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    VIAC   US92556H2067

VIACOMCBS INC.

(VIAC)
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ViacomCBS : Management's Discussion and Analysis of Results of Operations and Financial Item 2. Condition. (Tabular dollars in millions, except per share amounts)

05/06/2021 | 10:06am EDT
Management's discussion and analysis of the results of operations and financial
condition of ViacomCBS Inc. should be read in conjunction with the consolidated
financial statements and related notes in ViacomCBS Inc.'s Annual Report filed
on Form 10-K for the year ended December 31, 2020. References in this document
to "ViacomCBS," the "Company," "we," "us" and "our" refer to ViacomCBS Inc.

Significant components of management's discussion and analysis of results of
operations and financial condition include:
•Overview-Summary of ViacomCBS and our business and operational highlights.
•Consolidated Results of Operations-Analysis of our results on a consolidated
basis for the three months ended March 31, 2021 compared with the three months
ended March 31, 2020.
•Segment Results of Operations-Analysis of our results on a reportable segment
basis for the three months ended March 31, 2021 compared with the three months
ended March 31, 2020.
•Liquidity and Capital Resources-Discussion of our sources and uses of cash;
cash flows for the three months ended March 31, 2021 and March 31, 2020; and of
our outstanding debt, commitments and contingencies as of March 31, 2021.
•Legal Matters-Discussion of legal matters in which we are involved.

Overview

ViacomCBS is a leading global media and entertainment company that creates content and experiences for audiences worldwide.


Stock Offerings
On March 26, 2021, we completed offerings of 20 million shares of our Class B
Common Stock at a price to the public of $85 per share and 10 million shares of
5.75% Series A Mandatory Convertible Preferred Stock ("Mandatory Convertible
Preferred Stock") at a price to the public and liquidation preference of $100
per share. The net proceeds from the Class B Common Stock offering and the
Mandatory Convertible Preferred Stock offering were approximately $1.67 billion
and $983 million, respectively, in each case after deducting underwriting
discounts, commissions and estimated offering expenses. We intend to use these
net proceeds for general corporate purposes, including investments in streaming.

Streaming Revenues
Beginning in the first quarter of 2021, we changed the categories we use to
disaggregate revenues to include streaming revenues, in order to align with
management's increased focus on this revenue stream. Streaming revenues are
comprised of streaming advertising and streaming subscription revenues.
Streaming advertising revenues are earned from advertisements on our pay and
free streaming services, including Paramount+ and Pluto TV, and from digital
video advertisements on our websites and in our video content on third party
platforms ("other digital video platforms"). Streaming subscription revenues
include fees for our pay streaming services, including Paramount+, Showtime
Networks' premium subscription streaming service ("Showtime OTT"), BET+ and
Noggin, as well as premium subscriptions to access certain video content on our
websites. Accordingly, our advertising and affiliate revenue categories exclude
revenues earned by our streaming services and on other digital video platforms.
The prior year has been reclassified to conform to this presentation.


                                      -29-
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                    Management's Discussion and Analysis of
           Results of Operations and Financial Condition (Continued)
            (Tabular dollars in millions, except per share amounts)
Operational Highlights - Three Months Ended March 31, 2021 versus Three Months
Ended March 31, 2020
Consolidated results of operations                                                        Increase/(Decrease)
Three Months Ended March 31,                      2021             2020                    $                     %
GAAP:
Revenues                                       $ 7,412          $ 6,499          $              913               14  %
Operating income                               $ 1,528          $   902          $              626               69  %
Net earnings from continuing operations
attributable to ViacomCBS                      $   899          $   501          $              398               79  %
Diluted EPS from continuing operations
attributable to ViacomCBS                      $  1.42          $   .81          $              .61               75  %

Net cash flow provided by operating activities

  from continuing operations                   $ 1,651          $   357          $            1,294              362  %

Non-GAAP: (a)
Adjusted OIBDA                                 $ 1,627          $ 1,245          $              382               31  %
Adjusted net earnings from continuing
operations
attributable to ViacomCBS                      $   961          $   690          $              271               39  %
Adjusted diluted EPS from continuing
operations
attributable to ViacomCBS                      $  1.52          $  1.12          $              .40               36  %
Free cash flow                                 $ 1,589          $   306          $            1,283              419  %


(a) See "Reconciliation of Non-GAAP Measures" and "Free Cash Flow" for
reconciliations of non-GAAP results to the most directly comparable financial
measures in accordance with GAAP.
For the three months ended March 31, 2021, revenues increased 14% to $7.41
billion, driven by CBS' broadcasts of Super Bowl LV and NCAA Division I Men's
Basketball Championship (the "NCAA Tournament") games. There were no comparable
broadcasts on CBS in the first quarter of 2020 as we have the rights to
broadcast the Super Bowl on a rotational basis with other networks, and the 2020
NCAA Tournament was cancelled as a result of the coronavirus disease
("COVID-19") pandemic. Taken together, these sporting events contributed 11
percentage points of the revenue increase. The revenue comparison also benefited
from 65% growth in streaming revenues, reflecting growth across our streaming
services, and higher licensing revenues primarily from the licensing of film
content. These increases were partially offset by the continued impact on
theatrical revenues from the closure or reduced capacity of movie theaters in
response to COVID-19.

Operating income for the three months ended March 31, 2021 increased 69% from
the same prior-year period. This comparison was impacted by costs for
restructuring and other corporate matters, which were items identified as
affecting comparability in the first quarter of 2020. See "Reconciliation of
Non-GAAP Measures." Adjusted operating income before depreciation and
amortization ("Adjusted OIBDA") increased 31%, primarily driven by the revenue
growth, partially offset by higher sports programming costs associated with the
above-mentioned sporting events and increased investment in our streaming
services.

