SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|☒||ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2020
|☐||TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934|
For the transition period from to
Commission File Number 001-09553
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction of|
incorporation or organization)
|(I.R.S. Employer Identification No.)|
|New York,||New York||10036|
(Address, including zip code, and telephone numbers, including
area code, of registrant’s principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:
|Title of Each Class||Trading Symbols||Name of Each Exchange on|
|Class A Common Stock, $0.001 par value||VIACA||The Nasdaq Stock Market LLC|
|Class B Common Stock, $0.001 par value||VIAC||The Nasdaq Stock Market LLC|
Securities Registered Pursuant to Section 12(g) of the Act:
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act of 1933). Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.
|Large accelerated filer ||☒||Accelerated filer ||☐||Non-accelerated filer||☐||Smaller reporting company||☐||Emerging growth company||☐|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒
As of June 30, 2020, which was the last business day of the registrant’s most recently completed second fiscal quarter, the market value of the shares of the registrant’s Class A Common Stock, $0.001 par value (“Class A Common Stock”), held by non-affiliates was approximately $275,618,509 (based upon the closing price of $25.60 per share as reported by The Nasdaq Stock Market LLC on that date) and the market value of the shares of the registrant’s Class B Common Stock, $0.001 par value (“Class B Common Stock”), held by non-affiliates was approximately $12,618,241,490 (based upon the closing price of $23.32 per share as reported by The Nasdaq Stock Market LLC on that date); and the aggregate market value of the shares of both Class A Common Stock and Class B Common Stock held by non-affiliates was $12,893,859,999.
As of February 19, 2021, 52,066,317 shares of Class A Common Stock and 567,539,816 shares of Class B Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of ViacomCBS Inc.’s Notice of 2021 Annual Meeting of Stockholders and Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 (Part III).
TABLE OF CONTENTS
ViacomCBS Inc. is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide. Driven by iconic consumer brands, our portfolio includes CBS, SHOWTIME, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Smithsonian Channel, CBS All Access (soon to be rebranded Paramount+) and Pluto TV, among others. We deliver the largest share of television audience in the United States (“U.S.”) and one of the industry’s most extensive libraries of television and film titles. In addition to offering innovative streaming services and digital video products, we provide powerful capabilities in production, distribution and advertising solutions.
Through the synergistic combination of our studios, networks and streaming businesses, we strategically focus on creating value in three ways. First, we maximize the power of our content by leveraging our extensive intellectual property portfolio across our Company and by focusing on areas with growth potential. Second, we maximize value from our biggest lines of revenue: advertising, affiliate and content licensing. Third, we are accelerating our momentum in streaming by expanding our differentiated ecosystem of free, pay and premium streaming services to capitalize on the global opportunity in streaming. Ahead of the rebranding of CBS All Access as Paramount+, which is scheduled for March 4, 2021, we recently announced an integrated global streaming organization under new leadership to ensure a more holistic approach across our streaming services, more closely align our streaming initiatives globally and enhance our ability to leverage our content portfolio.
As part of our ongoing integration strategy since the Merger (as defined below), in early 2020 we conducted a strategic review of our assets to identify and ultimately divest assets that do not fit within our focus on studios, networks and streaming. In connection with that review, in October 2020 we sold CNET Media Group and in November 2020 announced that we entered into an agreement to sell Simon & Schuster, which is expected to close in 2021, subject to customary closing conditions, including regulatory approvals. As a result, Simon & Schuster, which previously comprised our Publishing segment (“Publishing”), is presented as a discontinued operation in our consolidated financial statements for all periods presented in this Annual Report on Form 10-K.
We operate through the following segments:
•TV Entertainment. Our TV Entertainment segment (“TV Entertainment”) operates the CBS Television Network, our domestic broadcast network; CBS Studios and CBS Media Ventures, our television production and syndication operations; our CBS-branded streaming services, including CBS All Access/Paramount+; CBS Sports Network, our cable network focused on college athletics and other sports; and CBS Television Stations, our owned broadcast television stations. TV Entertainment accounted for approximately 42% of our consolidated revenues in 2020.
•Cable Networks. Our Cable Networks segment (“Cable Networks”) operates a portfolio of streaming services, including Pluto TV, a leading free advertising-supported streaming television (“FAST”) service in the U.S., and Showtime Networks’ premium subscription streaming service (“SHOWTIME OTT”); premium subscription cable networks, including SHOWTIME; basic cable networks, including BET, Nickelodeon, MTV, Comedy Central, Paramount Network and Smithsonian Channel; international extensions of these brands; and our international free-to-air broadcast networks such as Network 10, Channel 5 and Telefe. Cable Networks accounted for approximately 50% of our consolidated revenues in 2020.
•Filmed Entertainment. Our Filmed Entertainment segment (“Filmed Entertainment”) operates Paramount Pictures, Paramount Players, Paramount Animation and Paramount Television Studios, and also includes Miramax, a consolidated joint venture. Filmed Entertainment accounted for approximately 10% of our consolidated revenues in 2020.
We were organized as a Delaware corporation in 1986. On December 4, 2019, Viacom Inc. (“Viacom”) merged with and into CBS Corporation (“CBS”), with CBS continuing as the surviving company (the “Merger”), pursuant to an Agreement and Plan of Merger dated as of August 13, 2019, as amended on October 16, 2019 (the “Merger Agreement”). At the effective time of the Merger, we changed our name to ViacomCBS Inc. Unless the context requires otherwise, references in this document to “ViacomCBS,” “Company,” “we,” “us” and “our” mean ViacomCBS Inc. and our consolidated subsidiaries, to “CBS” mean CBS Corporation and its consolidated subsidiaries prior to the Merger and to “Viacom” mean Viacom Inc. and its consolidated subsidiaries prior to the Merger.
Our principal offices are located at 1515 Broadway, New York, New York 10036. Our telephone number is (212) 258-6000 and our website is www.ViacomCBS.com. Information included on or accessible through our website is not intended to be incorporated into this Annual Report on Form 10‑K.
We have two classes of common stock, Class A Common Stock and Class B Common Stock, both of which are listed on The Nasdaq Stock Market LLC. Owners of our Class A Common Stock are entitled to one vote per share. Our Class B Common Stock does not have voting rights. As of December 31, 2020, National Amusements, Inc. (“NAI”), a closely held corporation that owns and operates movie screens in the U.S., the United Kingdom (“U.K.”) and South America and manages additional movie screens in South America, directly or indirectly owned approximately 79.4% of our voting Class A Common Stock, and approximately 10.2% of our Class A Common Stock and Class B Common Stock on a combined basis. NAI is not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.
TV Entertainment operates the CBS Television Network, our domestic broadcast network; CBS Studios and CBS Media Ventures, our television production and syndication operations; our CBS-branded streaming services CBS All Access/Paramount+, CBSN, CBS Sports HQ and ET Live; CBS Sports Network, our cable network focused on college athletics and other sports; and CBS Television Stations, our owned broadcast television stations.
TV Entertainment’s revenues are generated primarily from advertising sales; the licensing and distribution of content; and affiliate revenues comprised of fees received from television stations affiliated with the CBS Television Network (“reverse compensation”), fees for authorizing multichannel video programming distributors’ (“MVPDs”) and virtual MVPDs’ (“vMVPDs”) carriage of our owned television stations (“retransmission fees”), and subscription fees for our streaming services. In 2020, TV Entertainment advertising, affiliate and content licensing revenues generated approximately 47%, 29% and 22%, respectively, of the segment’s total revenues. TV Entertainment generated approximately 42%, 44% and 42% of our consolidated revenues in 2020, 2019 and 2018, respectively.
CBS Television Network
The CBS Television Network, through CBS Entertainment, CBS News and CBS Sports, distributes news and public affairs broadcasts, sports and entertainment programming. The CBS Television Network primarily derives revenue from the sale of advertising time for its network broadcasts and affiliation fees from television stations affiliated with the CBS Television Network.
CBS Entertainment acquires or develops and schedules the programming on the CBS Television Network, which includes primetime comedies and dramas, reality, specials, kids’ programs, daytime dramas, game shows and late night. CBS Television Network’s top-rated series include NCIS, The Late Show with Stephen Colbert and The Price is Right. CBS News operates a worldwide news organization, providing the CBS Television Network and
CBS News Radio with regularly scheduled news and public affairs broadcasts, including 60 Minutes, 48 Hours, CBS Evening News, CBS This Morning, CBS Sunday Morning and Face the Nation.
CBS Sports broadcasts on CBS Television Network include: certain regular season games from the National Football League’s (the “NFL”) American Football Conference (“AFC”) and National Football Conference (NFC), as well as post-season AFC wild card playoff, AFC divisional playoff and championship games, and, on a rotating basis with other networks, the Super Bowl; the National Collegiate Athletic Association (the “NCAA”) Division I Men’s Basketball Tournament and marquee regular-season college basketball games, including conference championship games from the Big Ten, Mountain West, Atlantic 10 and Missouri Valley; regular-season college football games, including games from the Southeastern Conference; and PGA Tour golf tournaments, for which we have broadcast rights through 2030, the Masters and the PGA Championship. In 2020, CBS Sports, along with CBS All Access, became the exclusive English-language home in the U.S. of the Union of European Football Associations (“UEFA”) Champions League, UEFA Europa League and UEFA Europa Conference League.
CBS Television Network content also is available on the internet, including through: CBS.com, CBSSports.com and related software applications (“apps”); our streaming services, such as CBS All Access and CBSN; and vMVPDs, such as Hulu with Live TV and YouTube TV.
The CW, a broadcast network and our joint venture with Warner Bros. Entertainment, airs programming targeting younger viewers, including Charmed and The Flash. Eight of our owned television stations are affiliates of The CW.
CBS Studios is a leading content supplier that produces nearly 70 series across broadcast television, premium subscription cable and streaming services. CBS Studios maintains an extensive library of intellectual property, including the genre-defining and ever-growing Star Trek universe. CBS Studios’ portfolio spans a diverse slate of commercially successful and critically acclaimed scripted programming. Broadcast television productions include Blue Bloods, the FBI franchise and the NCIS franchise for the CBS Television Network, and Nancy Drew and Walker for The CW. In premium cable, CBS Studios produced The Comey Rule and Our Cartoon President and produces Your Honor for SHOWTIME. Streaming productions include The Good Fight and The Stand for CBS All Access; Dead to Me and Unbelievable for Netflix; Diary of a Future President for Disney+; and Carpool Karaoke for Apple TV. CBS Studios also produces award-winning late night and daytime talk shows, such as The Late Show with Stephen Colbert, The Late Late Show with James Corden and The Talk. Internationally, CBS Studios develops, produces and distributes local language and international series originated outside of the U.S.
CBS Media Ventures
CBS Media Ventures produces or distributes first-run syndicated daily and weekly programming, across various dayparts and genres, including talk shows, court shows, game shows and newsmagazines. The programming is produced for television stations across the country and sold market by market. First-run syndication is programming exhibited on television stations without prior exhibition. Revenue is generated from licensing and distributing such programming, as well as through national advertising sales and integrations. CBS Media Ventures’ first-run series include Dr. Phil, Entertainment Tonight, Jeopardy!, Judge Judy and the new daytime series The Drew Barrymore Show. CBS Media Ventures also distributes programming produced by other divisions, such as CBS Studios, CBS News and Showtime Networks, after initial exhibition on broadcast television, basic or premium subscription cable networks or streaming services for domestic exhibition on television stations, cable networks or streaming services (known as “off-network syndicated programming”). Off-network syndicated programming and first‑run syndicated programming distributed domestically can be sold in successive sales cycles known as “first cycle” sales, “second cycle” sales, and so on, which may occur on an exclusive or non-exclusive basis. CBS Media Ventures operates Dabl, a multiplatform, advertiser-supported lifestyle network.
CBS Television Stations
The CBS Television Stations group consists of our 29 owned broadcast television stations, all of which operate under licenses granted by the Federal Communications Commission (“FCC”) pursuant to the Communications Act of 1934, as amended (the “Communications Act”). Licensees must seek to renew each license every eight years. The CBS Television Stations group principally derives revenue from the sale of advertising on our television stations and retransmission fees. Our television stations are located in the seven largest, and 15 of the top 20, television markets in the U.S. We own multiple television stations within the same designated market area (“DMA”) in 10 major markets, including New York, Los Angeles and Philadelphia. Our television stations enable us to reach a wide audience within and across geographically diverse markets in the U.S. The stations produce news and broadcast public affairs, sports and other programming to serve their local markets and offer CBS, The CW or MyNetworkTV (a national broadcast service that provides syndicated programming, including series from the ViacomCBS library, during primetime to stations across the country) programming and syndicated programming. The stations also broadcast free, advertiser-supported digital channels using available broadcast spectrum. These channels include local and syndicated programming, Dabl (a multiplatform, advertiser-supported lifestyle network operated by CBS Media Ventures) and Start TV, a national entertainment program service featuring classic television content focused on female audiences, which is our joint venture with Weigel Broadcasting. Local versions of our CBSN streaming service offers local news from certain of our owned television stations. Our television stations have local websites that promote the stations’ programming.
Television Stations, Local Websites and CBSN Streaming Services
The following table sets forth information regarding our owned television stations and related local websites and CBSN streaming services, as of February 22, 2021, within U.S. television markets:
Local Websites and CBSN
|New York, NY||1||WCBS‑TV||UHF||CBS||newyork.cbslocal.com|
|WLNY‑TV||UHF||Independent||CBSN New York|
|Los Angeles, CA||2||KCAL‑TV||VHF||Independent||losangeles.cbslocal.com|
|KCBS‑TV||UHF||CBS||CBSN Los Angeles|
|WPSG‑TV||UHF||The CW||CBSN Philly|
|Dallas‑Fort Worth, TX||5||KTVT‑TV||UHF||CBS||dfw.cbslocal.com|
|KTXA‑TV||UHF||Independent||CBSN Dallas-Fort Worth|
|San Francisco, CA||6||KPIX‑TV||UHF||CBS||sanfrancisco.cbslocal.com|
|KBCW‑TV||UHF||The CW||CBSN Bay Area|
|Atlanta, GA||7||WUPA-TV||UHF||The CW||atlanta.cbslocal.com|
|Seattle-Tacoma, WA||12||KSTW-TV||VHF||The CW||seattle.cbslocal.com|
|Tampa-St. Petersburg, FL||13||WTOG-TV||UHF||The CW||tampa.cbslocal.com|
Local Websites and CBSN
|Miami-Ft. Lauderdale, FL||18||WFOR‑TV||UHF||CBS||miami.cbslocal.com|
|WPCW-TV||VHF||The CW||CBSN Pittsburgh|
(1) Television market (DMA) rankings based on Nielsen Media Research Local Market Universe Estimates (September 2020).
(2) Our television stations’ websites and the local versions of CBSN feature and promote the stations’ programming and provide news, traffic, weather, entertainment and sports information, among other services for their local communities.
