- Achieved Second Consecutive Quarter of Sequential
Improvement in Operating Income, Adjusted OIBDA, Operating Cash
Flow and Free Cash Flow, Demonstrating Financial Momentum and
Commitment to Shareholder Value
- Executed Significant Distribution Deals, Highlighting
Progress in Unlocking Value-Creation Opportunities Across Combined
Asset Base
- Delivered Robust Growth in Streaming, with Record Revenue,
Subscribers, MAUs and Consumption Across Free and Pay Services,
Accelerating Adoption of Pluto TV Internationally and Significant
Progress in Transforming CBS All Access into a Diversified Super
Service
- Increased Target for Annualized Merger-Related Cost
Synergies, while Simultaneously Managing Costs in Response to
COVID-19
ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial
results for the quarter ended June 30, 2020.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20200806005283/en/
Domestic streaming and digital video
revenue rose to $489M, up 25% year-over-year. (Graphic: Business
Wire)
Statement from Bob Bakish, President
& CEO
“ViacomCBS delivered another solid quarter, with clear
operational momentum and sequential improvement in key earnings and
cash flow metrics. Despite the impact of COVID-19 on revenue in the
quarter, we’re successfully managing through the effects of the
pandemic, reaffirming the strength of our combined operations. Our
results underscored our strong progress delivering on our
value-creation initiatives, including integration cost synergies,
expanded and new distribution agreements, as well as the rapid
acceleration of our streaming business, where we achieved record
users and revenue in free and pay while building toward the
relaunch of our diversified super service.”
Q2 2020 RESULTS
Quarter Ended June 30
Six Months Ended June
30
GAAP
2020
2019
B/(W) %
2020
2019
B/(W) %
Revenues $
6,275
$
7,143
(12
)
% $
12,944
$
14,243
(9
)
% Operating income
1,286
1,446
(11
)
2,203
3,250
(32
)
Net earnings from continuing operations attributable to ViacomCBS
478
971
(51
)
986
2,917
(66
)
Diluted EPS from continuing operations attributable to ViacomCBS
0.77
1.57
(51
)
1.6
4.73
(66
)
Operating cash flow
795
260
206
1,151
1,189
(3
)
Non-GAAP† Adjusted OIBDA $
1,689
$
1,562
8
% $
2,952
$
3,101
(5
)
% Adjusted net earnings from continuing operations attributable to
ViacomCBS
769
912
(16
)
1,468
1,810
(19
)
Adjusted diluted EPS from continuing operations attributable to
ViacomCBS
1.25
1.48
(16
)
2.38
2.93
(19
)
Free cash flow
714
185
286
1,019
1,047
(3
)
$ in millions, except per share amounts † Non-GAAP measures
referenced in this release are detailed in the Supplemental
Disclosures at the end of this release.
OVERVIEW OF Q2 REVENUE
- Affiliate revenue increased 2%, reflecting growth in station
affiliation and retransmission fees, as well as subscription
streaming revenue, which more than offset declines in pay-TV
subscribers.
- Advertising revenue declined 27% year-over-year, driven by the
adverse effects of COVID-19 on global advertising demand, the
comparison against the broadcast of the national semifinals and
championship games of the NCAA Tournament in the prior-year
quarter, as well as the cancellation and postponement of
professional golf tournaments.
- Domestic streaming and digital video revenue – which includes
streaming subscription and digital video advertising revenue – rose
to $489M, up 25% year-over-year, driven by 52% growth in streaming
subscription revenue and robust growth in Pluto TV advertising
revenue.
- Content licensing revenue was relatively flat, primarily
reflecting the licensing of domestic streaming rights to South
Park, offset by significant licensing activity in the year ago
quarter, as well as the timing of deliveries, which were affected
by COVID-related production delays.
- Theatrical revenue was immaterial in the quarter due to the
closure of movie theaters in response to COVID-19.
- Publishing revenue decreased 8%, mainly driven by lower print
book sales as a result of the impact of COVID-19, partially offset
by growth in sales of electronic and digital audiobooks.