For the three months ended March 31, 2021, net earnings from continuing
operations attributable to ViacomCBS and diluted EPS from continuing operations
increased 79% and 75%, respectively, from the same prior-year period. These
comparisons were impacted by items identified as affecting comparability,
including the aforementioned items impacting operating income, and for the 2021
period, a loss on extinguishment of debt and a gain on marketable securities.
Adjusted net earnings from continuing operations attributable to ViacomCBS and
adjusted diluted EPS increased 39% and 36%, respectively, reflecting the higher
Adjusted OIBDA. Adjusted OIBDA, adjusted net earnings from continuing operations
attributable to ViacomCBS and adjusted diluted EPS from continuing operations
are non-GAAP financial measures. See "Reconciliation of Non-GAAP Measures" for
                                      -30-
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                    Management's Discussion and Analysis of
           Results of Operations and Financial Condition (Continued)
            (Tabular dollars in millions, except per share amounts)

details of the items excluded from financial results, and reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.


We generated operating cash flow from continuing operations of $1.65 billion for
the three months ended March 31, 2021 compared with $357 million for the three
months ended March 31, 2020. Free cash flow for the three months ended March 31,
2021 was $1.59 billion compared with $306 million for the same prior-year
period. These increases primarily reflect the benefit from the broadcast of
Super Bowl LV on the CBS Television Network, higher collections, and lower
spending, including the benefit from cost savings, lower income tax payments and
lower payments for restructuring, merger-related costs and costs to achieve
synergies. Operating cash flow from continuing operations and free cash flow
included payments for restructuring, merger-related costs and costs to achieve
synergies of $104 million and $172 million for the three months ended March 31,
2021 and 2020, respectively. Also included in free cash flow for 2021 are
capital expenditures of $13 million associated with costs to achieve synergies.
Free cash flow is a non-GAAP financial measure. See "Free Cash Flow" for a
reconciliation of net cash flow provided by operating activities from continuing
operations, the most directly comparable GAAP financial measure, to free cash
flow.
Impact of COVID-19
The COVID-19 pandemic continues to impact the macroeconomic environment in the
United States and globally, as well as certain parts of our business. Movie
theaters have remained closed or have been operating at reduced capacity and as
a result, we rescheduled the theatrical release of certain films, and licensed
others to our owned or third-party streaming services. We are not able to
predict when or whether movie theaters will reopen at scale, the level at which
consumers will return, and when or whether revenues from theatrical releases
will be comparable to historical levels. Additionally, while production of our
television and film content has resumed, the delays caused by COVID-19 continue
to impact the level of content available for airing on our broadcast and cable
networks, streaming services, and for our licensing customers. Because of the
uncertain nature of the pandemic, including its impact on the current and future
global macroeconomic environment, we are unable to predict the magnitude of the
future effects on our business, financial condition and results of operations.
Reconciliation of Non-GAAP Measures
Results for the three months ended March 31, 2021 and 2020 included certain
items identified as affecting comparability. 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 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 for income taxes, net earnings from continuing
operations attributable to ViacomCBS or diluted EPS from continuing operations,
as applicable, as indicators of operating performance.
                                      -31-
--------------------------------------------------------------------------------


                    Management's Discussion and Analysis of
           Results of Operations and Financial Condition (Continued)
            (Tabular dollars in millions, except per share amounts)
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.
                                                               Three Months Ended
                                                                   March 31,
                                                                              2021         2020
     Operating income (GAAP)                                               

$ 1,528 $ 902

     Depreciation and amortization (a)                                           99          112
     Restructuring and other corporate matters (b)                                -          231

     Adjusted OIBDA (Non-GAAP)                                             

$ 1,627 $ 1,245



(a) The three months ended March 31, 2020 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.
                                                                                           Three Months Ended March 31, 2021
                                                Earnings from Continuing                                          Net Earnings from
                                                Operations Before Income        Provision for Income            Continuing Operations              Diluted EPS from
                                                         Taxes                          Taxes                 Attributable to ViacomCBS         Continuing Operations
Reported (GAAP)                                         $ 1,155                        $ (226)                           $  899                         $ 1.42
Items affecting comparability:
Loss on extinguishment of debt                              128                           (30)                               98                         

.16

Gain on marketable securities                               (20)                            5                               (15)                          (.03)
Discrete tax items (a)                                        -                           (21)                              (21)                          (.03)
Adjusted (Non-GAAP)                                     $ 1,263                        $ (272)                           $  961                         $ 1.52


(a) Primarily reflects tax benefits from the resolution of certain state income
tax matters and excess tax benefits from the vesting or exercise of stock-based
compensation awards.
                                                                                 Three Months Ended March 31, 2020
                                      Earnings from Continuing                                           Net Earnings from
                                      Operations Before Income         Provision for Income            Continuing Operations              Diluted EPS from
                                                Taxes                          Taxes                 Attributable to ViacomCBS         Continuing Operations
Reported (GAAP)                                 $  647                        $ (134)                           $  501                         $  .81
Items affecting comparability:
Restructuring and other corporate
matters (a)                                        231                           (47)                              184                            .30
Depreciation of abandoned technology
(b)                                                 12                            (3)                                9                            .02
Discrete tax items                                   -                            (4)                               (4)                          (.01)
Adjusted (Non-GAAP)                             $  890                        $ (188)                           $  690                         $ 1.12


(a) Primarily reflects severance and exit costs as well as other costs related
to the Merger.
(b) Reflects accelerated depreciation for technology that was abandoned in
connection with synergy plans related to the Merger.
                                      -32-

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© Edgar Online, source Glimpses

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