(3) KCCW-TV is operated as a satellite station of WCCO-TV.
(4) WBXI-CA is a Class A low power television station. Class A low power television stations do not implicate the FCC’s ownership rules.
CBS Sports Network
CBS Sports Network is a cable network that provides a diverse slate of sports and related content 24 hours a day, seven days a week (“24/7”), with a focus on college sports. CBS Sports Network generates revenue from carriage fees from MVPDs, vMVPDs and advertising sales. The network televises live professional, amateur and college events, including Division I college football, basketball, hockey and lacrosse, as well as professional bull riding. In addition, the network showcases a variety of original programming, including documentaries, features and studio shows, highlighted by NFL Monday QB, That Other Pre-Game Show (TOPS), Time to Schein and a first of its kind all-female panel sports talk show, We Need to Talk. CBS Sports Network also provides ancillary coverage for CBS Sports relating to major events, such as the NCAA Division I Men’s Basketball Tournament, The Masters Tournament and the PGA Championship, and for SHOWTIME relating to SHOWTIME Championship Boxing.
CBS All Access/Paramount+
CBS All Access is our direct-to-consumer digital subscription video-on-demand (“SVOD”) and live streaming service, which generates revenue from subscription fees and advertising, and has provided subscribers the ability to watch television and movies on-demand, as well as livestreamed sports and local CBS stations across the U.S.
The streaming service is expected to be relaunched as Paramount+ on March 4, 2021 and will feature content from our leading portfolio of broadcast, news, sports and entertainment brands. Building on our legacy of great storytelling, Paramount+ will present original series such as: The Offer, a limited event series about the making of The Godfather, one of Paramount’s most legendary films; a new edition of Behind the Music from MTV; The Real Criminal Minds, a true crime docu-series; Kamp Koral: SpongeBob’s Under Years from Nickelodeon; and The SpongeBob Movie: Sponge on the Run. Paramount+ will also include current and past seasons of hit shows from the CBS Television Network; growing libraries from brands across our Cable Networks portfolio, including Nickelodeon, BET, Comedy Central, MTV, Paramount Network and Smithsonian Channel; and films from Paramount Pictures. Paramount+ will continue to be home to livestreamed CBS Sports programming, including golf, football and basketball, and every UEFA club competition match, including all UEFA Champions League and UEFA Europa League matches. Subscribers can also stream local CBS stations live across the U.S., as well as our other live channels: CBSN for news 24/7, CBS Sports HQ for sports news and analysis, and ET Live. The service is offered through mobile and connected devices, and third-party platforms.
Cable Networks operates a portfolio of free, pay and premium streaming services — Pluto TV, a leading FAST service in the U.S.; Noggin, Nickelodeon’s preschool subscription streaming service; BET+, a subscription streaming service focused on the Black audience; and SHOWTIME OTT — and a portfolio of both premium subscription and basic cable networks. Our premium subscription cable networks consist of SHOWTIME, The Movie Channel and Flix, and our basic cable networks consist of BET, Nickelodeon, MTV, Comedy Central, Paramount Network, Smithsonian Channel, Pop TV, CMT, VH1, TV Land and Logo.
Under ViacomCBS Networks International (“VCNI”), we operate international divisions of our domestic streaming and Cable Networks brands and businesses, program services created specifically for international audiences and our international free-to-air networks such as Channel 5 in the U.K., Televisión Federal S.A. (“Telefe”) in Argentina and Network 10 in Australia.
Cable Networks’ revenues are generated primarily from affiliate revenues comprised of fees from MVPDs and vMVPDs for carriage of our cable networks, and subscription fees from our streaming services; advertising sales; and the licensing of our content and brands. In 2020, Cable Networks affiliate, advertising and content licensing revenues generated approximately 48%, 38% and 14%, respectively, of the segment’s total revenues. Cable Networks generated approximately 50%, 46% and 48% of our consolidated revenues in 2020, 2019 and 2018, respectively.
Our most significant Cable Networks brands are discussed below.
Our three premium subscription cable networks in the U.S. are SHOWTIME, which offers original scripted and unscripted series, movies, documentaries and docu-series, sports, comedy and special events; The Movie Channel, which offers a variety of movies and related programming; and Flix, which primarily offers movies from the last several decades. Content highlights on SHOWTIME in 2020 include new seasons of The Chi, Billions, the final season of Homeland and the limited series The Good Lord Bird. SHOWTIME is also home to Shameless, The L Word: Generation Q, Black Monday, City on a Hill, Desus & Mero, the network’s first late-night talk show, a number of docu-series, including Couples Therapy, The Circus, and the news series Vice. SHOWTIME OTT, Showtime Networks’ premium subscription streaming service, is available for purchase without an MVPD subscription. SHOWTIME Anytime, an authenticated version of SHOWTIME, is available free of charge to SHOWTIME subscribers. Showtime Networks also produces and/or provides special events on a pay-per-view basis available for purchase by both SHOWTIME subscribers and non-subscribers through the SHOWTIME app and third-party distributors. Showtime Networks owns and operates Bellator, a leading mixed martial arts and kickboxing organization.
Pluto TV is a leading FAST service in the U.S., delivering over 250 live, linear channels and thousands of movies and television series on-demand to 30.1 million domestic monthly active users (“MAUs”) and 43.1 million global MAUs as of December 31, 2020. Pluto TV has an international footprint that spans three continents and 24 countries throughout North America, Europe and Latin America. With over 100,000 hours of premium content, Pluto TV offers a broad and diverse lineup of third-party branded and original, thematically-curated channels featuring categories including movies and television, sports, news & opinion, comedy, gaming & anime, home &
DIY, music, kids, reality, crime, classic TV and Latino. Over fifty channels, or approximately one-fifth of Pluto TV’s lineup, are dedicated to ViacomCBS titles and brands. Pluto TV has over 400 global content partners, including studios, networks, news and sports organizations, publishers, and digital media entities. With over 30 distribution partners, Pluto TV is widely available on mobile, web and connected devices, including on major connected television brands such as Samsung, LG, Fire TV, TiVo and Vizio.
BET is the nation’s leading provider of entertainment, music, news and experiences that entertain, engage and empower African-American audiences. BET can be seen in the U.S., Canada, the Caribbean, the U.K. and sub-Saharan Africa. In 2020, BET aired an array of content addressing systemic racism, including Justice Now: A BET News Special/Town Hall, American Injustice: The Fight for Police Reform, A March for Action and BET Remembers: George Floyd. Other highlights include John Lewis: In His Own Words, No Limit Chronicles, Twenties and Tyler Perry’s The Oval and Sistas, the first two series in our multi-year partnership with award-winning writer, director, producer, actor and playwright Tyler Perry. BET’s tentpoles and live events include the BET Awards & Experience, which in 2020 aired as the number one cable awards show for the sixth consecutive year among adults, and the BET Hip Hop Awards.
BET+, our joint venture with Tyler Perry Studios, is a subscription streaming service for the Black audience, with exclusive originals, thousands of television episodes and movies from leading Black content creators. The service is the official home of Tyler Perry’s film, television and stage works, and provides users with access to original content, including First Wives Club, Ruthless and Bigger. BET brands include: BET.com, a leading internet destination for Black entertainment, music, culture, and news; BET Her, an entertainment network targeting the African-American woman; BET Music Networks; BET Home Entertainment; BET Live; BET Mobile; and BET International, which operates BET around the globe.
Kids & Family Entertainment Group
Nickelodeon, now in its 41st year, is one of the most globally recognized and widely distributed multimedia entertainment brands for kids and family. Nickelodeon has been the number-one-rated advertising-supported basic cable network for 25 consecutive years among kids 2 to 11. Nickelodeon features leading original and licensed kids’ series across animation, live-action and preschool genres. Content highlights in 2020 include Ryan’s Mystery Playdate, SpongeBob SquarePants, PAW Patrol, The Loud House, The Casagrandes and Blue’s Clues & You!. Nickelodeon brands include Nick Jr., Nick at Nite, TeenNick, Nicktoons and Nick Music.
Noggin, Nickelodeon’s preschool subscription streaming service, features over 1,000 library episodes, interactive videos and short-form educational content. In partnership with Paramount, Nickelodeon Movies produces branded films based on some of Nickelodeon’s most iconic franchises and characters. Nickelodeon is a key part of our global consumer products business. In 2020, we entered into a licensing partnership with global toy brand Melissa & Doug to deliver PAW Patrol and Blue’s Clues and You! co-branded toys. Nickelodeon also licenses its brands for recreation and other location-based experiences such as hotels and theme parks and is involved in numerous live events such as the Kids’ Choice Awards.
Awesomeness creates content focused on the global Gen Z audience through its digital publishing, film and television studio divisions. Awesomeness has become the destination for youth culture, cultivating a loyal audience with content such as To All the Boys I’ve Loved Before, Trinkets and Pen15.
MTV Entertainment Group
MTV is the leading global youth media brand with operations that span cable and mobile networks, live events, films and MTV Studios, a unit focused on developing series for SVOD and other distribution platforms and partners. Content highlights in 2020 include The Challenge, Jersey Shore Family Vacation, Double Shot at Love with DJ Pauly D and Vinny, Floribama Shore, Teen Mom, Ridiculousness, Deliciousness, Wild ‘N Out, Catfish, Ghosted, Siesta Key, 16 & Recovering and the Oscar nominated St. Louis Superman from MTV Documentary Films. MTV’s signature event, the MTV Video Music Awards, drew 6.4 million viewers across its live linear simulcast and 41.1 million interactions across social media, making it the second most-social show of the year, behind only the Super Bowl. MTV’s annual tentpoles also include the MTV European Music Awards and the MTV Movie and TV Awards.
Comedy Central is a leading destination for comedic and topical talent and all things comedy, providing viewers access to a world of funny, provocative and relevant comedy, ranging from award-winning late-night, scripted and animated series, to stand-up and short-form. Content highlights in 2020 include South Park: The Pandemic Special, The Daily ‘Social Distancing’ Show with Trevor Noah and Awkwafina is Nora From Queens. Comedy Central also produces a global podcast network and operates Comedy Central Radio on SiriusXM.
Paramount Network is a premium entertainment destination with stories that are immersive, inclusive and deeply personal. Content highlights in 2020 include Yellowstone, written by Oscar nominee Taylor Sheridan and starring two-time Oscar winner Kevin Costner, and Dashing in December, an LGBTQ+ holiday film produced by the MTV Entertainment Group’s original movies and limited series division, which was launched in May 2020.
Smithsonian Channel is the home of popular genres such as air and space, travel, history, science, nature and pop culture. Among the brand’s series are Aerial America, America in Color, America’s Hidden Stories, Apollo’s Moon Shot, The Pacific War in Color and Air Disasters, as well as critically-acclaimed specials that include The Green Book: Guide to Freedom, Black in Space: Breaking the Color Barrier, Walk Against Fear: James Meredith and Princess Diana’s Wicked Stepmother.
ViacomCBS Networks International (VCNI)
VCNI operates international divisions of our domestic streaming and Cable Networks brands and businesses, as well as regional and free-to-air broadcast networks.
Network 10 is one of the three major free-to-air commercial broadcast networks in Australia that focuses on delivering content targeted at the under 50s demographic across a variety of platforms and genres. Network 10 is home to popular franchises, including MasterChef Australia, Australian Survivor and I’m A Celebrity…Get Me Out of Here!, and news and current affairs show The Project. Network 10 brands consist of channel 10, 10 Bold, 10 Peach and 10 Shake, on-demand service 10 Play, and 10 All Access (soon to be rebranded Paramount+), a subscription streaming service in Australia featuring a collection of popular Network 10 series as well as exclusive CBS library content.
Channel 5 is a free-to-air public service broadcaster (PSB) in the U.K. Channel 5 channels include 5Star, 5USA and 5Select, as well as its corresponding SVOD service, My5, which together offer a broad mix of popular content, including factual programming, entertainment, reality, sports, acquired and original drama, and preschool programming through its award-winning Milkshake! brand. Content highlights in 2020 include All Creatures Great and Small and Our Yorkshire Farm.
Telefe is the leading free-to-air entertainment broadcast network in Argentina and offers a wide range of programming, including Who Wants to Be a Millionaire? The Internationals: Buenos Aires Connection and MasterChef Celebrity. Telefe Noticias, Telefe’s flagship newscast, was in 2020 named Argentina’s most trusted news brand. Telefe also has an expansive digital presence that includes exclusive content, video-on-demand and a livestream.
COLORS is a Hindi-language general entertainment pay television channel operated by Viacom18, our joint venture in India. COLORS is available in India and over 100 additional countries. Content highlights in 2020 include Khatron Ke Khiladi, Bigg Boss 14 and Barrister Babu. Other COLORS brands include COLORS Infinity, COLORS Rishtey and COLORS Cineplex. Viacom18 Studios, Viacom18’s filmed entertainment business, includes Viacom18 Motion Pictures, a fully-integrated motion pictures studio, and Tipping Point, a digital content unit. Viacom18 Motion Pictures also partners with Paramount to market and distribute Paramount films for theatrical exhibition in the Indian sub-continent.
Filmed Entertainment operates Paramount Pictures, Paramount Players, Paramount Animation and Paramount Television Studios, and also includes Miramax, a consolidated joint venture. It partners on various projects with key TV Entertainment and Cable Networks brands. Films produced, acquired and/or distributed by Filmed Entertainment are generally first exhibited theatrically in domestic and/or international markets and then released in various markets and media.
Filmed Entertainment’s revenues are generated primarily from the release and/or distribution of films theatrically, the release and/or distribution of film and television product through home entertainment, the licensing of film and television product to television, SVOD and other digital platforms and other ancillary activities. Our theatrical revenues in 2020 were negatively impacted by the closure or reduction in capacity of movie theaters as a result of COVID-19. We rescheduled certain planned 2020 theatrical releases to 2021, and licensed others to our owned or third-party streaming services. In 2020, Filmed Entertainment licensing, home entertainment and theatrical revenues generated approximately 62%, 28% and 7%, respectively, of the segment’s total revenues. Filmed Entertainment generated approximately 10%, 11% and 11% of our consolidated revenues in 2020, 2019 and 2018, respectively.
Paramount Pictures is a major global producer and distributor of filmed entertainment and has an extensive library consisting of over 1,200 film titles produced by Paramount, acquired rights to nearly 2,900 additional films and a number of television programs. Paramount’s library includes many Academy Award winners, including Titanic, Braveheart, Forrest Gump, The Godfather, The Godfather Part II and Wings, which won the first ever Academy
Award for Best Picture in 1929. The Paramount library also includes other Academy Award Best Picture nominees such as Arrival, Fences, The Big Short, Selma and The Wolf of Wall Street, classics such as The Ten Commandments, Breakfast at Tiffany’s and Sunset Boulevard, and a number of successful franchises such as Mission: Impossible, Transformers, Star Trek and Paranormal Activity. In 2020, Paramount’s theatrical releases included Sonic the Hedgehog, the highest-grossing movie ever in the U.S. based on a video game.