REVENUE BY TYPE
Quarter Ended June 30
Six Months Ended June
30
2020
2019
$ B/(W) %
2020
2019
$ B/(W) %
Advertising $
1,934
$
2,645
$
(711
)
(27
)
% $
4,418
$
5,711
$
(1,293
)
(23
)
%
Domestic
1,730
2,290
(560
)
(24
)
3,959
5,065
(1,106
)
(22
)
International
204
355
(151
)
(43
)
459
646
(187
)
(29
)
Affiliate
2,194
2,155
39
2
4,391
4,320
71
2
Domestic
2,034
1,986
48
2
4,080
3,979
101
3
International
160
169
(9
)
(5
)
311
341
(30
)
(9
)
Content Licensing
1,902
1,909
(7
)
-
3,496
3,374
122
4
Theatrical
3
152
(149
)
(98
)
170
324
(154
)
(48
)
Publishing
200
218
(18
)
(8
)
370
382
(12
)
(3
)
Other
42
64
(22
)
(34
)
99
132
(33
)
(25
)
Total Revenues
$
6,275
$
7,143
$
(868
)
(12
)
% $
12,944
$
14,243
$
(1,299
)
(9
)
% $ in millions
BALANCE SHEET & LIQUIDITY
- In Q2, ViacomCBS raised $4.5B of capital and used the proceeds
to redeem $2.8B of near-term maturities, including a $340M
redemption that settled on July 10, 2020. These transactions
reinforced the company’s strong financial position, adding $1.7B to
its cash balance with no maturities due until 2022.
- As of June 30, 2020, taking into account the benefit of the
company’s full run-rate merger-related cost synergies, its debt to
Adjusted OIBDA ratio calculated to 3.3x. On a net basis, taking
into consideration its $2.3B cash balance as of June 30, 2020, this
ratio calculated to 2.9x, unchanged from the end of 2019.
- ViacomCBS continued to strengthen its financial position and
demonstrate its commitment to creating shareholder value, with
$795M of Operating Cash Flow and $714M of Free Cash Flow† generated
in the quarter.
- The company’s committed $3.5B revolving credit facility remains
undrawn.
† Non-GAAP measures referenced in this
release are detailed in the Supplemental Disclosures at the end of
this release.
SPOTLIGHT ON DISTRIBUTION & STREAMING
In Q2, ViacomCBS delivered significant multiplatform
distribution wins and strong domestic streaming and digital video
revenue growth, with record sign-ups and consumption across its
free and pay services.
DISTRIBUTION HIGHLIGHTS
- In April, ViacomCBS signed a comprehensive, multiplatform
partnership with Verizon, spanning pay TV, connected television and
mobile – including a significant expansion of Pluto TV’s
footprint.
- In May, the company announced a new deal with YouTube TV, which
renewed CBS and Showtime early and brought Viacom’s cable networks
to the service.
- More recently, in July ViacomCBS announced a multi-year renewal
with DISH and Sling TV, marking its third cross-company renewal and
further demonstrating the value of ViacomCBS content.
- The company also continued to benefit from strong reverse
compensation and recently signed agreements with Sinclair and
Cox.
STREAMING & DIGITAL VIDEO HIGHLIGHTS
- Domestic streaming and digital video revenue rose to $489M, up
25% year-over-year, driven by 52% growth in streaming subscription
revenue.
- Domestic pay streaming subscribers reached 16.2M, up 74%
year-over-year.
- CBS All Access continued to break records, with its paid
subscribers, streams and minutes watched reaching all-time highs in
the quarter.
- Original programming, titles from Paramount Pictures and
children’s content from Nickelodeon drove strong subscriber
acquisitions and engagement.
- Showtime OTT delivered its best quarter ever in sign-ups,
streams and minutes watched, driven by original programming,
including Homeland, Billions and The Chi.
- In free, Pluto TV continued to build on its strong momentum in
the US and internationally:
- Pluto TV maintained its position as the #1 ad-supported
streaming TV service in the US, with its domestic monthly active
users (MAUs) growing to 26.5M, up 61% year-over-year.
- Despite the impact of COVID-19, Pluto TV continued to deliver
robust advertising revenue growth in the quarter.
- In April, Pluto TV entered 17 Latin American markets and
achieved robust adoption. In addition to its presence in Europe,
this expansion brought Pluto TV’s total international MAUs to 6.5M,
with its total global MAUs reaching 33M.
- Additionally, Pluto TV continued to increase its distribution
through multiplatform deals with Verizon, TiVo and LG, and expand
its offering with more than 100,000 hours of content now
available.
ON TRACK FOR SUPER SERVICE RELAUNCH
- In July, ViacomCBS unveiled the first major step in
transforming CBS All Access into a rebranded super service and
remains on track to relaunch this differentiated streaming product
in early 2021.
