 

Net earnings from discontinued operations

$

 

 

$

.01

 

 

$

.02

 

 

$

.03

 

Net earnings

$

.78

 

 

$

1.58

 

 

$

1.62

 

 

$

4.76

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

615

 

 

615

 

 

615

 

 

615

 

Diluted

617

 

 

617

 

 

617

 

 

617

 

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)

 

 

At

 

At

 

June 30, 2020

 

December 31, 2019

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,288

 

 

 

 

$

632

 

 

Receivables, net

 

7,139

 

 

 

 

7,206

 

 

Programming and other inventory

 

1,837

 

 

 

 

2,876

 

 

Prepaid and other current assets

 

1,175

 

 

 

 

1,188

 

 

Total current assets

 

12,439

 

 

 

 

11,902

 

 

Property and equipment, net

 

1,995

 

 

 

 

2,085

 

 

Programming and other inventory

 

9,728

 

 

 

 

8,652

 

 

Goodwill

 

17,077

 

 

 

 

16,980

 

 

Intangible assets, net

 

2,948

 

 

 

 

2,993

 

 

Operating lease assets

 

1,841

 

 

 

 

1,939

 

 

Deferred income tax assets, net

 

919

 

 

 

 

939

 

 

Other assets

 

4,212

 

 

 

 

4,006

 

 

Assets held for sale

 

29

 

 

 

 

23

 

 

Total Assets

 

$

51,188

 

 

 

 

$

49,519

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

422

 

 

 

 

$

667

 

 

Accrued expenses

 

1,553

 

 

 

 

1,760

 

 

Participants’ share and royalties payable

 

2,090

 

 

 

 

1,977

 

 

Accrued programming and production costs

 

1,189

 

 

 

 

1,500

 

 

Deferred revenues

 

695

 

 

 

 

739

 

 

Debt

 

364

 

 

 

 

717

 

 

Other current liabilities

 

1,672

 

 

 

 

1,688

 

 

Total current liabilities

 

7,985

 

 

 

 

9,048

 

 

Long-term debt

 

19,704

 

 

 

 

18,002

 

 

Participants’ share and royalties payable

 

1,485

 

 

 

 

1,546

 

 

Pension and postretirement benefit obligations

 

2,070

 

 

 

 

2,121

 

 

Deferred income tax liabilities, net

 

708

 

 

 

 

500

 

 

Operating lease liabilities

 

1,816

 

 

 

 

1,909

 

 

Program rights obligations

 

252

 

 

 

 

356

 

 

Other liabilities

 

2,344

 

 

 

 

2,494

 

 

Redeemable noncontrolling interest

 

274

 

 

 

 

254

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ViacomCBS stockholders’ equity:

 

 

 

 

 

 

 

Class A Common Stock, par value $.001 per share; 55 shares authorized; 52 (2020 and 2019) shares issued

 

 

 

 

 

 

 

Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,066 (2020) and 1,064 (2019) shares issued

 

1

 

 

 

 

1

 

 

Additional paid-in capital

 

29,680

 

 

 

 

29,590

 

 

Treasury stock, at cost; 502 (2020) and 501 (2019) Class B shares

 

(22,958

)

 

 

 

(22,908

)

 

Retained earnings

 

9,150

 

 

 

 

8,494

 

 

Accumulated other comprehensive loss

 

(1,999

)

 

 

 

(1,970

)

 

Total ViacomCBS stockholders’ equity

 

13,874

 

 

 

 

13,207

 

 

Noncontrolling interests

 

676

 

 

 

 

82

 

 

Total Equity

 

14,550

 

 

 

 

13,289

 

 

Total Liabilities and Equity

 

$

51,188

 

 

 

 

$

49,519

 

 

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

   

 

 

Six Months Ended

 

 

June 30,

 

 

2020

 

 

2019

Operating Activities:

 

 

 

 

 

Net earnings (ViacomCBS and noncontrolling interests)

 

$

1,245

 

 

 

$

2,947

 

Less: Net earnings from discontinued operations, net of tax

 

11

 

 

 

19

 

Net earnings from continuing operations

 

1,234

 

 

 

2,928

 

Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

237

 

 

 

215

 

Deferred tax provision (benefit)

 

224

 

 

 

(535

)

Stock-based compensation

 

145

 

 

 

106

 

Gain on sale of assets

 

 

 

 

(549

)

Gains from investments

 

(32

)

 

 

(77

)

Loss on extinguishment of debt

 

103

 

 

 

 

Equity in loss of investee companies, net of tax and distributions

 

22

 

 

 

41

 

Change in assets and liabilities

 

(782

)

 

 

(940

)

Net cash flow provided by operating activities

 

1,151

 

 

 

1,189

 

Investing Activities:

 

 

 

 

 

Investments

 

(60

)

 

 

(132

)

Capital expenditures

 

(132

)

 

 

(142

)

Acquisitions, net of cash acquired

 

(141

)

 

 

(361

)

Proceeds from dispositions

 

146

 

 

 

751

 

Other investing activities

 

 

 

 

4

 

Net cash flow (used for) provided by investing activities

 

(187

)

 

 

120

 

Financing Activities:

 

 

 

 

 

Repayments of short-term debt borrowings, net

 

(698

)

 

 

(674

)

Proceeds from issuance of senior notes

 

4,370

 

 

 

493

 

Repayment of notes and debentures

 

(2,535

)

 

 

(600

)

Dividends

 

(301

)

 

 

(299

)

Purchase of Company common stock

 

(58

)

 

 

(14

)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation

 

(59

)

 

 

(52

)

Other financing activities

 

(70

)

 

 

(81

)

Net cash flow provided by (used for) financing activities

 

649

 

 

 

(1,227

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(17

)

 

 

2

 

Net increase in cash, cash equivalents and restricted cash

 

1,596

 

 

 

84

 

Cash, cash equivalents and restricted cash at beginning of period (includes $202 (2020) and $120 (2019) of restricted cash)

 

834

 

 

 

976

 

Cash, cash equivalents and restricted cash at end of period (includes $142 (2020) and $122 (2019) of restricted cash)

 

$

2,430

 

 

 

$

1,060

 

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

Results for the quarters and six months ended June 30, 2020 and 2019 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.

 

 

Quarter Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

Operating income (GAAP)

 

$

1,286

 

 

 

$

1,446

 

 

 

$

2,203

 

 

 

$

3,250

 

Depreciation and amortization (a)

 

124

 

 

 

109

 

 

 

237

 

 

 

215

 

Restructuring and other corporate matters (b)

 

158

 

 

 

7

 

 

 

391

 

 

 

185

 

Programming charges (b)

 

121

 

 

 

 

 

 

121

 

 

 

 

Gain on sale of assets (b)

 

 

 

 

 

 

 

 

 

 

(549

)

Adjusted OIBDA (Non-GAAP)

 

$

1,689

 

 

 

$

1,562

 

 

 

$

2,952

 

 

 

$

3,101

 

(a)

The quarter and six months ended June 30, 2020 include an impairment charge for FCC licenses of $25 million and the six months ended June 30, 2020 also includes accelerated depreciation of $12 million for technology that was abandoned in connection with synergy plans related to the merger of Viacom Inc. with and into CBS Corporation (the “Merger”).

(b)

See notes on the following tables for additional information on items affecting comparability.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)

(Unaudited; in millions, except per share amounts)

   

 

 

Quarter Ended June 30, 2020

 

 

Earnings from
Continuing
Operations
Before Income
Taxes

 

 

Provision for
Income Taxes

 

 

Net Earnings
from
Continuing
Operations
Attributable to
ViacomCBS

 

 

Diluted EPS
from
Continuing
Operations

Reported (GAAP)

 

 

$

937

 

 

 

 

 

$

(202

)

 

 

 

 

$

478

 

 

 

 

 

$

.77

 

 

Items affecting comparability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (a)

 

 

158

 

 

 

 

 

(34

)

 

 

 

 

124

 

 

 

 

 

.20

 

 

Impairment charge (b)

 

 

25

 

 

 

 

 

(6

)

 

 

 

 

19

 

 

 

 

 

.03

 

 

Programming charges (c)

 

 

121

 

 

 

 

 

(29

)

 

 

 

 

92

 

 

 

 

 

.15

 

 

Gains from investments (d)

 

 

(32

)

 

 

 

 

8

 

 

 

 

 

(24

)

 

 

 

 

(.03

)

 

Loss on extinguishment of debt

 

 

103

 

 

 

 

 

(24

)

 

 

 

 

79

 

 

 

 

 

.13

 

 

Discrete tax items

 

 

 

 

 

 

 

1

 

 

 

 

 

1

 

 

 

 

 

 

 

Adjusted (Non-GAAP)

 

 

$

1,312

 

 

 

 

 

$

(286

)

 

 

 

 

$

769

 

 

 

 

 

$

1.25

 

 

(a)

Reflects severance, exit costs and other costs related to the Merger and a charge to write down property and equipment classified as held for sale.