Paramount Players is committed to creating genre films from unique, contemporary voices and properties, as well as drawing from Paramount’s rich library of content.
Paramount Animation is our animation division and develops and produces top-quality animated films. Paramount Animation co-produced The SpongeBob Movie: Sponge on the Run, which will be digitally released domestically in March 2021 simultaneously on premium video on demand and Paramount+.
Paramount Television Studios
Paramount Television Studios develops and finances a wide range of original, premium television content across all platforms for distribution worldwide. Paramount Television Studios’ productions include The Haunting of Hill House and The Haunting of Bly Manor for Netflix; 13 Reasons Why for Netflix; Tom Clancy’s Jack Ryan for Amazon Prime; The Alienist and The Angel of Darkness for TNT; Home Before Dark and Defending Jacob for AppleTV+; Catch-22 for Hulu; and Boomerang and First Wives Club for BET and BET+, respectively.
Miramax, a consolidated joint venture with beIN Media Group, is a global film and television studio with an extensive library of content. We have exclusive, long-term rights to distribute Miramax’s library, adding nearly 700 titles to our existing library. We also have certain rights to co-produce, co-finance and/or distribute new film and television projects with Miramax.
Film Production, Distribution and Financing
We produce many of the films we release and also acquire films for distribution from third parties. In some cases, we co-finance and/or co-distribute films with third parties, including other studios. We also enter into film-specific financing and slate financing arrangements from time to time under which third parties participate in the financing of the costs of a film or group of films in exchange for an economic participation and a partial copyright interest. We distribute films worldwide or in select territories or media and may engage third-party distributors for certain films in certain territories. We have several multi-film production, distribution and financing relationships, including with Skydance Productions, Hasbro Inc. and New Republic Pictures.
Domestically, we generally market and distribute our own theatrical and home entertainment releases. Internationally, we generally distribute theatrical releases through our international affiliates or, in territories where we have no operating presence, through United International Pictures, our joint venture with Universal Studios. For home entertainment releases, DVD and Blu-ray discs are distributed internationally by local licensees. We also license films and television shows domestically and/or internationally to a variety of platforms.
Publishing consists of Simon & Schuster, which publishes and distributes adult and children’s consumer books in printed, digital and audio formats in the U.S. and internationally. Its digital formats include electronic books and audio books. In November 2020, we announced that we entered into an agreement to sell Simon & Schuster, which is expected to close in 2021, subject to customary closing conditions, including regulatory approvals. Simon & Schuster is presented as a discontinued operation in our consolidated financial statements for all periods presented in this Annual Report on Form 10-K.
Simon & Schuster’s major children’s imprints include Simon & Schuster Books For Young Readers, Aladdin and Little Simon. Simon & Schuster also develops special imprints and publishes titles based on the products of certain of our businesses as well as those of third parties and distributes products for other publishers. Simon & Schuster distributes its products directly and through third parties. Simon & Schuster also delivers content and promotes its products on its own websites, social media, and general internet sites as well as those dedicated to individual titles. International publishing includes the international distribution of English-language titles through Simon & Schuster in the U.K., Canada, Australia and India and other distributors, as well as the publication of locally originated titles by its international companies.
Best-selling titles in 2020 include: Mary Trump’s Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man; Bob Woodward’s Rage; John Bolton’s The Room Where it Happened; Stephen King’s If It Bleeds and The Outsider; and Cassandra Clare’s Chain of Gold.
All of our businesses operate in highly competitive environments, and compete for creative talent and intellectual property, as well as for audiences and distribution of our content.
TV Entertainment, Cable Networks and Filmed Entertainment compete with a variety of media, technology and entertainment companies that have substantial resources to produce and acquire content worldwide, including broadcast networks, basic and premium cable networks, streaming services, film and television studios, production groups, independent producers and syndicators, television stations and television station groups. These segments compete with other content creators for creative talent including producers, directors, actors and writers, as well as for new program ideas and intellectual property and for the acquisition of popular programming. Similarly, Publishing competes with many other publishers for the rights to works by authors, and competition is particularly strong for well-known authors and public personalities.
Our businesses also face significant competition for audiences from various sources. Filmed Entertainment competes for audiences for its films and television content with releases from other film studios, television producers and streaming services, as well as with other forms of entertainment and consumer spending outlets. TV Entertainment and Cable Networks compete for audiences and advertising revenues primarily with other cable and broadcast television networks; streaming services; social media platforms; websites, apps and other online experiences; radio programming; and print media. In addition, our television and basic cable networks businesses face increasing competition from technologies providing digital audio and visual content in ways that allow audiences to consume content of their choosing while avoiding traditional commercial advertising. Moreover, our businesses face competition from the many other entertainment options available to consumers including video games, sports, travel and outdoor recreation.
We also face competition for distribution of our content. TV Entertainment and Cable Networks compete for distribution of our program services (and receipt of related fees) with other broadcast networks, cable networks and programmers. The CBS Television Network competes with other broadcast networks to secure affiliations with independently owned television stations to ensure the effective distribution of network programming
nationwide. TV Entertainment, Cable Networks and Filmed Entertainment compete with studios and other producers of entertainment content for distribution on third-party platforms.
For additional information regarding competition, see “Item 1A. Risk Factors — Our businesses operate in industries that are highly competitive.”
ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
The media and entertainment industry is uniquely positioned to shape culture, social attitudes and societal outcomes. As a global content company that reaches billions of people, we take seriously the opportunity and responsibility that comes with that reach.
We are committed to advancing and strengthening our approach to environmental, social and governance (“ESG”) topics to help serve our partners, audiences, employees and shareholders — and to enhance our success as a business. Our approach is grounded in an understanding of where our biggest impacts, risks and opportunities lie.
ViacomCBS is committed to responsible and sustainable business practices, which strengthen our ability to innovate and better serve our partners, audiences and stockholders. In 2020, we built upon the momentum at each of CBS and Viacom and established three pillars for our ESG strategy moving forward: On-Screen Content and Social Impact, Workforce and Culture, and Sustainable Production and Operations. We also published our first companywide Materiality Assessment and our first ESG report. We are committed to continuing to identify, measure, and map the ESG impacts of our global operations and report on those impacts with stakeholders.
Human Capital Management
We aim to build a culture that attracts and retains the best employees and a workplace where everyone feels welcome, safe and inspired to bring their whole self to work. As of December 31, 2020, we employed approximately 22,109 full-time and part-time employees worldwide, and had approximately 4,231 additional project-based staff on our payroll. We also use other temporary employees in the ordinary course of our business. Our human capital management strategy is intended to address the following areas:
A Culture of Diversity, Equity and Inclusion
We seek to foster a culture of diversity, equity and inclusion through a range of partnerships, collaborations, programs and initiatives, some of which are described below.
•We partner with approximately 70 diversity-focused institutions that are committed to supporting women, BIPOC and LGBTQ+ individuals, veterans and/or persons with disabilities. We have placed a particular focus on organizations advancing the causes of racial justice, anti-hate and social equity on a global basis.
•Our job postings reach an expansive network that includes approximately 70 diversity-focused job boards. We leverage technology with the goal of removing potentially biasing language from our job descriptions and recruitment correspondence.
•We sponsor internal and external professional development programs and campus-to-career initiatives aimed at underrepresented groups. We nominate and support women and BIPOC employees for leadership training opportunities.
•We conduct a variety of training and other initiatives designed to educate our employees on unconscious bias, inclusive leadership, allyship, anti-Semitism and anti-racism, which are intended to help disrupt systemic bias and racism in the workplace.
•We conduct surveys to gather information about our employee population that self-identifies as LGBTQ+ or as having a disability and we provide education across the business intended to address associated stigma.
•We support nine active employee-led Employee Resource Groups (ERGs) with 48 chapters in 14 locations worldwide. Our ERGs provide support for certain business and corporate initiatives.
•We are a founding participant of the Black Equity at Work Certification, designed to benchmark and index our performance to other companies to advance diversity and inclusion in the workplace, and of the CEO Action for Diversity Pledge.
Of our U.S. employees, as of December 31, 2020, approximately 49% were female and approximately 37% self-identified as part of a racial or ethnic minority group. Of our U.S. employees with Vice President titles and above, as of December 31, 2020, approximately 48% were female and approximately 26% self-identified as part of a racial or ethnic minority group. We have set measurable goals intended to improve the diversity of our workforce through hiring and promotions.
Preventing Harassment and Discrimination
We have enacted policies addressing harassment, discrimination and other behaviors that could create a hostile workplace, some of which are described below.
•We make available to our employees, globally, training on preventing sexual harassment, discrimination and retaliation. We also make available to workers on ViacomCBS productions, including freelancers and others not directly employed by ViacomCBS, training on preventing sexual harassment.
•We monitor employee diversity data for trends that could suggest discrimination or unconscious bias.
•We expect employees to report any violations of Company policies, including sexual harassment, they witness. Among other ways, employees can report incidents of harassment using our anonymous complaint and reporting hotline, called OPENLINE.
Employee Attraction, Retention and Training
We provide a range of training, mentoring and career mobility programs aimed at attracting, retaining and engaging our employees. Some of these programs are described below.
•We offer our employees formal, six-month mentoring programs and “pop up” mentoring events. We also offer our employees leadership-specific training.
•We offer a range of financial and nonfinancial compensation and benefits, including health, life and disability insurance; matching retirement contributions; flexible paid time off; and paid volunteer time. In 2020, we implemented new parental, caregiving, bereavement and military leave benefits. We also offer tuition support for certain employees.
•We offer flexible work hours for many of our full-time and part-time employees.
Health, Safety and Security
We endeavor to take a proactive approach to identifying and mitigating health, safety and security risks. Some of the steps we take are described below.
•We have on-site health care at some office and production sites, as well as medics and medical support at many production sites.
•We perform risk assessments of daily work processes across our productions, offices and other work sites and develop hazard reduction, avoidance and mitigation plans. We also track and report safety, health and security incident data across the Company.
•Our Global Security Operations Center oversees security and emergency response efforts and undertakes risk scans in an effort to identify potential security risks.
•Early in the COVID-19 pandemic, we closed our offices and productions out of an abundance of caution and concern for the safety of our workforce. While our workforce continues to be predominantly remote, we restarted some productions beginning in mid-2020 in accordance with local requirements. We also committed $100 million to help provide support to those impacted by COVID-19.
Social Impact and Corporate Social Responsibility
The content we produce both reflects and shapes culture and influences how people perceive and understand important issues. We endeavor to earn our viewers’ trust through a variety of practices, and we are focused on using our platforms to create positive social impacts.
Using our platforms for good includes community projects, philanthropy and employee engagement. Across the organization, we focus our social impact efforts on such issues as civic engagement, social justice, mental health, and diversity and inclusion, among others, and our brands also have strategic focus areas based on their diverse audiences and unique strengths. For example, we heighten social awareness on important issues through CBS Cares public service announcement campaigns, produce arts education programming for students through Paramount Animation’s Arts Matter initiative, and partner with social justice organizations to disseminate content that will combat systemic racism and inequality through BET’s Content for Change initiative. Our focus is also on our audiences: we spread messages to keep our audiences safe and informed from the earliest days of the COVID-19 pandemic with our award-winning #AloneTogether campaign, recruited hundreds of thousands of new poll workers and millions of new early voters with our civic engagement initiatives such as the Vote for Your Life and Reclaim Your Vote campaigns, and are bringing the entertainment industry together for a collaboration to transform mental-health storytelling with a first-of-its-kind Mental Health Media Guide for content creators.
Our businesses and the intellectual property they create or acquire are subject to and affected by laws and regulations of U.S. federal, state and local governmental authorities, as well as laws and regulations of countries other than the U.S. and pan-national bodies such as the European Union (“E.U.”). The laws and regulations affecting our businesses are constantly subject to change, as are the protections that those laws and regulations afford us. The discussion below describes certain, but not all, present and proposed laws and regulations affecting our businesses.
FCC and Similar Regulation
The FCC regulates broadcast television, and some aspects of cable network programming and certain programming in the U.S. delivered by internet protocol, pursuant to U.S. federal law, including the Communications Act. Violation of FCC regulations can result in substantial monetary fines, the imposition of reporting obligations, limited renewals of licenses and, in egregious cases, denial of license renewal or revocation of a license.
Each of our owned television stations in the U.S. must be licensed by the FCC. Television broadcast licenses are typically granted for eight-year terms, and we must obtain renewals as they expire to continue operating our stations. The Communications Act requires the FCC to renew a broadcast license if the FCC finds that (1) the station has served the public interest, convenience and necessity; (2) with respect to the station, there have been no serious violations by the licensee of either the Communications Act or FCC regulations; and (3) there have been no other violations by the licensee of the Communications Act or FCC regulations that, taken together, constitute a pattern of abuse. As of February 22, 2021, we had four pending renewal applications, and we will be filing applications with respect to most of our remaining stations on a staggered basis between 2021 and 2023. A station remains authorized to operate while its license renewal application is pending. In addition, the
Communications Act requires prior FCC approval for the assignment of a license or transfer of control of an FCC licensee.
Broadcast Ownership Regulation
The Communications Act and FCC regulations impose limitations on local and national broadcast television ownership in the U.S. The following broadcast ownership rules are the most relevant to our operations. In 2019, a federal appellate court vacated an FCC decision issued in 2017 that would have relaxed some of the broadcast ownership rules. The U.S. Supreme Court is currently reviewing that decision, the outcome of which could have significant implications for the FCC’s broadcast ownership regulatory framework.
Local Television Ownership. The FCC’s local television ownership rule limits the number of full-power television stations that may be commonly owned in the same DMA. For example, common ownership of two full-power stations in a market generally is allowed only if, at the time the common ownership is created, at least eight independently owned and operating full-power stations remain in the market, and at least one of the owned stations is outside of the top-four ranked stations in the market based on audience share.
Dual Network Rule. The dual network rule prohibits any of the four major U.S. broadcast networks — ABC, CBS, FOX and NBC — from combining or being under common control.
Television National Audience Reach Limitation. Under the national television ownership rule, one party may not own television stations that reach more than 39% of all U.S. television households. However, for purposes of this rule, a UHF station is afforded a “discount” and is therefore attributed with reaching only 50% of the television households in its market. We currently own and operate television stations that reach approximately 38% of all U.S. television households, but we are attributed with reaching 25% of all such households for purposes of the national ownership rule because of the discount.
Foreign Ownership. In general, the Communications Act restricts foreign individuals or entities from collectively owning more than 25% of our voting power or equity. FCC approval is required to exceed the 25% threshold. The FCC has recently approved foreign ownership levels of up to 100% in certain instances, subsequent to its review and approval of specific, named foreign individuals.
Cable and Satellite Carriage of Television Broadcast Stations
The Communications Act and FCC rules govern the retransmission of broadcast television stations by cable system operators, direct broadcast satellite operators, and other MVPDs in the U.S. Pursuant to these regulations, we have elected to negotiate with MVPDs for the right to carry our broadcast television stations via retransmission consent agreements. The Communications Act and FCC regulations require that broadcasters and some types of MVPDs negotiate in good faith for retransmission consent. Some MVPDs have sought changes to federal law that would eliminate or otherwise limit the ability of broadcasters to obtain fair compensation for the grant of retransmission consent.
The FCC also regulates the content of broadcast, cable network, and other video programming. The FCC prohibits broadcasters from airing obscene material at any time and indecent or profane material between 6 a.m. and 10 p.m. The FCC’s maximum forfeiture penalty per station for broadcasting indecent or profane programming is approximately $419,000 per indecent or profane utterance or image, with a maximum forfeiture exposure of approximately $3.87 million for any continuing violation arising from a single act or failure to act. The FCC also actively monitors compliance with requirements that apply to broadcasters and cable networks relating to political advertising, identification of program sponsors, and the use and integrity of the Emergency Alert System. In addition, FCC regulations require the closed captioning of almost all broadcast and cable programming, as well as certain programming in the U.S. delivered by internet protocol, among other requirements intended to ensure that video programming is accessible to persons with disabilities.
Our business is subject to various regulations in the U.S. and abroad applicable to children’s programming. U.S. federal law and FCC rules limit the amount and content of commercial matter that may be shown on broadcast television stations and cable networks during programming designed for children 12 years of age and younger, and the FCC also limits the display of certain commercial website addresses during children’s programming. Moreover, each of our broadcast television stations is required to air, in general, three hours per week of educational and informational programming designed for children 16 years of age and younger.
In addition, some policymakers have sought limitations on food and beverage marketing in media popular with children and teens. For example, restrictions on the television advertising of foods high in fat, salt and sugar (“HFSS”) to children aged 15 and under have been in place in the U.K. since 2007. The U.K. government is currently considering tighter controls, including a ban on all HFSS advertising before 9:00 p.m. Various laws with similar objectives have also been enacted in Ireland, Turkey, Mexico, Chile, Peru, Taiwan and South Korea, and significant pressure for similar restrictions continues to be felt globally, most acutely in Australia, Brazil, Canada, Colombia, India, Hungary, Singapore, South Africa and France. The implementation of these or similar limitations and restrictions could have a negative impact on our Cable Networks advertising revenues, particularly for our networks with programming for children and teens.
Broadcast Transmission Standard
In 2017, the FCC adopted rules to permit television broadcasters to voluntarily broadcast using the “Next Generation” broadcast television transmission standard developed by the Advanced Television Systems Committee, Inc., also called “ATSC 3.0.” Those full-service television stations using the new standard are subject to certain requirements, including the obligation to continue broadcasting a generally identical program stream in the current ATSC 1.0 broadcast standard. The ATSC 3.0 standard can be used to offer better picture quality and improved mobile broadcast viewing. A television station converting to ATSC 3.0 operation will incur significant costs in equipment purchases and upgrades. In addition, consumers may be required to obtain new television sets or other equipment that are capable of receiving ATSC 3.0 broadcasts. We are participating in ATSC 3.0 partnerships with other broadcasters and may enter into additional partnerships in the future.
Global Data Protection Laws and Children’s Privacy Laws
A number of data protection laws impact, or may impact, the manner in which ViacomCBS collects, processes and transfers personal data. In the E.U., the General Data Protection Regulation (“GDPR”) mandates data protection compliance obligations and authorizes significant fines for noncompliance, requiring extensive compliance resources and efforts on our part. Further, a number of other regions where we do business, including the U.S., Asia and Latin America, have enacted or are considering new data protection regulations that may impact our business activities that involve the processing of personal data. For example, in the U.S., the California Consumer Privacy Act, which went into effect on January 1, 2020, creates a host of new obligations for businesses regarding how they handle the personal information of California residents, including creating new data access, data deletion and opt out rights. In addition, some of the mechanisms ViacomCBS relies upon for the transfer of personal data from the E.U. to the U.S., such as utilizing standard contractual clauses approved by the European Commission, have been subject to legal challenges, and the E.U.-U.S. Privacy Shield framework, which permits the transfer of personal data from the E.U. to the U.S., has been challenged by the relevant E.U. authorities. The outcomes of these proceedings continue to be uncertain and will require changes to our international data transfer mechanisms.
In addition, we are subject to other laws and regulations intended specifically to protect the interests of children, including the privacy of minors online. The U.S. Children’s Online Privacy Protection Act (“COPPA”) limits the collection by operators of websites or online services of personal information online from children under the age of 13. In July 2019, the Federal Trade Commission initiated a review of its regulations implementing COPPA, which we anticipate will be updated to address changes in technology. In the E.U., GDPR also limits our ability to process data from children under the age of 16. Such regulations also restrict the types of advertising we are able to sell on these sites and apps and impose strict liability on us for certain actions of ViacomCBS, advertisers and
other third parties, which could affect advertising demand and pricing. Recently, laws in Brazil and China that govern the processing of children’s data also went into effect. These laws will likely have similar impacts to COPPA and GDPR, especially with respect to data collected in connection with advertising. State and federal policymakers are also considering regulatory and legislative methods to protect consumer privacy on the internet, and these efforts have focused particular attention on children and teens.
Compliance with enhanced data protection laws, which may be inconsistent with one another, requires additional resources and efforts on our part, and noncompliance with personal data protection regulations could result in increased regulatory enforcement and significant monetary fines or private litigation.
We are fundamentally a content company, and the trademark, copyright, patent and other intellectual property laws that protect our brands and content are extremely important to us. It is our practice to protect our films, programs, content, brands, formats, characters, games, publications and other original and acquired works, and ancillary goods and services. The unauthorized reproduction, distribution, exhibition or other exploitation of copyrighted material interferes with the market for copyrighted works and disrupts our ability to distribute and monetize our content. The infringement of our intellectual property rights in films, television and digital programming, books, consumer products and other entertainment content presents a significant challenge to our industry, and we take a number of steps to address this concern. For example, where possible, we use technologies, such as encryption, watermarking, and digital rights management tools, to protect our content from piracy and infringement. We are also actively engaged in enforcement and other activities to protect our intellectual property, including: monitoring online destinations that distribute or otherwise infringe our content and sending takedown or cease and desist notices in appropriate circumstances; using filtering technologies employed by some social networks and other platforms hosting our content; working with intermediaries and other third parties to address current infringements and prevent more in the future; and pursuing litigation and referrals to law enforcement with respect to websites and other online platforms that distribute or facilitate the distribution and exploitation of our content without authorization. Through partnerships with various organizations, we also are actively involved in educational outreach to the creative community, state and federal government officials and other stakeholders in an effort to marshal greater resources to combat intellectual property infringement. Additionally, we participate in various industry-wide enforcement initiatives, public relations programs and legislative activities on a worldwide basis. For example, we have had notable success with site-blocking efforts in parts of Europe and Asia, which can be effective in steering consumers away from piracy platforms and toward legitimate platforms.
Notwithstanding these efforts and the many legal protections that exist to combat piracy, the proliferation of content infringement and the technological tools with which to carry out those illicit activities continues to be a challenge. The failure to maintain enhanced legal protections and enforcement tools and to update those tools as threats evolve could make it more difficult for us to adequately protect our intellectual property, which could negatively impact its value and further increase the costs of enforcing our rights as we continue to expend substantial resources to protect our content.
OUR EXECUTIVE OFFICERS
ViacomCBS’ executive officers as of February 22, 2021 are as follows:
|Robert M. Bakish||57||President and Chief Executive Officer, Director|
|Naveen Chopra||47||Executive Vice President, Chief Financial Officer|
|Christa A. D’Alimonte||52||Executive Vice President, General Counsel and Secretary|
|Katherine Gill-Charest||56||Executive Vice President, Controller and Chief Accounting Officer|
|Richard M. Jones||55||Executive Vice President, General Tax Counsel and Chief Veteran Officer|
|Doretha (DeDe) Lea||56||Executive Vice President, Global Public Policy and Government Relations|
|Julia Phelps||43||Executive Vice President, Chief Communications and Corporate Marketing Officer|
|Nancy Phillips||53||Executive Vice President, Chief People Officer|
Robert M. Bakish has been our President and Chief Executive Officer and a member of our Board since December 2019. Mr. Bakish served as President and Chief Executive Officer and a member of the board of Viacom from December 2016 to December 2019, having served as Acting President and Chief Executive Officer beginning earlier in 2016. Mr. Bakish joined Viacom’s predecessor (“Former Viacom”) in 1997 and held positions throughout the organization, including as President and Chief Executive Officer of Viacom International Media Networks and its predecessor company, MTV Networks International, from 2007 to 2016; Executive Vice President, Operations and Viacom Enterprises; Executive Vice President and Chief Operating Officer, MTV Networks Advertising Sales; and Senior Vice President, Planning, Development and Technology. Before joining Former Viacom, Mr. Bakish was a partner with Booz Allen Hamilton in its Media and Entertainment practice. Mr. Bakish has served as a director of Avid Technology, Inc. since 2009.
Naveen Chopra has been our Executive Vice President, Chief Financial Officer since August 2020. Prior to that, he served as Vice President and Chief Financial Officer of Amazon Devices & Services, beginning in 2019. Prior to joining Amazon Devices & Services, Mr. Chopra served as Chief Financial Officer of Pandora Media from 2017 to 2019 and as its Interim Chief Executive Officer during part of this time, having previously served as Interim Chief Executive Officer of TiVo Inc. in 2016 and as its Chief Financial Officer from 2012 to 2016.
Christa A. D’Alimonte has been our Executive Vice President, General Counsel and Secretary since December 2019. Prior to that, she served as Executive Vice President, General Counsel and Secretary of Viacom beginning in 2017, having previously served as Senior Vice President, Deputy General Counsel and Assistant Secretary beginning in 2012. Prior to joining Viacom, Ms. D’Alimonte was a partner of Shearman & Sterling LLP, where she was Deputy Practice Group Leader of the Firm’s Global Mergers & Acquisitions group. She first joined Shearman & Sterling in 1993 and became a partner in 2001.
Katherine Gill-Charest has been our Executive Vice President, Controller and Chief Accounting Officer since December 2019. Prior to that, she served as Senior Vice President, Controller and Chief Accounting Officer of Viacom beginning in 2010, having previously served as Senior Vice President, Deputy Controller of Viacom during 2010 and Vice President, Deputy Controller beginning in 2007. Prior to that, Ms. Gill-Charest was the Chief Accounting Officer of WPP Group from 2001 to 2007 and was the Vice President and Worldwide Controller of Young & Rubicam Inc. from 1998 to 2000. Ms. Gill-Charest also held roles in financial reporting and accounting policy at Time Warner Inc. from 1991 to 1998 and at NYNEX Corporation from 1988 to 1991 and served in the audit practice of Price Waterhouse for two years.
Richard M. Jones has been our Executive Vice President, General Tax Counsel and Chief Veteran Officer since August 2014. Prior to that, he served as Senior Vice President and General Tax Counsel of CBS Corporation beginning in 2006 and of Former Viacom beginning in 2005. Prior to that, he served as Vice President of Tax, Assistant Treasurer and Tax Counsel for NBC Universal, Inc. beginning in 2003 and he served 13 years with Ernst & Young in its media & entertainment and transaction advisory services practices. Mr. Jones served honorably as a non-commissioned officer in the U.S. Army’s 75th Ranger Regiment and 10th Mountain Division.
Doretha (DeDe) Lea has been our Executive Vice President, Global Public Policy and Government Relations since December 2019. Prior to that, she served as Executive Vice President, Global Government Affairs of Viacom beginning in 2013, having previously served as Executive Vice President, Government Relations beginning in 2005. Prior to that, Ms. Lea served in various government relations positions at Former Viacom beginning in 1997, with the exception of 2004 to 2005, when she served as Vice President of Government Affairs at Belo Corp. Prior to joining Former Viacom, she was Senior Vice President of Government Relations at the National Association of Broadcasters.
Julia Phelps has been our Executive Vice President, Chief Communications and Corporate Marketing Officer since December 2019. Prior to that, she served as Executive Vice President, Communications, Culture and Marketing of Viacom beginning in 2017, having previously served as Senior Vice President, Communications and Culture of Viacom beginning earlier in 2017. Prior to that, she served as Executive Vice President of Communications for Viacom International Media Networks beginning in 2012, after having served as Vice President of Corporate Communications for Viacom. Ms. Phelps joined Former Viacom in 2005 from DeVries Public Relations, a New York-based communications agency.
Nancy Phillips has been our Executive Vice President, Chief People Officer since December 2019. Prior to that, she served as Executive Vice President and Chief Human Resources Officer of Nielsen Holdings PLC beginning in 2017, having served as Executive Vice President and Chief Human Resources Officer of Broadcom Corporation from 2014 to 2016. From 2010 to 2014, Ms. Phillips was Senior Vice President, Human Resources for the Imaging and Printing Group at Hewlett-Packard Company, and previously served as Senior Vice President, Human Resources, Enterprise Services. From 2008 to 2010, Ms. Phillips served as Executive Vice President and Chief Human Resources Officer at Fifth Third Bancorp. Prior to that, Ms. Phillips spent 11 years at General Electric Company, holding various human resources positions. Ms. Phillips practiced law from 1993 to 1997.
We file annual, quarterly and current reports, proxy and information statements and other information with the SEC. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC pursuant to the Securities Exchange Act of 1934, as amended, will be available free of charge on our website at www.ViacomCBS.com (under “Investors”) as soon as reasonably practicable after the reports are filed with the SEC. These documents are also available on the SEC’s website at www.sec.gov.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current expectations concerning future results, objectives, plans and goals, 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 are discussed in “Item 1A. Risk Factors” below. Other risks, or updates to the risks discussed below, may be described in our news releases and filings with the SEC, including but not limited to our reports on Form 10-Q and Form 8-K. The forward-looking statements included in this Annual Report on Form 10‑K are made only as of the date of this document, and we do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.
A wide range of risks may affect our business, financial condition or results of operations, now and in the future. We consider the risks described below to be the most significant. There may be other currently unknown or unpredictable factors that could have adverse effects on our business, financial condition or results of operations.
Risks Relating to Our Business and Industry
Changes in consumer behavior, as well as evolving technologies, distribution platforms and packaging, may negatively affect our business, financial condition or results of operations
Our success in the media and entertainment industry depends on our ability to adapt to shifting patterns of content consumption. The ways in which consumers view content, and technology and business models in our industry, continue to evolve rapidly, and new distribution platforms, as well as increased competition from new entrants and emerging technologies, have added to the complexity of maintaining predictable revenue streams.