- In a significant content expansion, the company added more than
3,500 episodes from the ViacomCBS portfolio, spanning series from
BET, Comedy Central, MTV, Nickelodeon, Smithsonian and more. This
brings the CBS All Access library to more than 20,000 episodes and
movies.
- CBS All Access will be home to a growing slate of new original
and exclusive movies and series, including:
- Big Brother Live Feeds, The Stand and the animated series Star
Trek: Lower Decks
- The SpongeBob Movie: Sponge on the Run and Kamp Koral, a new
original kid’s series premiering in 2021 and the first spinoff
derived from SpongeBob SquarePants, one of ViacomCBS’ biggest
franchises
- In addition to its vast library and original content offering,
CBS All Access will feature compelling live programming, spanning
news, tentpole events and a critical mass of live sports,
including:
- Live streams of local CBS stations nationwide and CBSN, CBS
News' rapidly growing 24/7 digital news service
- The Super Bowl, The Grammy Awards, The Academy of Country Music
Awards, The Tony Awards and more
- Major sporting events from golf to football to basketball, plus
UEFA club competitions, as the exclusive streaming home to the UEFA
Champions League, UEFA Europa League and UEFA Europa Conference
League in the US
REPORTING SEGMENTS
TV ENTERTAINMENT
- CBS finished the broadcast season as America’s most-watched
network for the 12th straight year and was #1 in all key dayparts,
including Prime, Late Night and Daytime, for the 3rd straight
season.
- Revenue declined 22%, primarily driven by the impact of
COVID-19 on the advertising market and lower content licensing
revenue.
- Affiliate revenue rose 22%, fueled by growth in station
affiliation fees and retransmission revenue, as well as strong
subscription streaming revenue.
- Advertising revenue decreased 27%, reflecting the adverse
effects of COVID-19 on advertising demand, the comparison against
the broadcast of the national semifinals and championship games of
the NCAA Tournament in the prior-year quarter, and the cancellation
and postponement of professional golf tournaments.
- Content licensing revenue declined 44% mainly due to
comparisons against several significant licensing agreements in the
prior-year quarter, as well as fewer programming deliveries as a
result of COVID-related production delays and the timing of
deliveries of programs produced for third parties.
- Adjusted OIBDA decreased 36%, mainly as a result of the revenue
decline, partially offset by lower production and programming costs
from COVID-related production delays and the mix of primetime
programming. Advertising and promotion costs were also lower,
reflecting the broadcast of fewer original programs due to
COVID-19.
Quarter Ended June 30
Six Months Ended June
30
2020
2019
$ B/(W) %
2020
2019
$ B/(W) %
Revenue $
2,287
$
2,938
$
(651
)
(22
)
% $
5,234
$
6,344
$
(1,110
)
(17
)
% Advertising
951
1,309
(358
)
(27
)
2,332
3,276
(944
)
(29
)
Affiliate
751
616
135
22
1,485
1,227
258
21
Content Licensing
544
966
(422
)
(44
)
1,341
1,747
(406
)
(23
)
Other
41
47
(6
)
(13
)
76
94
(18
)
(19
)
Expenses
1,895
2,325
430
18
4,269
4,989
720
14
Adjusted OIBDA $
392
$
613
$
(221
)
(36
)
% $
965
$
1,355
$
(390
)
(29
)
% $ in millions
CABLE NETWORKS
- In the quarter, ViacomCBS had the #1 share of viewers among
P2+, P2-11, P12-17, P12-34, P18-34, P18-49, P25-54 and P2-49 and
owned more top-30 cable networks than any other media family;
Showtime also had the top scripted show on premium cable for the
second consecutive quarter and the top 3 scripted shows
year-to-date.
- Revenue increased 2% reflecting growth from the licensing of
domestic streaming rights to South Park, partially offset by
weakness in the advertising market as a result of COVID-19, as well
as lower affiliate revenue.
- Affiliate revenue decreased 6%, as growth in subscription
streaming was more than offset by linear subscriber declines.
- Advertising revenue declined 26%, primarily driven by the
adverse effects of COVID-19, which more than offset growth in
streaming and digital video advertising revenue.
- Content licensing revenue increased 175%, driven by the
licensing of domestic streaming rights to South Park.
- Adjusted OIBDA grew 30%, driven by lower programming costs
primarily due to scheduling changes and the cancellation of events
as a result of COVID-19, lower advertising and promotion costs
resulting from the broadcast of fewer original programs during the
quarter and the increase in revenues.