(b)

Reflects a charge to reduce the carrying values of FCC licenses in two markets to their fair values.

(c)

Programming charges primarily related to the abandonment of certain incomplete programs resulting from coronavirus disease (“COVID-19”) related production shutdowns.

(d)

Reflects an increase to the carrying value of an equity security based on the market price of a similar security.

 

 

Quarter Ended June 30, 2019

 

 

Earnings from
Continuing
Operations
Before Income
Taxes

 

 

Provision for
Income Taxes

 

 

Net Earnings
from
Continuing
Operations
Attributable to
ViacomCBS

 

 

Diluted EPS
from
Continuing
Operations

Reported (GAAP)

 

 

$

1,239

 

 

 

 

 

$

(241

)

 

 

 

 

$

971

 

 

 

 

 

$

1.57

 

 

Items affecting comparability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (a)

 

 

7

 

 

 

 

 

(2

)

 

 

 

 

5

 

 

 

 

 

.01

 

 

Gains from investments (b)

 

 

(39

)

 

 

 

 

7

 

 

 

 

 

(32

)

 

 

 

 

(.05

)

 

Discrete tax items (c)

 

 

 

 

 

 

 

(32

)

 

 

 

 

(32

)

 

 

 

 

(.05

)

 

Adjusted (Non-GAAP)

 

 

$

1,207

 

 

 

 

 

$

(268

)

 

 

 

 

$

912

 

 

 

 

 

$

1.48

 

 

(a)

Reflects professional fees associated with legal proceedings involving the Company and other corporate matters.

(b)

Reflects a gain on marketable securities of $28 million and a gain of $11 million on the sale of an international joint venture.

(c)

Primarily reflects a tax benefit related to the bankruptcy of an investee.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)

(Unaudited; in millions, except per share amounts)

   

 

 

Six Months Ended June 30, 2020

 

 

Earnings from
Continuing
Operations
Before Income
Taxes

 

 

Provision for
Income Taxes

 

 

Net Earnings
from
Continuing
Operations
Attributable to
ViacomCBS

 

 

Diluted EPS
from
Continuing
Operations

Reported (GAAP)

 

 

$

1,594

 

 

 

 

 

$

(339

)

 

 

 

 

$

986

 

 

 

 

 

$

1.60

 

 

Items affecting comparability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (a)

 

 

391

 

 

 

 

 

(81

)

 

 

 

 

310

 

 

 

 

 

.50

 

 

Impairment charge (b)

 

 

25

 

 

 

 

 

(6

)

 

 

 

 

19

 

 

 

 

 

.03

 

 

Depreciation of abandoned technology (c)

 

 

12

 

 

 

 

 

(3

)

 

 

 

 

9

 

 

 

 

 

.01

 

 

Programming charges (d)

 

 

121

 

 

 

 

 

(29

)

 

 

 

 

92

 

 

 

 

 

.15

 

 

Gains from investments (e)

 

 

(32

)

 

 

 

 

8

 

 

 

 

 

(24

)

 

 

 

 

(.04

)

 

Loss on extinguishment of debt

 

 

103

 

 

 

 

 

(24

)

 

 

 

 

79

 

 

 

 

 

.13

 

 

Discrete tax items

 

 

 

 

 

 

 

(3

)

 

 

 

 

(3

)

 

 

 

 

 

 

Adjusted (Non-GAAP)

 

 

$

2,214

 

 

 

 

 

$

(477

)

 

 

 

 

$

1,468

 

 

 

 

 

$

2.38

 

 

(a)

Reflects severance, exit costs and other costs related to the Merger and a charge to write down property and equipment classified as held for sale.

(b)

Reflects a charge to reduce the carrying values of FCC licenses in two markets to their fair values.

(c)

Reflects accelerated depreciation for technology that was abandoned in connection with synergy plans related to the Merger.

(d)

Programming charges primarily related to the abandonment of certain incomplete programs resulting from COVID-19 related production shutdowns.

(e)

Reflects an increase to the carrying value of an equity security based on the market price of a similar security.