Technological advancements have empowered consumers to seek more control over when, where and how they consume content and have affected the options available to advertisers for reaching their target audiences. The evolution of consumer preferences towards digital and other subscription services, and the substantial increase in availability of programming without advertising or adequate methodologies for audience measurement, have had, and may continue to have, an adverse effect on our business, financial condition and results of operations. In addition, consumers are increasingly using time-shifting and advertising-blocking technologies that enable users to fast-forward or circumvent advertisements, such as DVRs, or increase the sharing of subscription content and reduce the demand for electronic sell-through, DVD and Blu-ray disc products. Substantial use of these technologies could impact the attractiveness of our programming to advertisers, adversely affecting our advertising revenue. Our business also may be adversely affected by the use of antennas (and their integration with set-top boxes or other consumer devices) to access broadcast signals to avoid subscriptions, as well as live and stored video streaming boxes and services, which deliver unauthorized copies of copyrighted content, including those emanating from other countries in various languages.
In response to perceived consumer demand, distributors of programming and program services are continuing to develop alternative offerings for consumers, including SVOD and other subscription services; FAST services; and original content for mobile and social media platforms. Also, the impact of technological changes on MVPDs may adversely affect our cable networks’ ability to grow revenue. If our networks and brands are not included in these offerings and services, or if consumers increasingly favor alternative offerings over traditional broadcast television and cable subscriptions, we may continue to experience a decline in viewership and ultimately demand for our programming, which could lead to lower revenues. These changing distribution models may also impact our ability to negotiate carriage deals on terms favorable to us, thereby having an adverse effect on our business, financial condition or results of operations.
In order to respond to these developments, we regularly adopt or develop new technologies and consider, and from time to time implement, changes to our business models and strategies to remain competitive, such as our focus on streaming, and there can be no assurance that we will successfully anticipate or respond to these developments, that we will not experience disruption, even as we respond to such developments, or that the new technologies or business models we develop will be as successful as our current technology and business models.
Our advertising revenues have been and may continue to be adversely impacted by changes in consumers’ content viewership, deficiencies in audience measurement and advertising market conditions
We derive substantial revenues from the sale of advertising, and a decline in advertising revenues could have a significant adverse effect on our business, financial condition or results of operations.
Consumers are increasingly turning to “over-the-top” sources for viewing and purchasing content, and an increasing number of companies offer SVOD and/or FAST services, including some that offer exclusive high-quality original programming delivered over the internet. The increasing number of entertainment choices available to consumers has intensified audience fragmentation and reduced the viewing of content through traditional linear distribution models, which has caused, and may continue to cause, ratings declines for broadcast and cable networks. This decline may adversely affect the amount of advertising dollars invested in broadcast and cable networks. Although we expect our digital advertising products in both local and national markets (through
direct and automated transactional models) to provide some offsetting benefit, increased advertising investment in digital offerings could adversely affect our advertising volume in linear.
In addition, advertising sales are largely dependent on audience measurement, and the results of audience measurement techniques can vary for a variety of reasons, including the platforms on which viewing is measured and variations in statistical sampling methods used. While Nielsen’s statistical sampling method is the primary measurement technique used in our television advertising sales, we measure and monetize across over-the-top platforms based on census-based advertising-server data establishing the number of impressions served, combined with third-party data providing demographic composition estimates. Multiplatform campaign verification remains in its infancy and is still not measured by any one consistently applied method. While we expect innovation and standards around multiplatform measurement to benefit us as the video advertising market continues to evolve, we are nevertheless partially dependent on third parties to deliver those solutions.
The strength of the advertising market can fluctuate in response to the economic prospects of specific advertisers or industries, advertisers’ current spending priorities and the economy in general or the economy of any individual geographic market, and this may adversely affect our advertising revenues. Natural and other disasters, pandemics, acts of terrorism, political uncertainty or hostilities could lead to a reduction in domestic and international advertising expenditures as a result of disrupted programming and services, uninterrupted news coverage and economic uncertainty. In 2020, we experienced a material negative impact on advertising revenues because of weakness in the advertising market as a result of COVID-19. Our ability to generate advertising revenue is also dependent on demand for our content, the consumers in our targeted demographics, advertising rates and results observed by advertisers.
Our success depends on our ability to maintain attractive brands and our reputation, and to offer popular programming and other content
Our ability to maintain attractive brands, and to create, distribute and/or license popular content are key to our success and ability to generate revenues. The revenues we generate primarily depend on our ability to anticipate and consistently satisfy consumer tastes and expectations, both in the U.S. and internationally. The popularity of our content is affected by our ability to develop and maintain strong brand awareness and a strong reputation; our ability to target key audiences; the quality and attractiveness of competing entertainment content; and the availability of alternative forms of entertainment and leisure time activities. Audience tastes change frequently, and it is a challenge to anticipate what will be successful at any point in time. We invest substantial capital in creating and promoting our content, including in the production of original content, before learning the extent to which it will garner critical success and popularity with consumers. A shortfall in the expected popularity of content we expect to distribute or of sports events for which we have acquired rights, could lead to decreased profitability or losses for a significant period of time. Significant negative claims or publicity regarding the Company or its operations, products, management, employees, practices, business partners and culture, including individuals associated with the content we create and/or license, as well as our inability to adequately respond to such negative claims or publicity, may damage our brands or reputation, even if such claims are untrue. A lack of popularity of our offerings or damage to our reputation could have an adverse effect on our business, financial condition or results of operations in a particular period or over a longer term.
Increased costs for programming, films and other rights, and judgments we make on the potential performance of our content, may adversely affect our business, financial condition or results of operations
In TV Entertainment and Cable Networks, we produce a significant amount of original programming and other content and we invest significant resources in our brands, in part with the aim of developing higher quality and quantity of original content, and we also derive a portion of our revenue from the exploitation of our extensive library of television programming. In Filmed Entertainment, we invest significant amounts in the production, marketing and distribution of films and television series. We also acquire programming, films and television series, as well as a variety of digital content and other ancillary rights such as consumer and home entertainment product offerings, and we pay license fees, royalties and/or contingent compensation in connection with these acquired rights. For example, some of CBS Sports’ most widely viewed programming, including The Masters Tournament and NFL games, are made available based on programming rights of varying duration that we have
negotiated with third parties. We also license various music rights from the major record companies, music publishers and performing rights organizations.
Our investments in original and acquired programming are significant and involve complex negotiations with numerous third parties, and rapid changes in consumer behavior have increased the risk associated with the success of all kinds of programming. Competition for popular content is intense, and we may have to increase the price we are willing to pay for talent and intellectual property rights, which may result in significantly increased costs. Further, increased competition in the market for development and production of original content, particularly from streaming services providers, including our streaming services, increases our content costs. We may be outbid by our competitors for the rights to new, popular programming or in connection with the renewals of popular programming that we currently license. Finally, certain of our counterparties and vendors may encounter financial and operational pressures, which could result in increased costs to us or delays in production. As such, there can be no assurance that we will recoup our investments when the content is broadcast or distributed.
Our businesses operate in industries that are highly competitive
We compete with other media companies to attract creative talent and produce high-quality content, and for distribution on a variety of third-party platforms to draw large audiences. Competition for talent, content, audiences, service providers, production infrastructure, advertising and distribution is intense and comes from other broadcast television stations and networks, cable television systems and networks, streaming service providers, the internet and social media platforms, film studios and independent film producers and distributors, consumer products companies and other entertainment outlets and platforms, as well as from search engines, program guides and “second screen” applications. Additionally, other television stations or cable networks may change their formats or programming, a new station or new network may adopt a format to compete directly with our stations or networks, or stations or networks might engage in aggressive promotional campaigns. Further, competition from additional entrants into the market for development and production of original content and streaming services continues to increase.
Our ability to obtain widespread distribution on favorable terms, which contributes to our ability to attract audiences and, in turn, advertisers, is adversely affected by the consolidation of advertising agencies, programmers, content providers, distributors and television service providers. This consolidation reduces the number of distributors with whom we negotiate and increases the negotiating leverage and market power of the combined companies. Our competitors generally include companies with interests in multiple media businesses that are often vertically integrated, whereas our Cable Networks business generally relies on distribution relationships with third parties. As more cable and satellite operators, internet service providers, telecom companies and other content distributors, aggregators and search providers create or acquire their own content, they may have significant competitive advantages, which could adversely affect our ability to negotiate favorable terms for distribution or otherwise compete effectively in the delivery marketplace. Our competitors could also have preferential access to important technologies, customer data or other competitive information, as well as significant financial resources.
This competition and consolidation could result in lower ratings and advertising, lower affiliate and other revenues, and increased content costs and promotional and other expenses, negatively affecting our ability to generate revenues and profitability. There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that competition or consolidation in the marketplace will not have an adverse effect on our business, financial condition or results of operations.
Because we derive a significant portion of our revenues from a limited number of distributors, the loss of affiliation and distribution agreements, renewal on less favorable terms or adverse interpretations thereof could have a significant adverse effect on our business, financial condition or results of operations
A significant portion of our revenues are attributable to agreements with a limited number of distributors. These agreements generally have fixed terms that vary by market and distributor, and there can be no assurance that these agreements will be renewed in the future, or renewed on favorable terms, including those related to pricing
and programming tiers. We may also be unable to modify existing agreements with terms that have become less favorable over time. The loss of existing packaging, positioning, pricing or other marketing opportunities and the loss of carriage or the failure to renew our agreements with any distributor, or renew or modify them on favorable terms, could reduce the distribution of our programming and program services and decrease the potential audience for our programs, thereby negatively affecting our growth prospects and revenues from both affiliate fees and advertising. CBS Television Network provides affiliated television stations regularly scheduled programming in return for the insertion of network commercials during that programming and the payment of reverse compensation. The loss of such station affiliation agreements could adversely affect our results of operations by reducing the reach of our programming and therefore our attractiveness to advertisers, and renewal of these affiliation agreements on less favorable terms may also adversely affect our results of operations.
Consolidation among and vertical integration of distributors in the cable or broadcast network business has provided more leverage to these distributors and could adversely affect our ability to maintain or obtain distribution for our network programming or distribution and/or marketing of our subscription services on favorable or commercially reasonable terms, or at all. Also, consolidation among television station group owners could increase their negotiating leverage. Moreover, competitive pressures faced by MVPDs, particularly in light of the lower retail prices of streaming services, could adversely affect the terms of our renewals with MVPDs. In addition, MVPDs and streaming services continue to develop alternative offerings for consumers. To the extent these offerings do not include our programming and become widely accepted in lieu of traditional offerings, we could experience a decline in affiliate revenues.
Our revenues are dependent on the compliance of major distributors with the terms of our affiliation or distribution agreements. As these agreements have grown in complexity, the number of disputes regarding their interpretation and even their validity has grown, resulting in greater uncertainty and, from time to time, litigation with respect to our rights and obligations. Some of our distribution agreements contain “most favored nation” (“MFN”) clauses, which provide that if we enter into an agreement with a distributor and such agreement includes terms that are more favorable than those held by a distributor holding an MFN right, we must offer some of those terms to the distributor holding the MFN right. Disagreements with a distributor on the interpretation or validity of an agreement could adversely impact our affiliate and advertising revenues, as well as our relationship with that distributor.
We could suffer losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming
We test goodwill and indefinite-lived intangible assets, including FCC licenses, for impairment on an annual basis and between annual tests if events or circumstances require an interim impairment assessment. Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in advertising markets, a decrease in audience acceptance of our programming or films, a shift by advertisers to competing advertising platforms and/or changes in consumer behavior could result in a downward revision in the estimated fair value of a reporting unit or intangible assets, including FCC licenses, which could result in a non-cash impairment charge. Any such impairment charge for goodwill, intangible assets and/or programming could have a material adverse effect on our reported net earnings.
Risks Relating to the Merger and Other Strategic Initiatives
The integration of the CBS and Viacom businesses may be more difficult, time-consuming or costly than expected. Synergies and other anticipated benefits may not be realized within the expected time frames, or at all.
Our ability to realize the anticipated benefits of the Merger depend, to a large extent, on our ability to integrate the businesses of the combined companies in a manner that facilitates growth opportunities and achieves projected standalone cost savings and revenue growth trends without adversely affecting revenues and investments in future growth. The failure to meet the challenges involved in combining CBS’ and Viacom’s businesses following the Merger and to realize the anticipated benefits of the Merger, including expected synergies, could adversely affect the results of operations of ViacomCBS. The overall combination of our businesses may also result in material
unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships. The difficulties of combining the operations of the companies include, among others: the diversion of management attention to integration matters; difficulties in integrating operations and systems, including administrative and information technology infrastructure and financial reporting and internal control systems; challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies; difficulties in integrating employees and attracting and retaining key personnel, including talent; challenges in retaining existing, and obtaining new customers, viewers, suppliers, distributors, licensors, employees and others, including material content providers, studios, producers, directors, actors, authors and other talent, and advertisers; difficulties in achieving anticipated cost savings, synergies, business opportunities, financing plans and growth prospects from the combination; difficulties in managing the expanded operations of a significantly larger and more complex company; challenges in continuing to develop valuable and widely accepted content and technologies; contingent liabilities that are larger than expected; and potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the Merger.
Even if our operations are integrated successfully, the full benefits of the Merger, including anticipated synergies, cost savings or sales or growth opportunities, may not be realized, and these benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of our businesses. Many of these factors are outside of our control, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact our business, financial condition and results of operations.
We have acquired and invested in, and expect to continue to acquire and invest in, new businesses, products, services and technologies as part of our ongoing strategic initiatives. Such acquisitions and strategic initiatives may involve significant risks and uncertainties, including the types described above, as well as insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with the new investments; unidentified issues not discovered in our due diligence that could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities; and a failure to successfully develop an acquired business or technology. Because new investments are inherently risky, and the anticipated benefits or value of these investments may not materialize, no assurance can be given that such investments and other strategic initiatives will not adversely affect our business, financial condition or results of operations.
If our streaming initiatives are unsuccessful, our business, financial condition or results of operations could be adversely affected
There can be no assurance that our streaming initiatives will be successful. The streaming market is intensely competitive and our ability to attract and retain subscribers to our pay streaming services, including Paramount+, SHOWTIME OTT and BET+, and MAUs on our FAST service, Pluto TV, as well as the corresponding subscription and advertising revenues they enable us to generate, will depend on our ability to consistently provide appealing and differentiated content, effectively market these services and provide a quality experience for selecting and viewing that content. Our success will also require significant investments to produce original content and acquire the rights to third-party content, including with respect to live sports, as well as the establishment and maintenance of key content and distribution partnerships. We will need to find the right balance between licensing our content to our own streaming services, forgoing traditional sources of content licensing revenues, and licensing our content to third parties.
In addition, the relative service levels, content offerings, promotions, and pricing and related features of our competitors’ services may adversely impact our ability to attract and retain subscribers and MAUs. Competitors include MVPDs, vMVPDs and other content providers. If consumers do not consider our streaming services to be of value compared to our competitors’ services, including because we fail to introduce new features, increase our pricing, terminate or modify promotional or trial period offerings, experience technical issues, or change the mix of content in a manner that is not favorably received, we may not be able to attract and retain subscribers and MAUs. In addition, many subscribers and MAUs originate from word-of-mouth advertising from existing subscribers and MAUs. If we are not be able to attract subscribers and MAUs, or our subscribers or MAUs decide to not continue subscriptions on our services for a variety of reasons, including a perception that they do not use it
sufficiently, the need to cut household expenses, unsatisfactory content, promotions or trial-period offers expire or are modified, competitive services or promotions provide a better value or experience or customer service or technical issues are not satisfactorily resolved, our business, financial condition or results of operations could be adversely affected.