Quarter Ended June 30
Six Months Ended June
30
2020
2019
$ B/(W) %
2020
2019
$ B/(W) %
Revenue $
3,232
$
3,176
$
56
2
% $
6,090
$
6,078
$
12
-
% Advertising
992
1,347
(355
)
(26
)
2,109
2,462
(353
)
(14
)
Affiliate
1,443
1,539
(96
)
(6
)
2,906
3,093
(187
)
(6
)
Content Licensing
797
290
507
175
1,075
523
552
106
Expenses
1,947
2,187
240
11
4,011
4,196
185
4
Adjusted OIBDA $
1,285
$
989
$
296
30
% $
2,079
$
1,882
$
197
10
% $ in millions
FILMED ENTERTAINMENT
- Despite softness driven by production limitations and theater
closures, ViacomCBS continued to monetize its vast library and
integrated Miramax films into its offering.
- Revenue decreased 26% as a result of the closure of movie
theaters throughout the quarter, as well as the timing of licensing
revenues.
- Theatrical revenue was immaterial in the quarter due to the
closure of movie theaters in response to COVID-19.
- Home entertainment revenue rose 30%, driven by the mix of
titles in release, including Sonic the Hedgehog, and higher sales
of catalog titles.
- Licensing revenue decreased 20% due to lower revenues from
licensing of catalog titles, as well as the timing of deliveries of
programs produced for third parties.
- Adjusted OIBDA increased 22%, reflecting lower distribution
costs resulting from the absence of theatrical releases in the
quarter, as well as the strong performance of Sonic the Hedgehog in
the home entertainment market.
Quarter Ended June 30
Six Months Ended June
30
2020
2019
$ B/(W) %
2020
2019
$ B/(W) %
Revenue $
647
$
877
$
(230
)
(26
)
% $
1,458
$
1,607
$
(149
)
(9
)
% Theatrical
3
152
(149
)
(98
)
170
324
(154
)
(48
)
Home Entertainment
209
161
48
30
383
315
68
22
Licensing
434
540
(106
)
(20
)
876
915
(39
)
(4
)
Other
1
24
(23
)
(96
)
29
53
(24
)
(45
)
Expenses
531
782
251
32
1,315
1,474
159
11
Adjusted OIBDA $
116
$
95
$
21
22
% $
143
$
133
$
10
8
% $ in millions
PUBLISHING
- Bestselling titles for the quarter included John Bolton’s The
Room Where It Happened and Stephen King’s If It Bleeds.
- Publishing revenue decreased 8%, primarily driven by lower
print book sales as a result of the impact of COVID-19, partially
offset by growth in sales of electronic and digital
audiobooks.
- Adjusted OIBDA increased 9%, as the decrease in revenue was
more than offset by lower production and distribution costs
associated with the decline in print book sales and the mix of
titles.
Quarter Ended June 30
Six Months Ended June
30
2020
2019
$ B/(W) %
2020
2019
$ B/(W) %
Revenue $
200
$
218
$
(18
)
(8
)
% $
370
$
382
$
(12
)
(3
)
% Expenses
162
183
21
11
313
328
15
5
Adjusted OIBDA $
38
$
35
$
3
9
% $
57
$
54
$
3
6
% $ in millions
ABOUT VIACOMCBS
ViacomCBS (NASDAQ: VIAC; VIACA) is a leading global media and
entertainment company that creates premium content and experiences
for audiences worldwide. Driven by iconic consumer brands, its
portfolio includes CBS, Showtime Networks, Paramount Pictures,
Nickelodeon, MTV, Comedy Central, BET, CBS All Access, Pluto TV and
Simon & Schuster, among others. The company delivers the
largest share of the US television audience and boasts one of the
industry’s most important and extensive libraries of TV and film
titles. In addition to offering innovative streaming services and
digital video products, ViacomCBS provides powerful capabilities in
production, distribution and advertising solutions for partners on
five continents.
For more information about ViacomCBS, please visit
www.viacomcbs.com and follow @ViacomCBS on social platforms.
VIAC-IR
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
This communication contains both historical and forward-looking
statements. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements within the
meaning of section 27A of the Securities Act of 1933, as amended,
and section 21E of the Securities Exchange Act of 1934, as amended.
