ViacomCBS Inc's quarterly results demonstrated a level of resilience, buoyed by demand for streaming, even as the coronavirus pandemic ravaged media businesses globally, sending shares up 5% at the open.
Although it logged a 12% drop in revenue, dragged down by a steep decline in advertising, the fall was less than expected and ViacomCBS Chief Executive Bob Bakish told analysts the second quarter was the bottom for ad declines.
The company declined to give financial guidance for the year but said that advertising trends had improved since April.
"June was strong, and we're encouraged by what we're seeing so far in Q3," Bakish said. "We believe this reflects not only economic optimism for a gradual recovery but also the power of our portfolio and the significant value we bring to advertisers."
Stay-at-home orders have boosted demand for streaming services in the absence of live events and theater releases, with Netflix Inc and Walt Disney Co reporting strong streaming subscriber additions.
ViacomCBS U.S. streaming subscribers reached 16.2 million in the second quarter, up from 13.5 million in the prior quarter. The company said it now expects to reach 18 million customers by the end of the year.
To fuel growth, the company is preparing to launch new streaming platforms by early next year to consolidate programming across the portfolio. It will also launch an international subscription streaming service in 2021 in Australia, Latin America and the Nordics, Bakish said.
"While advertising businesses are suffering amid the pandemic, the companies with strong streaming products are benefiting from the stay-at-home environment," said Haris Anwar, senior analyst at Investing.com. "Since the merger, ViacomCBS has built an attractive streaming portfolio which is helping the company to weather this downturn."
Streaming and digital video revenue, which includes subscriptions to CBS All Access and Showtime, rose 25% to $489 million in the quarter, ViacomCBS said.
Advertising fell 27% across the company as marketers slashed spending and as live sports disappeared from TV screens.
Revenue from its filmed entertainment division, which includes Paramount Pictures, fell 26% to $647 million, hurt by a near complete absence of theatrical sales as cinemas shut down to prevent the spread of the coronavirus.
The company said the fees it collected from cable and satellite operators rose 2% to $2.19 billion in the quarter.
Revenue fell 12% to $6.28 billion in the second quarter but exceeded estimates of $6.27 billion, according to Refinitiv IBES data.
On an adjusted basis, the company earned $1.25 per share, beating analysts' estimates of $0.93 per share, according to IBES data.
(Reporting by Kenneth Li in New York and Neha Malara in Bengaluru; Editing by Anil D'Silva and Steve Orlofsky) ((Neha.Malara@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 6749 3443;))