We must continually add new subscribers and MAUs both to replace canceled subscribers and to grow our business, including offsetting subscriber declines in our traditional linear distribution model. If we are unable to successfully compete with competitors in retaining and attracting new subscribers and MAUs, our business, financial condition or results of operations could be adversely affected.
Risks Relating to Business Continuity, Cybersecurity and Privacy and Data Protection
Disruptions or failures of, or cybersecurity attacks upon, our or our service providers’ networks, information systems and other technologies, and a failure of our business continuity plans in response thereto, could result in the disclosure of confidential or valuable business or personal information, disruption of our businesses, damage to our brands and reputation, legal exposure and financial losses
Cloud services, networks, information systems and other technologies we use or that are used by our third-party providers, including technology systems used in connection with the production and distribution of our content (“Systems”), are critical to our business activities, and shutdowns or disruptions of, and cybersecurity attacks on, these Systems pose increasing risks. We also use content delivery networks to help us stream programming, films and other content in high volume to viewers and users of our online, mobile and app offerings over the internet. Shutdowns, disruptions and attacks may be caused by third-party hacking of computers and Systems; dissemination of computer viruses, worms, malware, ransomware and other destructive or disruptive software; denial of service attacks and other bad acts; human error; and power outages, natural disasters, extreme weather, terrorist attacks or other similar events. Shutdowns, disruptions and attacks could have an adverse impact on us, our business partners, employees, advertisers, viewers and users of our content, including degradation or disruption of service, loss of data and damage to equipment and data. Steps we take to add software and hardware, upgrade our Systems and network infrastructure, and to otherwise improve the stability and efficiency of our Systems may not be sufficient to avoid shutdowns, disruptions and attacks. Significant events could result in a disruption of our operations and reduction of our revenues, the loss of or damage to the integrity of data used by management to make decisions and operate our businesses, viewer or advertiser dissatisfaction or a loss of viewers or advertisers, and damage to our reputation or brands. In addition, our recovery and business continuity plans may prove inadequate to address any such disruption, failure or cybersecurity attack.
We are subject to risks caused by the misappropriation, misuse, falsification or intentional or accidental release or loss of business or personal data or programming content maintained in our or our third-party providers’ Systems, including proprietary and personal information (of third parties, employees and users of our online, mobile and app offerings), business information including intellectual property, or other confidential information. Outside parties may attempt to penetrate our Systems or those of our third-party providers or fraudulently induce employees, business partners or users of our online, mobile and app offerings to disclose sensitive or confidential information in order to gain access to our data or our subscribers’ or users’ data, or our programming. The number and sophistication of attempted and successful information security breaches in the U.S. and elsewhere have increased significantly in recent years, and because of our prominence, we and/or third-party providers we use may be a particularly attractive target for such attacks. Because the techniques used to obtain unauthorized access to, or disable, degrade or sabotage, these Systems change frequently and often are not recognized until launched, we may be unable to anticipate these techniques, implement adequate security measures or remediate any intrusion on a timely or effective basis. Moreover, the development and maintenance of security measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Despite our efforts, the possibility of these events occurring cannot be eliminated.
If a material breach of our Systems or those of our third-party providers occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose subscribers, viewers, revenues in the case of leaked content, advertisers and other business partners, and users of our online, mobile and app offerings; our
reputation, brands and credibility could be damaged; and we could be required to expend significant amounts of money and other resources to repair or replace such Systems or to comply with regulatory requirements. We could also be subject to actions by regulatory authorities and claims asserted in private litigation. The costs relating to any data breach could be material, and we may not have adequate insurance coverage to compensate us for any losses associated with such events.
We are subject to complex, often inconsistent and potentially costly laws, rules, regulations, industry standards and contractual obligations relating to privacy and personal data protection
We are subject to laws, rules and regulations in the U.S. and in other countries relating to privacy and the collection, use and security of personal data. In the E.U., for example, the GDPR mandates data protection compliance obligations and authorizes significant fines for noncompliance, requiring extensive compliance resources and efforts on our part. Further, a number of other regions where we do business have enacted or are considering new data protection regulations that may impact our business activities. In the U.S., the California Consumer Privacy Act, which went into effect on January 1, 2020, creates a host of new obligations for businesses regarding how they handle the personal information of California residents. We are also subject to laws and regulations intended specifically to protect the interests of children and the privacy of minors online, including COPPA in the U.S. and the GDPR in the E.U., and we have been required to limit some functionality on digital properties as a result of these regulations. Such regulations also restrict the types of advertising we are able to sell on these digital properties and impose strict liability on us for certain actions of ViacomCBS, advertisers and other third parties, which could affect advertising demand and pricing. Recently, laws in Brazil and China that govern the processing of children’s data also went into effect. These laws will likely have similar impacts to COPPA and GDPR, especially with respect to data collected in connection with advertising. We will continue to expend resources to comply with data protection and privacy standards imposed by law, industry standards or contractual obligations, which may be inconsistent with one another, and despite such efforts we may face regulatory and other legal actions. Each of these factors could have an adverse effect on our reputation, business, financial condition or results of operations.
Risks Relating to Intellectual Property
Infringement of our content, including digital copyright piracy and other unauthorized uses of our content, reduces revenue received from legitimate distribution of our programming, films, books and other entertainment content and adversely affects our business, financial condition and results of operations
The success of our businesses depends in part on our ability to maintain and monetize our intellectual property rights. We are fundamentally a content company and infringement of our content — specifically, the infringement of our films and home entertainment products, television programming, digital content, books and other intellectual property rights — affects the value of our content. Copyright infringement is particularly prevalent in many parts of the world that either lack effective laws and technical protection measures similar to those existing in the U.S. and Europe or lack effective enforcement of such measures, or both. Such foreign copyright infringement often creates a supply of pirated content for major markets as well. The interpretation of copyright, trademark and other intellectual property laws as applied to our content, and our infringement-detection and enforcement efforts, remain in flux, and some methods of enforcement have encountered political opposition. The failure to appropriately enforce and/or the weakening of existing intellectual property laws could make it more difficult for us to adequately protect and monetize our intellectual property and thus negatively affect its value.
Copyright piracy is made easier by the wide availability of higher bandwidth and reduced storage costs, as well as tools that undermine encryption and other security features and enable infringers to disguise their identities online. We and our numerous production and distribution partners operate various technology systems in connection with the production and distribution of our programming and films, and intentional or unintentional acts could result in unauthorized access to our content. The continuing proliferation of digital formats and technologies heightens this risk. Internet-connected televisions, set-top boxes and mobile devices are ubiquitous, and many can support illegal retransmission platforms, illicit video-on-demand or streaming services and pre-loaded hardware, providing more accessible, versatile and legitimate-looking environments for consuming unlicensed film and television content. Unauthorized access to our content could result in the premature release of films, television programs or other
content as well as a reduction in demand for authorized content, which would likely have significant adverse effects on the value of the affected content and our ability to monetize our content.
Copyright infringement reduces the revenue that we are able to receive from the legitimate sale and distribution of our content, undermines lawful distribution channels, reduces the public’s and some affiliate partners’ perceived value of our content and inhibits our ability to recoup or profit from the costs incurred to create such content. We are actively engaged in enforcement and other activities to protect our intellectual property, and it is likely that we will continue to expend substantial resources in connection with these initiatives. Efforts to prevent the unauthorized reproduction, distribution and exhibition of our content may affect our profitability and may not be successful in preventing harm to our business.
Risks Relating to Macroeconomic and Political Conditions
COVID-19 and other pandemics could have a material adverse effect on our business, financial condition and results of operations.
The COVID-19 pandemic has negatively impacted, and is expected to continue to impact, the macroeconomic environment in the U.S. and globally. Federal, state and local governmental authorities in the U.S. and foreign governments around the world have implemented numerous orders, policies and initiatives to try to reduce the transmission of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. The difficult macroeconomic environment, which has included increased and prolonged unemployment and a decline in consumer confidence, and any resulting recession or prolonged declines in economic growth, as well as changes in consumer behavior in response to the pandemic, have had, and may continue to have, a negative impact on our business, financial condition and results of operations. Other pandemics or widespread health emergencies may have similar effects.
As a result of COVID-19, we experienced a material negative impact on our advertising revenues in 2020, particularly at the end of the first quarter and throughout the second quarter, as a result of weakness in the advertising market as advertisers sought to reduce costs in response to the pandemic’s impact on their businesses, the cancellation or postponement of sporting events for which we have broadcast rights, including the NCAA Division I Men’s Basketball Championship in the first quarter, and the delay of the 2020-21 television broadcast season as a result of production shutdowns. While the rate of decline improved in the second half of the year, we are not able to predict whether future sporting events will be canceled or postponed, or whether advertising revenues from these broadcasts, or advertising budgets and the advertising market generally, will return or be comparable to historical levels. Any prolonged decline in our advertising revenues would have a negative impact on our business, financial condition and results of operations.
COVID-19 had a negative effect on our content licensing revenues in 2020. Temporary television and film production shutdowns resulted in the abandonment of content that was not completed, delays in the delivery of programming to third parties, and fewer original programs and live events airing on our broadcast and cable networks. We also experienced lower demand for the licensing of our content from advertising-supported licensees. While production has resumed, we are not able to predict whether we will encounter future production delays or shutdowns or if and to what extent content licensing revenues will continue to be negatively impacted. Additionally, with the resumption of production we began incurring incremental costs related to health and safety protocols in response to COVID-19, which are expected to continue in 2021.
Our theatrical revenues have been negatively impacted by the closure or reduction in capacity of movie theaters that show our films as a result of COVID-19, which has impacted our theatrical releases. Accordingly, we have rescheduled certain theatrical releases and licensed others to our owned or third-party streaming services. We are not able to predict when or whether movie theaters will reopen at scale, whether consumers will return at the same levels they previously did because of concerns related to COVID-19 or because of changes to viewing habits, or whether revenues from theatrical releases will be comparable to historical levels.
In addition, COVID-19 could impact our business, financial condition and results of operations in a number of other ways, including: negatively impacting our affiliate and advertising revenues as consumers reduce
discretionary spending by cancelling or forgoing subscriptions to MVPD or vMVPD services; negatively impacting our financial condition or our ability to fund operations, dividends or future investment opportunities due to an increase in the cost or difficulty in obtaining debt or equity financing, or refinancing our debt in the future, our ability to comply with the leverage covenant in our Credit Facility, or a decrease in our debt ratings; impairments of our programming and other inventory, goodwill and other indefinite-lived intangible assets, and other long-lived assets; and increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online activity.
The magnitude of the continuing impact of COVID-19, which could be material to our business, financial condition and results of operations, will depend on numerous evolving factors that we may not be able to accurately predict or control, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and such governmental actions, and economic and operating conditions in the aftermath of COVID-19. Even after COVID-19 has subsided, we may experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future. Due to the evolving and uncertain nature of the pandemic, we are not able to estimate the full extent of the impact that COVID-19 will have on our business, financial condition and results of operations, and that impact could also exacerbate the other risks described herein.
Political and economic conditions in a variety of markets around the world could have an adverse effect on our business, financial condition or results of operations
Our businesses operate and have audiences, customers and partners worldwide, and we are focused on expanding our international operations in key markets, some of which are emerging markets. For that reason, economic conditions in many different markets around the world affect a number of aspects of our businesses. Economic conditions in each market can also impact our audience’s discretionary spending and therefore their willingness to access our content, as well as the businesses of our partners who purchase advertising on our networks, causing them to reduce their spending on advertising. We may also be subject to longer payment cycles. In addition, as we have expanded our international operations, our exposure to foreign currency fluctuations against the U.S. dollar has increased, and there is no assurance that downward trending currencies will rebound or that stable currencies will remain stable in any period. Such fluctuations could have an adverse effect on our business, financial condition or results of operations. Also, volatility and weakness in the capital markets, the tightening of credit markets or a decrease in our debt ratings could adversely affect our ability to obtain cost-effective financing.
Our businesses are also exposed to certain political risks inherent in conducting a global business, including retaliatory actions by governments reacting to changes in the U.S. and other countries, including in connection with trade negotiations; issues related to the presence of corruption in certain markets and enforcement of anti-corruption laws and regulations; increased risk of political instability in some markets as well as conflict and sanctions preventing us from accessing those markets; escalating trade, immigration and nuclear disputes; wars, acts of terrorism or other hostilities; and other political, economic or other uncertainties.
These political and economic risks could create instability in any of the markets where our businesses derive revenues, which could result in a reduction of revenue or loss of investment that adversely affects our businesses, financial condition or results of operations.
Risks Relating to Regulatory and Legal Matters
Failures to comply with or changes in U.S. or foreign laws or regulations may have an adverse effect on our business, financial condition or results of operations
We are subject to a variety of laws and regulations, both in the U.S. and/or in the foreign jurisdictions in which we or our partners operate, including laws and regulations relating to intellectual property, content regulation, user privacy, data protection, anti-corruption, repatriation of profits, tax regimes, quotas, tariffs or other trade barriers, currency exchange controls, operating license and permit requirements, restrictions on foreign ownership or
investment, export and market access restrictions, and exceptions and limitations on copyright and censorship, among others.
The television broadcasting and cable programming industries in the U.S. are highly regulated by U.S. federal laws and regulations issued and administered by various federal agencies, including the FCC. For example, we are required to obtain licenses from the FCC to operate our television stations and periodically renew them. It cannot be assured that the FCC will approve our future renewal applications or that the renewals will be for full terms or will not include conditions or qualifications. The non-renewal, or renewal with substantial conditions or modifications, of one or more of our licenses could have a material adverse effect on our revenues. We must also comply with extensive FCC limits on the ownership and operation of our television stations and our television networks, which could restrict our ability to consummate future transactions and in certain circumstances could require us to divest some television stations.
Our businesses could be adversely affected by new laws and regulations, changes in existing laws, changes in interpretations of existing laws by courts and regulators and the threat that additional laws or regulations may be forthcoming, as well as our ability to enforce our legal rights. We could be required to change or limit certain of our business practices, which could impact our ability to generate revenues. We could also incur substantial costs to comply with new and existing laws and regulations, or substantial fines and penalties or other liabilities if we fail to comply with such laws and regulations.
Our liabilities related to discontinued operations and former businesses could adversely impact our financial conditions
We have both recognized and potential liabilities and costs related to discontinued operations and former businesses, certain of which are unrelated to the media business, including leases, guarantees, environmental liabilities, liabilities related to the pensions and medical expenses of retirees, asbestos liabilities, contractual disputes and other pending and threatened litigation. We cannot be assured that our accruals for these matters are sufficient to cover these liabilities in their entirety or any one of these liabilities when it becomes due or at what point any of these liabilities may come due. Therefore, there can be no assurances that these liabilities will not have a material adverse effect on our financial condition, operating performance or cash flow.