Similarly, statements that describe our objectives, plans or goals
are or may be forward-looking statements. These forward-looking
statements reflect our current expectations concerning future
results and events; generally can be identified by the use of
statements that include phrases such as “believe,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,”
“could,” “estimate” or other similar words or phrases; and involve
known and unknown risks, uncertainties and other factors that are
difficult to predict and which may cause our actual results,
performance or achievements to be different from any future
results, performance or achievements expressed or implied by these
statements. These risks, uncertainties and other factors include,
among others: the impact of the COVID-19 pandemic (and other
widespread health emergencies or pandemics) and measures taken in
response thereto; technological developments, alternative content
offerings and their effects in our markets and on consumer
behavior; the impact on our advertising revenues of changes in
consumers’ content viewership, deficiencies in audience measurement
and advertising market conditions; the public acceptance of our
brands, programming, films, published content and other
entertainment content on the various platforms on which they are
distributed; increased costs for programming, films and other
rights; the loss of key talent; competition for content, audiences,
advertising and distribution in consolidating industries; the
potential for loss of carriage or other reduction in or the impact
of negotiations for the distribution of our content; the risks and
costs associated with the integration of the CBS Corporation and
Viacom Inc. businesses and investments in new businesses, products,
services and technologies; evolving cybersecurity and similar
risks; the failure, destruction or breach of critical satellites or
facilities; content theft; domestic and global political, economic
and/or regulatory factors affecting our businesses generally;
volatility in capital markets or a decrease in our debt ratings;
strikes and other union activity; fluctuations in our results due
to the timing, mix, number and availability of our films and other
programming; losses due to asset impairment charges for goodwill,
intangible assets, FCC licenses and programming; liabilities
related to discontinued operations and former businesses; potential
conflicts of interest arising from our ownership structure with a
controlling stockholder; and other factors described in our news
releases and filings with the Securities and Exchange Commission,
including but not limited to our most recent Annual Report on Form
10-K and reports on Form 10-Q and Form 8-K. There may be additional
risks, uncertainties and factors that we do not currently view as
material or that are not necessarily known. The forward-looking
statements included in this communication are made only as of the
date of this communication, and we do not undertake any obligation
to publicly update any forward-looking statements to reflect
subsequent events or circumstances.
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions,
except per share amounts)
Quarter Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Revenues
$
6,275
$
7,143
$
12,944
$
14,243
Costs and expenses:
Operating
3,485
4,210
7,550
8,458
Selling, general and administrative
1,222
1,371
2,563
2,684
Depreciation and amortization
124
109
237
215
Restructuring and other corporate
matters
158
7
391
185
Total costs and expenses
4,989
5,697
10,741
11,542
Gain on sale of assets
—
—
—
549
Operating income
1,286
1,446
2,203
3,250
Interest expense
(263
)
(237
)
(504
)
(477
)
Interest income
11
15
25
34
Loss on extinguishment of debt
(103
)
—
(103
)
—
Other items, net
6
15
(27
)
25
Earnings from continuing operations before
income taxes and equity in loss of investee companies
937
1,239
1,594
2,832
(Provision) benefit for income taxes
(202
)
(241
)
(339
)
135
Equity in loss of investee companies, net
of tax
(12
)
(21
)
(21
)
(39
)
Net earnings from continuing
operations
723
977
1,234
2,928
Net earnings from discontinued operations,
net of tax
3
6
11
19
Net earnings (ViacomCBS and noncontrolling
interests)
726
983
1,245
2,947
Net earnings attributable to
noncontrolling interests
(245
)
(6
)
(248
)
(11
)
Net earnings attributable to ViacomCBS
$
481
$
977
$
997
$
2,936
Amounts attributable to ViacomCBS:
Net earnings from continuing
operations
$
478
$
971
$
986
$
2,917
Net earnings from discontinued operations,
net of tax
3
6
11
19
Net earnings attributable to ViacomCBS
$
481
$
977
$
997
$
2,936
Basic net earnings per common share
