ViacomCBS Plots Streaming Expansion With Sky Deal In Europe

The arms race to acquire subscribers for streaming services is well underway.

ViacomCBS’s total streaming subscribers jumped 6.5 million, for a total of 42 million subscribers across Pluto TV, Showtime OTT, BET Plus and Paramount Plus, which launched an ad-supported version in June.

ViacomCBS has a goal of reaching 65 million to 75 million global streaming subscribers – mainly through Paramount Plus – and more than $7 billion in streaming revenue by 2024, Chief Financial Officer Naveen Chopra said in February.

To expand its international subscriber base, ViacomCBS locked in a distribution deal with Comcast’s Sky to expand Paramount Plus in Europe next year, after the two companies were reportedly in talks about partnering to bolster their respective streaming platforms overseas.

The deal opens up distribution channels in the UK, Italy, Ireland, Germany, Switzerland and Austria and also unlocks exclusive Sky content for use on Paramount Plus, which provides the streaming service “with a very significant subscriber base at launch in these markets,” CEO Bob Bakish told investors.

Bakish said the company reached its goal to extend Paramount Plus into 25 international markets this year, and the company plans to push into 45 markets by the end of 2022.

“What excites me is our ability to work with a key partner, supporting both the traditional ecosystem and in transitioning consumers from linear to streaming,” he said. “Importantly, the deal preserves our ability to pursue DTC opportunities in these markets.”

Comcast CEO Brian Roberts didn’t rule out potential partnerships to “enhance its streaming position” internationally during the company’s earnings call last week, when he announced that Peacock would be made available free to 20 million Sky TV customers in Europe.

While he didn’t comment on a partnership with ViacomCBS, he said Comcast “looked forward” to finalizing agreements with other programming and distribution partners outside of Sky markets.

There has been speculation on Wall Street of Comcast acquiring ViacomCBS, though Roberts said, "We don't need M&A."

On Thursday, when asked whether ViacomCBS was being eyed as a potential merger partner, Bakish said, “We believe organic execution continues to be the right path for Viacom CBS and our shareholders.” However, he added, “we will always evaluate any opportunities through a shareholder value creation lens.”

Streaming a plus

Paramount Plus priced its ad-supported version in June at $4.99 per month, and Bakish said the company is “bullish” about the platform.

Paramount Plus fueled ViacomCBS's overall subscriber growth, and the company will more than double its investment in streaming content this year. For example, ViacomCBS inked a multiyear deal with “South Park” creators Matt Stone and Trey Parker that includes original content on Paramount Plus for a reported $900 million. ViacomCBS’s operating income dropped 2% to $1.23 billion due in part to content and licensing expenses.

Bakish said the ad-supported version of Paramount Plus and original content played a big role in securing major upfront deals.

“We’re beginning to see the massive potential,” he said.

ViacomCBS’s total global streaming revenue increased 92% YoY to $983 million; streaming advertising revenue leaped more than 100% to $502 million. Subscription revenue jumped 82% to $481 million.

Q2 streaming ad revenue growth was led by Pluto TV, he said Thursday, which saw its monthly active users grow 2.8 million to more than 52 million and revenue increased 169% year-over-year. Paramount Plus, Showtime OTT and BET Plus also increased their subscribers, though the company did not break out specific numbers.

Pluto TV’s domestic average revenue per user more than doubled YoY and saw double-digit increases in CPMs, reflecting strong demand for Pluto TV inventory, the Q2 launch of ViacomCBS’s open header bidding and its EyeQ unified ad buying platform for streaming.

Overall, ViacomCBS revenue increased 8% to $6.6 billion, while ad revenue – which excludes streaming – raked in more than $2 billion, a 24% YoY increase driven by the return of sports such as the NCAA Men’s Basketball Tournament.

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