Risks Relating to Human Capital
The loss of key talent could adversely affect our business, financial condition or results of operations
Our business depends upon the continued efforts, abilities and expertise of our executive teams, and the various creative talent and entertainment personalities with whom we work. We compete for talented executives in a highly-specialized industry, and our ability to attract and retain such individuals may be impacted by our reputation, workplace culture, efforts with respect to diversity and inclusion, the compensation and benefits we provide, and our commitment to effectively managing executive succession. We also employ or contract with several entertainment personalities with loyal audiences and we produce films with highly regarded directors, producers, writers, actors and other talent. These individuals are important to attracting viewers of our content and achieving the success of our programs, films and other content. There can be no assurance that these individuals will remain with us or will retain their current appeal, or that the costs associated with retaining them or new talent will be reasonable. If we fail to retain these individuals on current terms or if our entertainment personalities lose their current appeal or we fail to attract new talent, our business, financial condition or results of operations could be adversely affected.
In addition, we and our business partners engage the services of writers, directors, actors, musicians and other talent, production crew members, trade employees, professional athletes and others who are subject to collective bargaining agreements. Any labor disputes, including lockouts, strikes or work stoppages, may disrupt our operations and cause delays in the production of our programming, which could increase our costs and have an adverse effect on our revenues, cash flows and/or operating income.
Risks Relating to our Ownership Structure
NAI, through its voting control of ViacomCBS, is in a position to control actions that require stockholder approval
NAI, through its direct and indirect ownership of our Class A Common Stock, has voting control of ViacomCBS. At December 31, 2020, NAI directly or indirectly owned approximately 79.4% of the shares of our Class A Common Stock outstanding, and approximately 10.2% of the shares of our Class A Common Stock and our Class B Common Stock outstanding on a combined basis. Shari E. Redstone, the Chairperson, CEO and President of NAI, serves as non-executive Chair of the ViacomCBS Board of Directors (the “ViacomCBS Board”). Until the death of Mr. Sumner M. Redstone on August 11, 2020, NAI was controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owned 80% of the voting interest of NAI, with such voting interest voted solely by Mr. Redstone. Upon Mr. Redstone’s death and in accordance with the terms of the trust agreement governing the SMR Trust and the Continuing Trusts (as defined below), the SMR Trust was succeeded by two continuing trusts (the “Continuing Trusts”), each of which holds 40% of the voting stock of NAI. Under the terms of the trust agreement governing the SMR Trust and the Continuing Trusts, the Continuing Trusts are required to share the same seven voting trustees, who have equal voting power, and each trustee is required to cause each Continuing Trust to vote the NAI shares held by that Continuing Trust in the same manner as the NAI shares held by the other Continuing Trust. Ms. Redstone is one of the seven voting trustees for each Continuing Trust and is one of two voting trustees who are beneficiaries of one of the Continuing Trusts. No member of our management, or other member of our the ViacomCBS Board, is a trustee of either of the Continuing Trusts.
Subject to the terms of the Governance Agreement dated as of August 13, 2019, which is incorporated by reference as an exhibit in this Annual Report on Form 10-K, NAI is in a position to control the outcome of corporate actions that require, or may be accomplished by, stockholder approval, including amending ViacomCBS’ bylaws, the election or removal of directors and transactions involving a change of control. For example, the ViacomCBS bylaws provide that:
•the affirmative vote of not less than a majority of the aggregate voting power of all outstanding shares of our capital stock then entitled to vote generally in an election of directors, voting together as a single class, is required for our stockholders to amend, alter, change, repeal or adopt any of our bylaws;
•any or all of our directors may be removed from office at any time prior to the expiration of his or her term of office, with or without cause, only by the affirmative vote of the holders of record of outstanding shares representing at least a majority of all the aggregate voting power of outstanding shares of our Common Stock then entitled to vote generally in the election of directors, voting together as a single class at a special meeting of our stockholders called expressly for that purpose; provided that during the two-year period following the closing date of the Merger, the removal of our Chief Executive Officer requires the approval of the ViacomCBS Board by the “Requisite Approval” (as defined in the ViacomCBS certificate of incorporation incorporated by reference as an exhibit in this Annual Report on Form 10-K); provided further, that during the two-year period following the closing date, NAI and NAI Entertainment Holdings LLC are not permitted to remove any other persons who were members of the ViacomCBS Board at the effective time of the Merger in accordance with the Merger Agreement or who otherwise become members the ViacomCBS Board (other than any of the NAI Affiliated Directors (as defined in the bylaws)) without the Requisite Approval; and
•in accordance with the General Corporation Law of the State of Delaware, our stockholders may act by written consent without a meeting if such stockholders hold the number of shares representing not less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted.
Accordingly, ViacomCBS stockholders who may have different interests are unable to affect the outcome of any such corporate actions for so long as NAI retains voting control. For more information, see the Governance Agreement incorporated by reference as an exhibit in this Annual Report on Form 10-K.
Sales of NAI’s shares of ViacomCBS Common Stock, some of which are pledged to lenders, could adversely affect the stock price
Based on information received from NAI, NAI has pledged to its lenders a portion of shares of our Class A Common Stock and our Class B Common Stock owned directly or indirectly by NAI. At December 31, 2020, the aggregate number of shares of our Common Stock pledged by NAI to its lenders represented approximately 4.1% of the total outstanding shares of our Class A Common Stock and our Class B Common Stock on a combined basis. If there is a default on NAI’s debt obligations and the lenders foreclose on the pledged shares, the lenders may not effect a transfer, sale or disposition of any pledged shares of our Class A Common Stock unless NAI and its affiliates beneficially own 50% or less of our Class A Common Stock then outstanding or such shares have first been converted into our Class B Common Stock. A sale of the pledged shares could adversely affect our Common Stock share price. In addition, there can be no assurance that at some future time NAI will not sell or pledge additional shares of our Common Stock, which could adversely affect our Common Stock share price.
Unresolved Staff Comments.
Our significant physical properties are described below. In addition, we own and lease office, studio, production and warehouse space and broadcast, antenna and satellite transmission facilities throughout the U.S. and around the world for our businesses. We consider our properties adequate for our present needs.
•Our global headquarters is located at 1515 Broadway, New York, New York, where we lease approximately 1.6 million square feet for executive, administrative and business offices for the Company and certain of our operating divisions. The lease runs through 2031, with two renewal options based on market rates at the time of renewal for ten years each.
•We also own a building at 51 West 52nd Street, New York, New York containing approximately 892,000 square feet of space. Of the 855,000 square feet of office space in the building, we occupy approximately 270,000 square feet and lease the balance to third parties. We have announced our intention to sell this property when market conditions allow.
•We own the CBS Broadcast Center complex located on approximately 3.7 acres at 524 West 57th Street, New York, New York, which consists of approximately 860,000 square feet of office, studio and production space.
•We own the CBS Studio Center at 4024 Radford Avenue, Studio City, California, located on approximately 40 acres and used for executive and administrative offices, sounds stages and production facilities and other ancillary uses.
•We occupy approximately 330,000 square feet of office and production space at 555 West 57th Street, New York, New York under a lease expiring in 2023.
•We occupy approximately 281,000 square feet of office and production space at 345 Hudson Street, New York, New York, under a lease expiring in 2022.
•We occupy approximately 210,000 square feet of office and production space at 1575 North Gower Street, Los Angeles, California, under a lease expiring in 2028.
•Our Network Operations Center in Hauppauge, New York contains approximately 65,000 square feet of floor space on approximately nine acres of owned land.
•The Nickelodeon Animation Studio at 203-231 West Olive Avenue, Burbank, California contains approximately 180,000 square feet of studio and office space, leased under two leases expiring in 2036.
•Nickelodeon’s Live Action Studio contains approximately 108,000 square feet of stage and office space at Burbank Studios, 3000 West Alameda Avenue, Burbank, California, under a lease expiring in 2024.
•Showtime Networks leases approximately 253,000 square feet of office and production space at 1633 Broadway, New York, New York, under a lease expiring in 2026 and leases approximately 56,000 square feet of office space at The Lot, 1041 N. Formosa Avenue, West Hollywood, California, under a lease expiring in 2028.
•Telefe occupies approximately 496,000 square feet of office, studio and production space, transmission facilities and for other ancillary uses at its owned and leased facilities in Buenos Aires, Argentina.
•VCNI occupies approximately 140,000 square feet of office, studio and production space at its owned and leased Hawley Crescent facilities in London.
•Network 10 leases approximately 120,000 square feet of office, studio and production space at 1 Saunders Street, Pyrmont, New South Wales, Australia, under a lease expiring in 2023.
•Paramount owns the Paramount Pictures Studio lot situated at 5555 Melrose Avenue, Los Angeles, California, located on approximately 62 acres of land, and containing approximately 1.85 million square feet of floor space used for executive, administrative and business offices, sound stages, production facilities, theatres, equipment facilities and other ancillary uses.
The information set forth under the caption “Legal Matters” in Note 20 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” is incorporated herein by reference.
Mine Safety Disclosures.
Market for ViacomCBS Inc.’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities.
Our voting Class A Common Stock and non-voting Class B Common Stock are listed and traded on The Nasdaq Stock Market LLC under the symbols “VIACA” and “VIAC”, respectively.
We declared a quarterly cash dividend on our Class A and Class B Common Stock during each of the quarters of 2020, resulting in total dividends for the year of $601 million, or $.96 per share. On December 19, 2019, we declared a quarterly cash dividend of $.24 per share on our Class A and Class B Common Stock, resulting in total dividends of $150 million. Prior to the Merger, Viacom and CBS each declared a quarterly cash dividend during each of the first three quarters of 2019 and during each of the four quarters of 2018. During the first three quarters of 2019, CBS declared total per share dividends of $.54, resulting in total dividends of $205 million. For the year ended December 31, 2018, CBS declared total per share dividends of $.72, resulting in total annual dividends of $274 million. During the first three quarters of 2019, Viacom declared total per share dividends of $.60, resulting in total dividends of $245 million. For the year ended December 31, 2018, Viacom declared total per share dividends of $.80, resulting in total annual dividends of $325 million.
On February 9, 2021, we announced a quarterly cash dividend of $.24 per share on our Class A and Class B Common Stock, payable on April 1, 2021. We currently expect to continue to pay a regular cash dividend to our stockholders.
In November 2010, we announced that our Board of Directors approved a program to repurchase $1.5 billion of our common stock in open market purchases or other types of transactions (including accelerated stock repurchases or privately negotiated transactions). Since then, various increases totaling $16.4 billion have been approved and announced, including most recently, an increase to the share repurchase program to a total availability of $6.0 billion on July 28, 2016. During the fourth quarter of 2020, we did not purchase any shares of our common stock. Our publicly announced share repurchase program had remaining authorization of $2.36 billion at December 31, 2020.
As of February 19, 2021, there were approximately 2,133 record holders of our Class A Common Stock and approximately 29,999 record holders of our Class B Common Stock.
The following graph compares the cumulative total stockholder return of our Class A and Class B Common Stock with the cumulative total return on the companies listed in the Standard & Poor’s 500 Stock Index (“S&P 500”) and the Standard & Poor’s 500 Media and Entertainment Industry Group Index (“S&P 500 Media and Entertainment Index”). We began presenting the S&P Media and Entertainment Index in 2020 in order to provide a comparison to a wider range of companies in the media industry than the peer group of companies that was presented in prior years (“Prior Peer Group”). Accordingly, this graph also presents the cumulative shareholder return for the Prior Peer Group, as required by the SEC in the year of change.
The performance graph assumes $100 invested on December 31, 2015 in each of our Class A and Class B Common Stock, the S&P 500, the S&P 500 Media and Entertainment Index, and the Prior Peer Group identified below, including reinvestment of dividends, through the calendar year ended December 31, 2020.
Total Cumulative Stockholder Return
For Five-Year Period Ended December 31, 2020
|Class A Common Stock||$100||$126||$117||$87||$91||$79|
|Class B Common Stock||$100||$137||$128||$96||$94||$87|
|S & P 500||$100||$112||$136||$130||$171||$203|
Prior Peer Group (a)
|S&P 500 Media & Entertainment Index||$100||$114||$121||$108||$145||$190|
(a) The Prior Peer Group consists of the following companies: The Walt Disney Company (“Disney”), Fox Corporation and Discovery Inc.
|Item 7.||Management’s Discussion and Analysis of Results of Operations and Financial Condition.|
(Tabular dollars in millions, except per share amounts)
Management’s discussion and analysis of the results of operations and financial condition of ViacomCBS Inc. should be read in conjunction with the consolidated financial statements and related notes. References in this document to “ViacomCBS,” the “Company,” “we,” “us” and “our” refer to ViacomCBS Inc. and its consolidated subsidiaries, unless the context otherwise requires.
Significant components of management’s discussion and analysis of results of operations and financial condition include:
•Overview—Summary of ViacomCBS and our business and operational highlights.
•Consolidated Results of Operations—Analysis of our results on a consolidated basis for each of the three years ended December 31, 2020.
•Segment Results of Operations—Analysis of our results on a reportable segment basis for each of the three years ended December 31, 2020.
•Liquidity and Capital Resources—Discussion of our cash flows for each of the three years ended December 31, 2020, and of our outstanding debt, commitments and contingencies as of December 31, 2020.
•Critical Accounting Policies—Detail with respect to accounting policies that are considered by management to require significant judgment and use of estimates and that could have a significant impact on our financial statements.
•Legal Matters—Discussion of legal matters to which we are involved.
•Market Risk—Discussion of how we manage exposure to market and interest rate risks.
ViacomCBS is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide.
Merger with Viacom Inc.
On December 4, 2019, Viacom Inc. (“Viacom”) merged with and into CBS Corporation (“CBS”), with CBS continuing as the surviving company (the “Merger”). At the effective time of the Merger, the combined company changed its name to ViacomCBS Inc. The Merger has been accounted for as a transaction between entities under common control as National Amusements, Inc. (“NAI”) was the controlling stockholder of each of CBS and Viacom (and remains the controlling stockholder of ViacomCBS). Upon the closing of the Merger, the net assets of Viacom were combined with those of CBS at their historical carrying amounts and the companies have been presented on a combined basis for all periods presented.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Impact of COVID-19
The coronavirus disease (“COVID-19”) pandemic negatively impacted the macroeconomic environment in the United States and globally, as well as our business, financial condition and results of operations in 2020. We experienced a material negative impact on our advertising revenues, particularly at the end of the first quarter and throughout the second quarter, as a result of weakness in the advertising market as advertisers sought to reduce costs in response to the pandemic’s impact on their businesses, the cancellation of sporting events for which we have broadcast rights, including the NCAA Division I Men’s Basketball Championship (the “NCAA Tournament”) in the first quarter, and the delay of the 2020-21 television broadcast season as a result of temporary production shutdowns. The rate of decline was lower in the second half of the year, with sequential improvement in the third and fourth quarters. While we are not able to predict when or if advertising revenue will return to historical levels, we expect that it will be impacted to a lesser extent in 2021.
