Covid-19 is still hitting media companies, but ViacomCBS’s streaming ambitions and ad revenue are looking good.
While advertising revenue fell 6% to $ 2.19 billion in the third quarter, that’s a huge improvement over the 27% decrease in the second quarter. In the TV entertainment segment, advertising revenue fell 1% to just over $ 1 billion, while the cable entertainment segment fell 11% to $ 1.1 billion. Affiliate sales rose in both segments, but content licensing income fell, resulting in a single-digit decline in sales.
CEO Bob Bakish painted a promising picture for the company in the last quarter and told investors today that he was “very pleased” with the results of an unusual upfront season. CPMs, which were up double digits at both Viacom and CBS over the past year, were in the “low single digits” through 2020, Bakish said, and the company held on to some inventory to take advantage of “historically high premiums.” The scatter market, which achieved higher returns than before Covid-19, resulted in double-digit growth in broadcast and high single-digit cables. There was also higher digital demand this year, which supported the growth in advertising for the free streamer Pluto TV.
Categories badly hit by Covid-19, including retail and auto, achieved tepid returns and helped reverse the dismal quarters for media companies. Coupled with CBS’s fall schedule, which is filled with recurring series as well as sports programming and a surge in political advertising, the company said the fourth quarter would be a bigger improvement.
“We’re encouraged by what we’re seeing and, by and large, the advertising is certainly headed in the right direction,” Bakish said.
The higher CPMs and the promising scatter market confirm trends that other media companies are also seeing. NBCUniversal reported last week that CPMs had “risen slightly” even amid a smaller than usual advance payment, while Fox Corp. announced Tuesday that a bet to hold back more advertising inventory for diversification than usual “pays off well”.
As ad revenue stabilized, ViacomCBS also touted the growth of its streaming segment ahead of a planned rebranding of CBS All Access to Paramount + in early 2021. Domestic streaming and digital video revenue rose to $ 636 million, an increase of 56 % Year Over Year The company’s subscription streamer sales, which include the soon-to-be-renamed CBS All Access and Showtime OTT, grew 78% year over year.
Bakish said both streamers saw “a material increase in time spent” including more than double the time spent on movie titles after CBS All Access was overflowing with new titles over the summer.
The advertising-financed free streamer Pluto TV recorded a growth in its monthly active users in Germany to 28.4 million and is expected to unlock 30 million active users per month by the end of the year. Worldwide the user base has grown to 36 million monthly active users.
More importantly, advertisers are spending money. “After logging the first day of ad sales of $ 1 million in 2019, it took Pluto 10 months to log the first day of ad sales of $ 2 million. After that, it took Pluto only a month to see its first day with $ 3 million, “Bakish said.
This should not be interpreted as a daily running rate, but it does show an optimistic development of the streamer, which will soon debut in Brazil, France and Italy. Bakish continued to show confidence in free ad-supported television (FAST) and ViacomCBS’s efforts to capitalize on it.
“The world is adopting FAST fast, so the leadership and growth of Pluto TV is a key component of our streaming strategy,” said Bakish. “And remember, as Pluto gradually builds an interconnected ecosystem, it will also serve as the gateway and funnel for our paid services.”