ViacomCBS Feedback Q3: OK today, but what about the long term?

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The near-term outlook for ViacomCBS’s high-growth streaming business appeared to be on track following its third quarter results results Thursday morning; however, the long-term picture remains blurry.

The media company said its overall revenue grew 13% year-over-year to $ 6.6 billion in the third quarter, and streaming revenue jumped 62% to topped $ 1 billion for the entire year. first time. ViacomCBS stock rose 1.5% during the pre-trade session before narrowing those gains and opening the regular session down 2%.

ViacomCBS added 4.3 million global streaming subscribers in the third quarter, bringing the total to nearly 47 million. In addition, the company announced a key partnership with T-Mobile, and eligible T-Mobile customers will get the ad-supported version of Paramount + free for one year starting November 9.

As VIP has already described, partnerships between major telecommunications companies and streaming services have recently been an important and mutually beneficial strategic decision.

Management said on the conference call that the most important thing for Paramount + right now is to raise awareness, and partnering with T-Mobile is an effective way to increase the number of Paramount + subscribers. In addition, the partnership will generate streaming advertising revenue. Streaming ad revenue in the third quarter jumped 48% from a year ago and 6% from the second quarter.

But if there’s one thing we’ve learned about the highly saturated competitive streaming space, it’s that businesses need big money to play. ViacomCBS’s long-term plan includes roughly $ 5 billion in content spending over the next several years, both linear and streaming, as it seeks to bolster its overall content arsenal.

So far, it looks like its balance sheet will be able to support such spending. ViacomCBS had about $ 4.8 billion in cash in the third quarter, up from $ 3 billion at the end of 2020, and debt fell to $ 17.7 billion in the third quarter, from nearly $ 20 billion at the end of 2020. end of last year.

On the surface, ViacomCBS delivered all closely watched aspects of its business in the third quarter and in the near term things look promising. Yet concerns remain.

For example, much of this cash flow has been built up by selling its non-core assets, which will not be sustainable in the long run if the business runs out of products to sell.

The third quarter results were enough to satisfy investors and will likely give the company more time to prove itself, but it should be remembered that from the second quarter there was heavy speculation that ViacomCBS would have to resort to mergers and acquisitions to survive the streaming wars, and Comcast looked like the most likely partner. As we learned by following Comcast Third Quarter Results, things are not really rosy for her Peacock streaming platform, That is.

It’s been about nine months since ViacomCBS rebranded its streaming service, so there are at least two more quarters (to one year) left before investors start to get excited. But the rumor mill can be ruthless.

CEO Bob Bakish said ViacomCBS will host an investor event early next year to highlight the streaming activity and showcase the content. While this is certainly a positive catalyst, it could be much more dangerous if there isn’t a lot of positive highlighting going on.


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