ViacomCBS said first-quarter profit tumbled as the company suffered a 19% decline in advertising revenue due in part to the cancellation of the NCAA “March Madness” men’s basketball championship this year.
The New York owner of the CBS television network, MTV and the Paramount movie studio said overall revenue fell 6%, to nearly $6.67 billion, compared with $7.1 billion in the year-earlier period.
The company posted net income of $508 million, or 82 cents a share, compared with $1.946 billion, or $3.15 a share,in the year-earlier period.
ViacomCBS said ad revenue overall would have increased 2% if the company had not faced comparisons to a 2019 first quarter that included last year’s NCAA event as well as the broadcast of Super Bowl LIII. The NCAA canceled this year’s tournament, one of the nation’s most-watched sports events, due to the coronavirus pandemic. ViacomCBS shares broadcast rights to the games along with AT&T’s WarnerMedia.
Still, first-quarter results were better than what Wall Street had anticipated, and CEO Bob Bakish predicted the company, formed late last year by the merger of Viacom Inc. and CBS Corp., would rebound as the nation recovers from the contagion. “We are just beginning to tap into the potential of our combined assets, and our growing scale, audience reach and earnings power will become even more apparent as the market rebounds and we put the power of our portfolio behind our streaming strategy,” he said in a prepared statement.
The company saw noticeable gains in its streaming-video operations. Revenue from U.S. streaming and digital-video soared 51%, up to $471 million. ViacomCBS said U.S. streaming subscribers rose 50% to 13.5 million, with streaming venues CBS All Access and Showtime notching record levels of subscribers.
The ad-revenue shortfalls occurred at the company’s broadcast operations, where ad revenue was off 30%. Ad revenue was flat the company’s cable networks. Revenue from affiliates and distribution rose 1% overall across the company.
ViacomCBS has been under intense scrutiny from Wall Street, as the value of its shares have plummeted since the merger was set. Investors are concerned about the effect of the company’s cable operations, which are aimed at younger viewers and have seen viewrship erode as that demographic adopts mobile video and on-demand streaming, on the finances of the CBS TV network and the Showtime premium pay-cable operation.