COVID-19 also had a negative effect on our content licensing revenues in 2020. Temporary television and film production shutdowns resulted in the abandonment of content that was not completed, delays in the delivery of programming to third parties, and fewer original programs and live events airing on our broadcast and cable networks. We also experienced lower demand for the licensing of our content from advertising-supported licensees. While production has resumed, we are not able to predict whether we will encounter future production delays or shutdowns, or if and to what extent content licensing revenues will continue to be negatively impacted. Additionally, with the resumption of production we began incurring incremental costs relating to health and safety protocols, which are expected to continue throughout 2021.
In addition, our theatrical revenues have been negatively impacted by the closure or reduction in capacity of movie theaters that show our films as a result of COVID-19, which impacted our theatrical releases in 2020. Accordingly, we have rescheduled certain theatrical releases and licensed others to our owned or third-party streaming services. We are not able to predict when or whether movie theaters will reopen at scale, whether consumers will return at the same levels they previously did because of concerns related to COVID-19 or because of changes to viewing habits, or whether revenues from theatrical releases will be comparable to historical levels.
While COVID-19 has negatively impacted parts of our business, we have benefited from increases in subscribers for our subscription streaming services and monthly active users (“MAUs”) for Pluto TV. Additionally, the impact from the lower revenues has been partially mitigated by lower costs as a result of decreases in production and distribution costs, mainly resulting from production shutdowns and fewer theatrical releases; lower advertising and promotion costs; and cost-savings initiatives. We have taken steps to strengthen our financial position during this period of market uncertainty, such as the issuance of long-term debt and redemption of near-term debt discussed under “Liquidity and Capital Resources,” and we will continue to actively monitor the potential impact of COVID-19 and related events on the commercial paper and credit markets.
The magnitude of the continuing impact of COVID-19 on our business, financial condition and results of operations will depend on numerous evolving factors that we may not be able to accurately predict or control, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and such governmental actions, and economic and operating conditions in the aftermath of COVID-19. Even after COVID-19 has subsided, we may experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future. Due to the evolving and uncertain nature of the pandemic, we are not able to estimate the full extent of the impact on our business, financial condition and results of operations.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Operational Highlights 2020 vs. 2019
|Consolidated results of operations||Increase/(Decrease)|
|Year Ended December 31,||2020||2019||$||%|
|Revenues||$||25,285 ||$||26,998 ||$||(1,713)||(6)||%|
|Operating income||$||4,139 ||$||4,146 ||$||(7)||— ||%|
Net earnings from continuing operations
attributable to ViacomCBS
|$||2,305 ||$||3,168 ||$||(863)||(27)||%|
Diluted EPS from continuing operations
attributable to ViacomCBS
|$||3.73 ||$||5.13 ||$||(1.40)||(27)||%|
Net cash flow provided by operating activities from
|$||2,215 ||$||1,171 ||$||1,044 ||89 ||%|
|Adjusted OIBDA||$||5,132 ||$||5,393 ||$||(261)||(5)||%|
Adjusted net earnings from continuing operations
attributable to ViacomCBS
|$||2,595 ||$||2,983 ||$||(388)||(13)||%|
Adjusted diluted EPS from continuing operations
attributable to ViacomCBS
|$||4.20 ||$||4.83 ||$||(.63)||(13)||%|
|Free cash flow||$||1,891 ||$||826 ||$||1,065 ||129 ||%|
(a) See “Reconciliation of Non-GAAP Measures” and “Free Cash Flow” for reconciliations of non-GAAP results to the most directly comparable financial measures in accordance with accounting principles generally accepted in the United States (“GAAP”).
For 2020, revenues decreased 6% to $25.29 billion from $27.00 billion in 2019, driven by the adverse effects of COVID-19 on our business, including lower demand in the advertising market, the closure or reduction in capacity of movie theaters, the cancellation of live events for which we have the broadcast rights, and production shutdowns. The revenue comparison was also impacted by CBS’ broadcasts in 2019 of annual tentpole sporting events, the Super Bowl and the semifinals and championship games of the NCAA Tournament, which we have the rights to broadcast on a rotational basis with other networks, including in 2019 and 2021. In addition, the games in the preceding rounds of the NCAA Tournament are shared equally each year between CBS and Turner Broadcasting System, Inc. (“Turner”). However, the 2020 NCAA Tournament was cancelled as a result of COVID-19. These decreases were partially offset by a 49% increase in streaming revenues, reflecting growth across our streaming services, including Pluto TV, CBS All Access (to be rebranded as Paramount+ in March 2021), Showtime Networks’ premium subscription streaming service (“Showtime OTT”), and BET+, as well as record political advertising sales.
Operating income for 2020 remained flat at $4.14 billion. Each year was impacted by items identified as affecting comparability, including programming, restructuring and impairment charges and costs for other corporate matters, as well as a gain on the sale of CNET Media Group (“CMG”) in 2020 and a gain on the sale of the CBS Television City property and sound stage operation (“CBS Television City”) in 2019. See “Reconciliation of Non-GAAP Measures.” Adjusted OIBDA decreased 5%, primarily reflecting the decline in revenues, partially offset by lower expenses as a result of production shutdowns, the absence in 2020 of certain major sporting events, fewer theatrical releases, lower advertising and promotion costs reflecting the broadcast of fewer original programs, and the benefit from cost savings, including from restructuring activities. The lower expenses were partially offset by increased costs to support the growth and expansion of our streaming services.
For 2020, net earnings from continuing operations attributable to ViacomCBS and diluted EPS from continuing operations each decreased 27% from 2019. These comparisons were impacted by items identified as affecting comparability, including the aforementioned items impacting operating income, a loss on extinguishment of debt
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
in 2020, net gains from investments, and discrete tax items. Adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS each decreased 13%, reflecting the lower Adjusted OIBDA and the noncontrolling interest’s share of profit from the licensing of South Park during the second quarter of 2020. Adjusted OIBDA, adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS from continuing operations are non-GAAP financial measures. See “Reconciliation of Non-GAAP Measures” for details of the items excluded from financial results, and reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.
We generated operating cash flows from continuing operations of $2.22 billion in 2020 compared with $1.17 billion in 2019. Free cash flow was $1.89 billion for 2020 compared with $826 million for 2019. These increases primarily reflect lower spending, including for programming, production, advertising and distribution costs resulting from production shutdowns related to COVID-19 and cost savings, as well as lower payments for income taxes in 2020. These items were partially offset by the decline in revenues and higher payments for restructuring, merger-related costs and costs to achieve synergies. Operating cash flow and free cash flow included payments for restructuring, merger-related costs and costs to achieve synergies which totaled $584 million and $362 million for 2020 and 2019, respectively. Also included in free cash flow for 2020 are capital expenditures of $40 million associated with costs to achieve synergies. Free cash flow is a non-GAAP financial measure. See “Free Cash Flow” for a reconciliation of net cash flow provided by operating activities, the most directly comparable GAAP financial measure, to free cash flow.
Reconciliation of Non-GAAP Measures
Results for the years ended December 31, 2020, 2019 and 2018 included certain items identified as affecting comparability. 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 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 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.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.
|Year Ended December 31,||2020||2019||2018|
|Operating Income (GAAP)||$||4,139 ||$||4,146 ||$||5,062 |
Depreciation and amortization (a)
|430 ||438 ||427 |
Restructuring and other corporate matters (b)
|618 ||769 ||489 |
Programming charges (b)
|159 ||589 ||162 |
Gain on sales (b)
|Adjusted OIBDA (Non-GAAP)||$||5,132 ||$||5,393 ||$||6,140 |
(a) Includes impairment charges of $25 million and $20 million to reduce the carrying value of intangible assets to fair value for 2020 and 2019, respectively. 2020 also includes accelerated depreciation of $12 million for technology that was abandoned in connection with synergy plans related to the Merger.
(b) See notes on the following tables for additional information on items affecting comparability.
|Year Ended December 31, 2020|
|Earnings from Continuing Operations Before Income Taxes ||Provision for Income Taxes||Net Earnings from Continuing Operations Attributable to ViacomCBS||Diluted EPS from Continuing Operations |
|Reported (GAAP)||$||3,147 ||$||(535)||$||2,305 ||$||3.73 |
|Items affecting comparability:|
Restructuring and other corporate matters (a)
|618 ||(133)||485 ||.79 |
Impairment charge (b)
|25 ||(6)||19 ||.03 |
Depreciation of abandoned technology (c)
|12 ||(3)||9 ||.01 |
Programming charges (d)
|159 ||(39)||120 ||.20 |
Gain on sales (e)
Net gains from investments (f)
|Loss on extinguishment of debt||126 ||(29)||97 ||.16 |
Discrete tax items (g)
|Impairment of equity-method investment||— ||— ||9 ||.01 |
|Adjusted (Non-GAAP)||$||3,667 ||$||(774)||$||2,595 ||$||4.20 |
(a) Reflects severance, exit costs and other costs related to the Merger and a charge to write down property and equipment classified as held for sale.
(b) Reflects a charge to reduce the carrying values of FCC licenses in two markets to their fair values.
(c) Reflects accelerated depreciation for technology that was abandoned in connection with synergy plans related to the Merger.
(d) Programming charges primarily related to the abandonment of certain incomplete programs resulting from production shutdowns related to COVID-19.
(e) Reflects a gain on the sale of CMG.
(f) Primarily reflects an increase in the value of our investment in fuboTV, Inc. (“fuboTV”), which was sold in the fourth quarter of 2020.
(g) Primarily reflects a benefit from the remeasurement of our U.K. net deferred income tax asset as a result of an increase in the U.K. corporate income tax rate from 17% to 19% enacted during the third quarter of 2020.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
|Year Ended December 31, 2019|
|Earnings from Continuing Operations Before Income Taxes ||Benefit (Provision) for Income Taxes||Net Earnings from Continuing Operations Attributable to ViacomCBS||Diluted EPS from Continuing Operations|
|Reported (GAAP)||$||3,223 ||$||29 ||$||3,168 ||$||5.13 |
|Items affecting comparability:|
Restructuring and other corporate matters (a)
|769 ||(133)||636 ||1.03 |
Impairment charge (b)
|20 ||(6)||14 ||.02 |
Programming charges (c)
|589 ||(142)||447 ||.73 |
Gain on sales (d)
Net gains from investments (e)
Discrete tax items (f)
|Adjusted (Non-GAAP)||$||3,967 ||$||(900)||$||2,983 ||$||4.83 |
(a) Reflects severance and exit costs relating to restructuring activities and costs incurred in connection with the Merger, legal proceedings involving the Company and other corporate matters.
(b) Reflects a charge to reduce the carrying value of our international broadcast licenses in Australia to their fair value.
(c) Programming charges principally reflect accelerated amortization associated with changes in the expected monetization of certain programs, and decisions to cease airing, alter future airing patterns or not renew certain programs, in connection with management changes implemented as a result of the Merger.
(d) Reflects a gain on the sale of CBS Television City.
(e) Reflects a gain on marketable securities of $113 million; gains of $22 million on the sale and acquisition of joint ventures; and an impairment charge of $50 million to write down an investment to its fair value.
(f) Primarily 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; a tax benefit of $44 million realized in connection with the preparation of the 2018 federal tax return, based on further clarity provided by the United States government on tax positions relating to federal tax legislation enacted in December 2017 (the “Tax Reform Act”); and a tax benefit of $39 million triggered by the bankruptcy of an investee.
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
|Year Ended December 31, 2018|
|Earnings from Continuing Operations Before Income Taxes ||Provision for Income Taxes||Net Earnings from Continuing Operations Attributable to ViacomCBS||Diluted EPS from Continuing Operations |
|Reported (GAAP)||$||3,984 ||$||(580)||$||3,320 ||$||5.35 |
|Items affecting comparability:|
Restructuring and other corporate matters (a)
|489 ||(116)||373 ||.59 |
Programming charges (b)
|162 ||(39)||123 ||.20 |
|Gain on extinguishment of debt||(18)||4 ||(14)||(.02)|
Net loss from investments (c)
|53 ||(16)||37 ||.06 |
Discrete tax items (d)
|Adjusted (Non-GAAP)||$||4,670 ||$||(1,044)||$||3,542 ||$||5.70 |
(a) Primarily reflects severance and exit costs relating to restructuring activities as well as professional fees related to legal proceedings, cost transformation initiatives, investigations at our Company and the evaluation of potential merger activity.
(b) Reflects programming charges resulting from changes to our programming strategy, including at CBS Films and our Cable Networks segment, in connection with management changes.
(c) Reflects a loss on marketable securities of $23 million; an impairment charge of $46 million to write down an investment to its fair value; and a gain of $16 million on the sale of a 1% equity interest in Viacom18 to our joint venture partner.
(d) Primarily reflects a net discrete tax benefit of $80 million related to the Tax Reform Act and other tax law changes; a net tax benefit of $71 million relating to a tax accounting method change granted by the Internal Revenue Service (“IRS”); and the reversal of a valuation allowance of $140 million relating to capital loss carryforwards that were utilized in connection with the sale of CBS Television City in 2019.
Consolidated Results of Operations—2020 vs. 2019
|Revenues by Type||% of Total||% of Total||Increase/(Decrease)|
|Year Ended December 31,||2020||Revenues||2019||Revenues||$||%|
|Advertising||$||9,751 ||38 ||%||$||11,074 ||41 ||%||$||(1,323)||(12)||%|
|Affiliate||9,166 ||36 ||8,602 ||32 ||564 ||7 |
|Content licensing||5,963 ||24 ||6,483 ||24 ||(520)||(8)|
|Theatrical||180 ||1 ||547 ||2 ||(367)||(67)|
|Other||225 ||1 ||292 ||1 ||(67)||(23)|
|Total Revenues||$||25,285 ||100 ||%||$||26,998 ||100 ||%||$||(1,713)||(6)||%|
Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
The following tables present our global streaming revenues by type and by segment. Streaming revenues are earned from advertising on our pay and free streaming services, including Pluto TV, CBS All Access (to be rebranded as Paramount+ in March 2021), and CBSN; subscription fees for our pay streaming services, including CBS All Access, Showtime OTT, BET+ and Noggin; and advertising and subscriptions for our other digital video products.
|Streaming Revenues by Type||Increase/(Decrease)|
|Year Ended December 31,||2020||2019||$||%|
|Advertising||$||1,418 ||$||1,005 ||$||413 ||41 ||%|
|1,143 ||709 ||434 ||61 |
|Total Streaming Revenues||$||2,561 ||$||1,714 ||$||847 ||49 ||%|
|Streaming Revenues by Segment|