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ViacomCBS Just Reported Strong Earnings. Here Are the Numbers to Know.

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Tiffany Hagler-Geard/Bloomberg

ViacomCBS

delivered on both its future and legacy businesses in the first quarter, sending shares higher on Thursday. The company added millions of streaming subscribers, and the broadcast of Super Bowl LV and the NCAA March Madness tournament drove a rebound in its TV segment. ViacomCBS delivered a beat on both the top and bottom lines as a result.

ViacomCBS stock (ticker: VIAC) was up about 2% in premarket trading on Thursday.

The company reported $1.42 cents in earnings per share on $7.4 billion in revenue for the first quarter, versus Wall Street analysts’ average estimates of $1.23 a share and $7.3 billion. Adjusted operating income before depreciation and amortization, ViacomCBS management’s preferred profit measure, was up 31% year over year at $1.6 billion, versus the $1.3 billion consensus.

ViacomCBS launched Paramount+, a rebranded and expanded streaming service, toward the end of the first quarter. That already had an impact: The company’s streaming subscriber base on Paramount+ and Showtime grew by 6 million in the period to 36 million, and streaming revenue was 65% higher than in the year-earlier period. The company expects to have up to 75 million streaming subscribers globally by 2024. Monthly active users at Pluto TV, an ad-supported streaming TV service, also increased by 6 million, to 50 million.

That subscriber performance will be enough to keep bullish investors satisfied with ViacomCBS’s streaming momentum. Management has ambitious plans to compete with the likes of

Netflix

(NFLX) and

Walt Disney

(DIS) in the streaming arena, and to direct billions of dollars into content investment for its services in the coming years. A broader international launch for Paramount+ is next up on the horizon.

Movie theaters remained closed for most of the first quarter, and the Paramount movie studio’s associated revenues were immaterial in the period. But that is a potential source of upside in future quarters if post-pandemic consumers are eager to return to theaters.

At ViacomCBS’ legacy TV and cable businesses, the Super Bowl and March Madness delivered a big quarter for advertising sales, despite its networks having fewer viewers than a year ago. The company’s channels include CBS, Nickelodeon, MTV, Comedy Central, and BET.

Advertising revenue excluding streaming was up 21% year-over-year, versus analysts’ predicted 12% increase. Despite a decline in cable subscribers—the cord-cutting trend isn’t going anywhere—affiliate fee revenue rose 5% from a year ago, while Wall Street had been predicting a decline. Those are the monthly fees that distributors like cable companies pay to include ViacomCBS’s networks in their bundles, and that broadcasters pay for transmitting its channels.

All together, it was a strong quarter for ViacomCBS’ TV businesses, and should silence the bears for at least a day. But the long-term picture for linear TV remains challenging, as consumers prefer streaming. ViacomCBS generated nearly two-thirds of its revenue in the quarter—and nearly all of its profits—from its legacy TV businesses. Streaming is growing fast, but has a long way to go to replace those revenue streams.

It has been a volatile start to the year for ViacomCBS stock, which has completed a round trip from $37 to $100 and back again. Short squeezes, a hedge fund blowup, and “meme stock” madness were largely behind the moves. The shares have lost about 3% after dividends since the start of 2020, versus a 32% return for the S&P 500. Media rivals Discovery (DISCA) and Disney have returned 12% and 26%, respectively, while shares of streaming pure-play Netflix are up 53% from before the pandemic.

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