ViacomCBS Speeds Up Streaming Plans, Expects Tough Ad Market in Q2

ViacomCBS earnings

In its first quarter call as a combined company Thursday, ViacomCBS hailed its strength and said the coronavirus pandemic would accelerate its plans for subscription streaming services.

Advertising revenue grew 2% to $2.5 billion, excluding the impact of last year’s Super Bowl and the canceled NCAAA tournament. Otherwise, advertising declined 19% year over year.

Pluto TV’s monthly active users grew 55% to 24 million monthly active users. Domestic streaming subscribers, which includes CBS All Access and Showtime OTT, grew 55% year over year to 13 million subscribers. Streaming revenue grew 51% to $471 million.

“There’s no question the crisis has proven the power of streaming,” said CEO Bob Bakish on its Q1 earnings call with investors Thursday. “We saw strong momentum in streaming, momentum we will build on.”

April was Showtime’s best month ever in terms of minutes watched and total streams, and ViacomCBS said both CBS All Access and Showtime had strong conversion rates to paid subscriptions.

By the end of the year, ViacomCBS expects Pluto to reach 30 million monthly active users, and its paid subscribers to reach 16 million.

ViacomCBS also upgraded Pluto’s user interface this quarter, and in June will begin using Pluto to drive subscriptions to its paid products via click-through ads that encourage CBS All Access and Showtime sign-ups.

“You shouldn’t just think of [Pluto] as a stand-alone service,” Bakish said. “It will serve as an important complement to and funnel for our paid services.”

CBS All Access is also in the midst of shoring up its content assets. All Paramount movies were added to the platform, and Bakish knows that viewers will want live news, events and sports to make the paid platform more compelling.

ViacomCBS also announced an affiliate deal to bring its channels to YouTube TV this summer. That deal, one of a handful struck this quarter, is testament to the better negotiating power ViacomCBS holds as a combined company, Bakish said.

The impact of COVID-19 on Q2 advertising

Advertising sales is one of the three areas where ViacomCBS has been affected by the coronavirus pandemic, along with a TV and film production shutdown and the closure of movie theaters.

ViacomCBS didn’t share specific advertising forecasts for Q2, though competitor Fox said it expected a 50% decline and AMC Networks predicted a 30% decline. “It’s not as bad as what Fox is saying, but it’s not pretty either,” Bakish told investors.

ViacomCBS said its scatter market in May and June improved over April. Plus, one of its biggest clients placed a big order in the scatter market that benefits ViacomCBS more than its competitors.

But macro-level uncertainty about what’s ahead, the cancellation of live sports and brands’ business closures are all affecting advertising. Categories still spending in TV advertising include pharma, CPG, financial services and tech.

ViacomCBS is optimistic at this point that the second half of the year will see an improvement in advertising, based in part on the improvement to the scatter market it’s already seeing.

As for the upfronts, Bakish said they will be “later and longer than normal.”

“But we are ready whenever clients are, and deals will get done,” he added.

On the sports side, the PGA Tour will take place in June in Texas. ViacomCBS is seeing “strong demand” to advertise against the sports content, especially since most sports are canceled – a sign of what the advertising market might look like as familiar content and events start taking place again.

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