attributable to ViacomCBS:
Net earnings from continuing
operations
$
.78
$
1.58
$
1.60
$
4.74
Net earnings from discontinued
operations
$
—
$
.01
$
.02
$
.03
Net earnings
$
.78
$
1.59
$
1.62
$
4.77
Diluted net earnings per common share
attributable to ViacomCBS:
Net earnings from continuing
operations
$
.77
$
1.57
$
1.60
$
4.73
Net earnings from discontinued
operations
$
—
$
.01
$
.02
$
.03
Net earnings
$
.78
$
1.58
$
1.62
$
4.76
Weighted average number of common shares
outstanding:
Basic
615
615
615
615
Diluted
617
617
617
617
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in millions,
except per share amounts)
At
At
June 30, 2020
December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents
$
2,288
$
632
Receivables, net
7,139
7,206
Programming and other inventory
1,837
2,876
Prepaid and other current assets
1,175
1,188
Total current assets
12,439
11,902
Property and equipment, net
1,995
2,085
Programming and other inventory
9,728
8,652
Goodwill
17,077
16,980
Intangible assets, net
2,948
2,993
Operating lease assets
1,841
1,939
Deferred income tax assets, net
919
939
Other assets
4,212
4,006
Assets held for sale
29
23
Total Assets
$
51,188
$
49,519
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable
$
422
$
667
Accrued expenses
1,553
1,760
Participants’ share and royalties
payable
2,090
1,977
Accrued programming and production
costs
1,189
1,500
Deferred revenues
695
739
Debt
364
717
Other current liabilities
1,672
1,688
Total current liabilities
7,985
9,048
Long-term debt
19,704
18,002
Participants’ share and royalties
payable
1,485
1,546
Pension and postretirement benefit
obligations
2,070
2,121
Deferred income tax liabilities, net
708
500
Operating lease liabilities
1,816
1,909
Program rights obligations
252
356
Other liabilities
2,344
2,494
Redeemable noncontrolling interest
274
254
Commitments and contingencies
ViacomCBS stockholders’ equity:
Class A Common Stock, par value $.001 per
share; 55 shares authorized; 52 (2020 and 2019) shares issued
—
—
Class B Common Stock, par value $.001 per
share; 5,000 shares authorized; 1,066 (2020) and 1,064 (2019)
shares issued
1
1
Additional paid-in capital
29,680
29,590
Treasury stock, at cost; 502 (2020) and
501 (2019) Class B shares
(22,958
)
(22,908
)
Retained earnings
9,150
8,494
Accumulated other comprehensive loss
(1,999
)
(1,970
)
Total ViacomCBS stockholders’ equity
13,874
13,207
Noncontrolling interests
676
82
Total Equity
14,550
13,289
Total Liabilities and Equity
$
51,188
$
49,519
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
Six Months Ended
June 30,
2020
2019
Operating Activities:
Net earnings (ViacomCBS and noncontrolling
interests)
$
1,245
$
2,947
Less: Net earnings from discontinued
operations, net of tax
11
19
Net earnings from continuing
operations
1,234
2,928
Adjustments to reconcile net earnings from
continuing operations to net cash flow provided by operating
activities:
Depreciation and amortization
237
215
Deferred tax provision (benefit)
224
(535
)
Stock-based compensation
145
106
Gain on sale of assets
—
(549
)
Gains from investments
(32
)
(77
)
Loss on extinguishment of debt
103
—
Equity in loss of investee companies, net
of tax and distributions
22
41
Change in assets and liabilities
(782
)
(940
)
Net cash flow provided by operating
activities
1,151
1,189
Investing Activities:
Investments
(60
)
(132
)
Capital expenditures
(132
)
(142
)
Acquisitions, net of cash acquired
(141
)
(361
)
Proceeds from dispositions
146
751
Other investing activities
—
4
Net cash flow (used for) provided by
investing activities
(187
)
120
Financing Activities:
Repayments of short-term debt borrowings,
net
(698
)
(674
)
Proceeds from issuance of senior notes
4,370
493
Repayment of notes and debentures
(2,535
)
(600
)
Dividends
(301
)
(299
)
Purchase of Company common stock
(58
)
(14
)
Payment of payroll taxes in lieu of
issuing shares for stock-based compensation
(59
)
(52
)
Other financing activities
(70
)
(81
)
Net cash flow provided by (used for)
financing activities
649
(1,227
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(17
)
2
Net increase in cash, cash equivalents and
restricted cash
1,596
84
Cash, cash equivalents and restricted cash
at beginning of period (includes $202 (2020) and $120 (2019) of
restricted cash)
834
976
Cash, cash equivalents and restricted cash
at end of period (includes $142 (2020) and $122 (2019) of
restricted cash)
$
2,430
$
1,060
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL MEASURES (Unaudited; in millions, except per share
amounts)
Results for the quarters and six months ended June 30, 2020 and
2019 included certain items identified as affecting comparability.