 

   

Six Months Ended June 30, 2019

 

   

Earnings from
Continuing
Operations
Before Income
Taxes

 

   

Benefit
(Provision)
for Income
Taxes

 

   

Net Earnings
from
Continuing
Operations
Attributable to
ViacomCBS

 

   

Diluted EPS
from
Continuing
Operations

Reported (GAAP)

   

 

$

2,832

 

 

 

   

 

$

135

 

 

 

   

 

$

2,917

 

 

 

   

 

$

4.73

 

 

Items affecting comparability:

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

Restructuring and other corporate matters (a)

   

 

185

 

 

 

   

 

(45

)

 

 

   

 

140

 

 

 

   

 

.23

 

 

Gain on sale of assets (b)

   

 

(549

)

 

 

   

 

163

 

 

 

   

 

(386

)

 

 

   

 

(.63

)

 

Gains from investments (c)

   

 

(77

)

 

 

   

 

16

 

 

 

   

 

(61

)

 

 

   

 

(.10

)

 

Discrete tax items (d)

   

 

 

 

 

   

 

(800

)

 

 

   

 

(800

)

 

 

   

 

(1.30

)

 

Adjusted (Non-GAAP)

   

 

$

2,391

 

 

 

   

 

$

(531

)

 

 

   

 

$

1,810

 

 

 

   

 

$

2.93

 

 

(a)

Reflects severance, exit costs, costs associated with the settlement of a commercial dispute, and other legal proceedings involving the Company.

(b)

Reflects a gain on the sale of the CBS Television City property and sound stage operation.

(c)

Reflects a gain on marketable securities of $66 million and a gain of $11 million on the sale of an international joint venture.

(d)

Reflects a deferred tax benefit of $768 million resulting from the transfer of intangible assets between our subsidiaries in connection with a reorganization of our international operations and a net tax benefit of $32 million principally related to the bankruptcy of an investee.

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

Free Cash Flow

Free cash flow is a non-GAAP financial measure. Free cash flow reflects our net cash flow provided by operating activities less capital expenditures. Our calculation of free cash flow includes capital expenditures because investment in capital expenditures is a use of cash that is directly related to our operations. Our net cash flow provided by operating activities is the most directly comparable GAAP financial measure.

Management believes free cash flow provides investors with an important perspective on the cash available to us to service debt, make strategic acquisitions and investments, maintain our capital assets, satisfy our tax obligations, and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management. Free cash flow is among several components of incentive compensation targets for certain management personnel. In addition, free cash flow is a primary measure used externally by our investors, analysts and industry peers for purposes of valuation and comparison of our operating performance to other companies in our industry.

As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by operating activities as a measure of liquidity or net earnings as a measure of operating performance. Free cash flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.

The following table presents a reconciliation of our net cash flow provided by operating activities to free cash flow.

 

 

Quarter Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

Net cash flow provided by operating activities (GAAP)

 

$

795

 

 

 

$

260

 

 

 

$

1,151

 

 

 

$

1,189

 

Capital expenditures

 

(81

)

 

 

(75

)

 

 

(132

)

 

 

(142

)

Free cash flow (Non-GAAP)

 

$

714

 

 

 

$

185

 

 

 

$

1,019

 

 

 

$

1,047

 

 

Contacts

Press:
Justin Dini
Executive Vice President, Corporate Communications
(212) 846-2724
justin.dini@viacbs.com

Justin Blaber
Senior Director, Corporate Communications
(212) 846-3139
justin.blaber@viacom.com

Pranita Sookai
Director, Corporate Communications
(212) 846-7553
pranita.sookai@viacom.com

Investors:
Anthony DiClemente
Executive Vice President, Investor Relations
(212) 846-5208
anthony.diclemente@viacbs.com

Jaime Morris
Vice President, Investor Relations
(212) 846-5237
jaime.morris@viacbs.com

Release Summary

ViacomCBS Inc. today reported financial results for the quarter ended June 30, 2020.

Contacts

Press:
Justin Dini
Executive Vice President, Corporate Communications
(212) 846-2724
justin.dini@viacbs.com

Justin Blaber
Senior Director, Corporate Communications
(212) 846-3139
justin.blaber@viacom.com

Pranita Sookai
Director, Corporate Communications
(212) 846-7553
pranita.sookai@viacom.com

Investors:
Anthony DiClemente
Executive Vice President, Investor Relations
(212) 846-5208
anthony.diclemente@viacbs.com

Jaime Morris
Vice President, Investor Relations
(212) 846-5237
jaime.morris@viacbs.com