ViacomCBS released solid third-quarter earnings on Friday that showed signs of improvement in advertising sales and affiliate revenue as well as strong growth in its streaming operations.
Paid subscribers for CBS All Access and Showtime standalone streaming services have climbed to 17.9 million, up from the 13.5 million subs disclosed earlier this year. The company also said its ad-supported Pluto TV service has reached 28.4 monthly active users. Total streaming and digital revenue reached $636 million, up 56% from the year-ago frame.
ViacomCBS hopes the focus on streaming metrics will help investors warm up to the company’s bifurcated strategy to build up its in-house platforms while also supplying to content to third-party buyers around the world. The company plans to rebrand CBS All Access as Paramount Plus early next year.
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ViacomCBS’ revenue for the quarter ended Sept. 30 was down 9% year over year to $6.1 billion, which still topped analysts expectations of around $5.94 billion. Earnings per share also surpassed expectations at 91 cents, down 17% from the year-ago period.
Net income dropped 2% to $612 million. Adjusted operating income fell 12% to $1.1 billion. Advertising revenue, a key metric for investors trying to assess the impact of the pandemic on the national economy, was down 6%, which was a sequential improvement and better than expected. Domestic ad sales fell 5% to $1.9 billion. International ad sales were hit harder, down 12% to $280 million.
CBS showed resilience amid the disruption. Revenue for the TV Entertainment sector that includes CBS and its related studio and distribution arms was off 4% for the quarter, to $2.4 billion. Ad sales were off only 1% ($1.1 billion) while affiliate revenue spiked 25% to $803 million thanks to what were surely contractually obligated increases set long before the coronavirus ravaged the country.
The struggles of the pandemic-battered theatrical sector are put in sharp focus by Paramount Pictures’ 94% slide in theatrical revenue, which dropped to $6 million from $94 million in the year-ago quarter. Adjusted operating income for the Filmed Entertainment division fell 18% to $54 million.
ViacomCBS previously set a goal of amassing 25 million subscribers for Showtime and CBS All Access by end of 2022. The company has surpassed its target of 16 million subscribers by the end of this year.
“As we near the first anniversary of the ViacomCBS merger, I’m thrilled about the way our organization has come together to realize the power of the combination and seize our unique global opportunity in streaming,” said ViacomCBS president-CEO Bob Bakish. “This quarter, we achieved strong user growth across our streaming platforms as we continue to build our linked ecosystem of pay and free services – with big steps taken, including the preview and brand reveal of Paramount Plus ahead of its launch in early 2021, and more recently, the unification of our global streaming organization. Our company’s transformation is ahead of schedule and we are incredibly excited by the opportunities ahead.”
More to come