Adjusted operating income before depreciation and amortization
(“Adjusted OIBDA”), adjusted earnings from continuing operations
before income taxes, adjusted provision for income taxes, adjusted
net earnings from continuing operations attributable to ViacomCBS
and adjusted diluted EPS from continuing operations (together, the
“adjusted measures”) exclude the impact of these items and are
measures of performance not calculated in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). We use these measures to, among other things,
evaluate our operating performance. These measures are among the
primary measures used by management for planning and forecasting of
future periods, and they are important indicators of our
operational strength and business performance. In addition, we use
Adjusted OIBDA to, among other things, value prospective
acquisitions. We believe these measures are relevant and useful for
investors because they allow investors to view performance in a
manner similar to the method used by our management; provide a
clearer perspective on our underlying performance; and make it
easier for investors, analysts and peers to compare our operating
performance to other companies in our industry and to compare our
year-over-year results.
Because the adjusted measures are measures of performance not
calculated in accordance with GAAP, they should not be considered
in isolation of, or as a substitute for, operating income, earnings
from continuing operations before income taxes, (provision) benefit
for income taxes, net earnings from continuing operations
attributable to ViacomCBS or diluted EPS from continuing
operations, as applicable, as indicators of operating performance.
These measures, as we calculate them, may not be comparable to
similarly titled measures employed by other companies.
The following tables reconcile the adjusted measures to their
most directly comparable financial measures in accordance with
GAAP.
Quarter Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Operating income (GAAP)
$
1,286
$
1,446
$
2,203
$
3,250
Depreciation and amortization (a)
124
109
237
215
Restructuring and other corporate matters
(b)
158
7
391
185
Programming charges (b)
121
—
121
—
Gain on sale of assets (b)
—
—
—
(549
)
Adjusted OIBDA (Non-GAAP)
$
1,689
$
1,562
$
2,952
$
3,101
(a)
The quarter and six months ended
June 30, 2020 include an impairment charge for FCC licenses of $25
million and the six months ended June 30, 2020 also includes
accelerated depreciation of $12 million for technology that was
abandoned in connection with synergy plans related to the merger of
Viacom Inc. with and into CBS Corporation (the “Merger”).
(b)
See notes on the following tables
for additional information on items affecting comparability.
SUPPLEMENTAL DISCLOSURES
REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions,
except per share amounts)
Quarter Ended June 30,
2020
Earnings from Continuing
Operations Before Income Taxes
Provision for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
937
$
(202
)
$
478
$
.77
Items affecting comparability:
Restructuring and other corporate matters
(a)
158
(34
)
124
.20
Impairment charge (b)
25
(6
)
19
.03
Programming charges (c)
121
(29
)
92
.15
Gains from investments (d)
(32
)
8
(24
)
(.03
)
Loss on extinguishment of debt
103
(24
)
79
.13
Discrete tax items
—
1
1
—
Adjusted (Non-GAAP)
$
1,312
$
(286
)
$
769
$
1.25
(a)
Reflects severance, exit costs
and other costs related to the Merger and a charge to write down
property and equipment classified as held for sale.
(b)
Reflects a charge to reduce the
carrying values of FCC licenses in two markets to their fair
values.
(c)
Programming charges primarily
related to the abandonment of certain incomplete programs resulting
from coronavirus disease (“COVID-19”) related production
shutdowns.
(d)
Reflects an increase to the
carrying value of an equity security based on the market price of a
similar security.
Quarter Ended June 30,
2019
Earnings from Continuing
Operations Before Income Taxes
Provision for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
1,239
$
(241
)
$
971
$
1.57
Items affecting comparability:
Restructuring and other corporate matters
(a)
7
(2
)
5
.01
Gains from investments (b)
(39
)
7
(32
)
(.05
)
Discrete tax items (c)
—
(32
)
(32
)
(.05
)
Adjusted (Non-GAAP)
$
1,207
$
(268
)
$
912
$
1.48
(a)
Reflects professional fees
associated with legal proceedings involving the Company and other
corporate matters.
(b)
Reflects a gain on marketable
securities of $28 million and a gain of $11 million on the sale of
an international joint venture.
(c)
Primarily reflects a tax benefit
related to the bankruptcy of an investee.
SUPPLEMENTAL DISCLOSURES
REGARDING NON-GAAP FINANCIAL MEASURES (Continued)
(Unaudited; in millions,
except per share amounts)
Six Months Ended June 30,
2020
Earnings from Continuing
Operations Before Income Taxes
Provision for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
1,594
$
(339
)
$
986
$
1.60
Items affecting comparability:
Restructuring and other corporate matters
(a)
391
(81
)
310
.50
Impairment charge (b)
25
(6
)
19
.03
Depreciation of abandoned technology
(c)
12
(3
)
9
.01
Programming charges (d)
121
(29
)
92
.15
Gains from investments (e)
(32
)
8
(24
)
(.04
)
Loss on extinguishment of debt
103
(24
)
79
.13
Discrete tax items
—
(3
)
(3
)
—
Adjusted (Non-GAAP)
$
2,214
$
(477
)
$
1,468
$
2.38
(a)
Reflects severance, exit costs
and other costs related to the Merger and a charge to write down
property and equipment classified as held for sale.
