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
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Domestic streaming and digital video revenue rose to
Statement from
“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 |
Six Months Ended |
|||||||||||||||||||||||||
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 |
478 |
971 |
(51 |
) |
986 |
2,917 |
(66 |
) |
||||||||||||||||||
Diluted EPS from continuing operations attributable to |
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 |
769 |
912 |
(16 |
) |
1,468 |
1,810 |
(19 |
) |
||||||||||||||||||
Adjusted diluted EPS from continuing operations attributable to |
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 |
Six Months Ended |
||||||||||||||||||||||||||||
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 |
) |
|||||||||||||||||
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 onJuly 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 ofJune 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,
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 andShowtime 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.
- CBS All Access continued to break records, with its paid subscribers, streams and minutes watched reaching all-time highs in the quarter.
- 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 fromBET ,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 a significant content expansion, the company added more than 3,500 episodes from the
- 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 theUEFA Champions League ,UEFA Europa League and UEFA Europa Conference League in the US
- Live streams of local
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 |
Six Months Ended |
|||||||||||||||||||||||||||||
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 |
||||||||||||||||||||||
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 |
Six Months Ended |
|||||||||||||||||||||||||||||
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 |
) |
||||||||||||||||||
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 integratedMiramax 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 |
Six Months Ended |
|||||||||||||||||||||||||||||
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 |
) |
||||||||||||||||||
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 |
Six Months Ended |
|||||||||||||||||||||||||||||
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
For more information about
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
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(Unaudited; in millions, except per share amounts) |
|||||||||||||||
|
Quarter Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
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 ( |
726 |
|
|
983 |
|
|
1,245 |
|
|
2,947 |
|
||||
Net earnings attributable to noncontrolling interests |
(245 |
) |
|
(6 |
) |
|
(248 |
) |
|
(11 |
) |
||||
Net earnings attributable to |
$ |
481 |
|
|
$ |
977 |
|
|
$ |
997 |
|
|
$ |
2,936 |
|
|
|
|
|
|
|
|
|
||||||||
Amounts attributable to |
|
|
|
|
|
|
|
||||||||
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 |
$ |
481 |
|
|
$ |
977 |
|
|
$ |
997 |
|
|
$ |
2,936 |
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per common share attributable to |
|
|
|
|
|
|
|
||||||||
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 |
|
|
|
|
|
|
|
||||||||
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 |
|
|
|||||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||||
(Unaudited; in millions, except per share amounts) |
|||||||||||
|
At |
|
At |
||||||||
|
|
|
|
||||||||
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 |
|
|
||
|
|
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 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
Class A Common Stock, par value |
|
— |
|
|
|
|
— |
|
|
||
Class B Common Stock, par value |
|
1 |
|
|
|
|
1 |
|
|
||
Additional paid-in capital |
|
29,680 |
|
|
|
|
29,590 |
|
|
||
|
|
(22,958 |
) |
|
|
|
(22,908 |
) |
|
||
Retained earnings |
|
9,150 |
|
|
|
|
8,494 |
|
|
||
Accumulated other comprehensive loss |
|
(1,999 |
) |
|
|
|
(1,970 |
) |
|
||
Total |
|
13,874 |
|
|
|
|
13,207 |
|
|
||
Noncontrolling interests |
|
676 |
|
|
|
|
82 |
|
|
||
Total Equity |
|
14,550 |
|
|
|
|
13,289 |
|
|
||
Total Liabilities and Equity |
|
$ |
51,188 |
|
|
|
|
$ |
49,519 |
|
|
|
|||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
(Unaudited; in millions) |
|||||||||
|
Six Months Ended |
||||||||
|
|
||||||||
|
2020 |
|
2019 |
||||||
Operating Activities: |
|
|
|
||||||
Net earnings ( |
$ |
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 |
834 |
|
|
976 |
|
||||
Cash, cash equivalents and restricted cash at end of period (includes |
$ |
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
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
The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.
|
Quarter Ended |
|
Six Months Ended |
||||||||||||||||
|
|
|
|
||||||||||||||||
|
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 |
|
(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 |
||||||||||||||||||||||||||
|
Earnings from |
|
Provision for |
|
Net Earnings |
|
Diluted EPS |
||||||||||||||||||||
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 |
|
(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 |
||||||||||||||||||||||||||
|
Earnings from |
|
Provision for |
|
Net Earnings |
|
Diluted EPS |
||||||||||||||||||||
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 |
|
(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 |
||||||||||||||||||||||||||
|
Earnings from |
|
Provision for |
|
Net Earnings |
|
Diluted EPS |
||||||||||||||||||||
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 |
|
(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 |
||||||||||||||||||||||||||||||
|
Earnings from |
|
Benefit |
|
Net Earnings |
|
Diluted EPS |
||||||||||||||||||||||||
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 |
|
(d) |
Reflects a deferred tax benefit of |
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 |
||||||||||||||||
|
|
|
|
||||||||||||||||
|
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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005283/en/
Press:
Executive Vice President, Corporate Communications
(212) 846-2724
justin.dini@viacbs.com
Senior Director, Corporate Communications
(212) 846-3139
justin.blaber@viacom.com
Director, Corporate Communications
(212) 846-7553
pranita.sookai@viacom.com
Investors:
Executive Vice President, Investor Relations
(212) 846-5208
anthony.diclemente@viacbs.com
Vice President, Investor Relations
(212) 846-5237
jaime.morris@viacbs.com
Source: