ViacomCBS reported a loss in the fourth quarter, its first as a new entity forged from the former Viacom Inc. and CBS Corp., demonstrating that the merged company faces many of the same tough operating conditions as its predecessors.
The New York owner of the CBS television network and cable outlets such as MTV and Nickelodeon said revenue fell 3% in the fourth quarter, with less money flowing in from advertising, publishing and movies. Revenue from affiliates proved to be a relative bright spot, increasing 1% in the period. Overall revenue fell to $6.87 billion from $7.09 billion in the year-earlier period.
For the quarter, the company said it posted a loss of $258 million, or 42 cents a share, compared with profit of $884 million, or $1.44 a share, in the year-earlier period. Results included a $589 million write-down for programming and a $468 million in restructuring charges. ViacomCBS missed Wall Street expectations for both earnings per share and revenue.
ViacomCBS leaders are under pressure to prove the merits of the merger to Wall Street. The company’s stock has taken a double-digit drop since the deal was completed in December. In early trading on Thursday, shares plummeted 15%.
Viacom and CBS merged in a bid to gain new traction in a media landscape that has been transformed by the rise of streaming video. The two companies individually seemed to small to compete with new giants like Walt Disney, enlarged by its recent purchase of Fox assets, or Comcast, which combined a massive cable footprint with the entertainment assets of NBCUniversal. And yet, ViacomCBS continue to grapple with many of the challenges plaguing its larger rivals: As audiences migrate to broadband video, viewership of linear TV continues to decline, making the process of monetizing audiences more complex.
ViacomCBS president-CEO Bob Bakish told investors the company plans to prioritize growth of its streaming platforms — CBS All Access, Showtime and Pluto TV — and rev up production at its content studios for internal outlets and external buyers. Bakish acknowledged that the fourth quarter results included “a significant set of merger-related items that were a headwind for expenses and cash flow.” He called it a transitional period for the company, asserting that its larger size would allow for “challenges to be mitigated in the combined company.”
ViacomCBS also revealed its U.S. streaming and digital video business generated around $1.6 billion in revenue in 2019, including subscriptions and digital advertising.
The company raised its target for post-merger cost savings to $750 million from $500 million as the company prepares for two rounds of layoffs of staffers.
Executives said they were placing new emphasis on a broadened version of the subscription video service “CBS All Access” that would add content from such Viacom cable assets as Nickelodeon and Comedy Central, as well as movies from Paramount, to the mix. Bakish said this new offering would have a “soft launch” later in 2020 and noted that employees were “hard at work” on the new product, which he likened to a “house of brands” that would include some of the company’s best-known content offerings.