(b)
Reflects a charge to reduce the
carrying values of FCC licenses in two markets to their fair
values.
(c)
Reflects accelerated depreciation
for technology that was abandoned in connection with synergy plans
related to the Merger.
(d)
Programming charges primarily
related to the abandonment of certain incomplete programs resulting
from COVID-19 related production shutdowns.
(e)
Reflects an increase to the
carrying value of an equity security based on the market price of a
similar security.
Six Months Ended June 30,
2019
Earnings from Continuing
Operations Before Income Taxes
Benefit (Provision) for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
2,832
$
135
$
2,917
$
4.73
Items affecting comparability:
Restructuring and other corporate matters
(a)
185
(45
)
140
.23
Gain on sale of assets (b)
(549
)
163
(386
)
(.63
)
Gains from investments (c)
(77
)
16
(61
)
(.10
)
Discrete tax items (d)
—
(800
)
(800
)
(1.30
)
Adjusted (Non-GAAP)
$
2,391
$
(531
)
$
1,810
$
2.93
(a)
Reflects severance, exit costs,
costs associated with the settlement of a commercial dispute, and
other legal proceedings involving the Company.
(b)
Reflects a gain on the sale of
the CBS Television City property and sound stage operation.
(c)
Reflects a gain on marketable
securities of $66 million and a gain of $11 million on the sale of
an international joint venture.
(d)
Reflects a deferred tax benefit
of $768 million resulting from the transfer of intangible assets
between our subsidiaries in connection with a reorganization of our
international operations and a net tax benefit of $32 million
principally related to the bankruptcy of an investee.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL MEASURES (Continued) (Unaudited; in millions, except per
share amounts)
Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow
reflects our net cash flow provided by operating activities less
capital expenditures. Our calculation of free cash flow includes
capital expenditures because investment in capital expenditures is
a use of cash that is directly related to our operations. Our net
cash flow provided by operating activities is the most directly
comparable GAAP financial measure.
Management believes free cash flow provides investors with an
important perspective on the cash available to us to service debt,
make strategic acquisitions and investments, maintain our capital
assets, satisfy our tax obligations, and fund ongoing operations
and working capital needs. As a result, free cash flow is a
significant measure of our ability to generate long-term value. It
is useful for investors to know whether this ability is being
enhanced or degraded as a result of our operating performance. We
believe the presentation of free cash flow is relevant and useful
for investors because it allows investors to evaluate the cash
generated from our underlying operations in a manner similar to the
method used by management. Free cash flow is among several
components of incentive compensation targets for certain management
personnel. In addition, free cash flow is a primary measure used
externally by our investors, analysts and industry peers for
purposes of valuation and comparison of our operating performance
to other companies in our industry.
As free cash flow is not a measure calculated in accordance with
GAAP, free cash flow should not be considered in isolation of, or
as a substitute for, either net cash flow provided by operating
activities as a measure of liquidity or net earnings as a measure
of operating performance. Free cash flow, as we calculate it, may
not be comparable to similarly titled measures employed by other
companies. In addition, free cash flow as a measure of liquidity
has certain limitations, does not necessarily represent funds
available for discretionary use and is not necessarily a measure of
our ability to fund our cash needs.
The following table presents a reconciliation of our net cash
flow provided by operating activities to free cash flow.
Quarter Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net cash flow provided by operating
activities (GAAP)
$
795
$
260
$
1,151
$
1,189
Capital expenditures
(81
)
(75
)
(132
)
(142
)
Free cash flow (Non-GAAP)
$
714
$
185
$
1,019
$
1,047
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005283/en/
Press: Justin Dini
Executive Vice President, Corporate Communications (212) 846-2724
justin.dini@viacbs.com
Justin Blaber Senior Director, Corporate Communications
(212) 846-3139 justin.blaber@viacom.com
Pranita Sookai Director, Corporate Communications (212)
846-7553 pranita.sookai@viacom.com
Investors: Anthony
DiClemente Executive Vice President, Investor Relations (212)
846-5208 anthony.diclemente@viacbs.com
Jaime Morris Vice President, Investor Relations (212)
846-5237 jaime.morris@viacbs.com
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