CBS CBS Corp

Media giant's profit falls as it ramps up spending on services ahead of CBS merger

By Benjamin Mullin and Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 15, 2019).

Viacom Inc.'s profit fell in the last quarter of its fiscal year as lower revenue and increased investment in new online streaming services weighed on its bottom line.

Profit at the media company -- whose portfolio includes TV Land, VH1 and MTV -- fell 22% from a year earlier to $307 million. Per-share earnings slid to 76 cents, down from 98 cents.

On an adjusted basis, profit totaled 79 cents a share, down from 99 cents a share a year earlier. Analysts polled by FactSet were expecting 76 cents a share in adjusted earnings.

Revenue was $3.43 billion, down 1.5%, but still slightly higher than analysts' consensus estimate. Total expenses rose 2.3%.

The company said the biggest factors in decreased profitability were investments in Pluto TV, its advertising-supported streaming service and one-time marketing expenses for the launch of BET+, a subscription video service launched earlier this year. The company said Pluto TV has reached 20 million monthly active users.

Revenue at the company's Paramount movie studio decreased 72% to $94 million, largely the result of a comparison to last year's summer blockbuster "Mission: Impossible -- Fallout."

On an earnings conference call Thursday, Viacom Chief Executive Bob Bakish said that the Paramount movie studio was profitable for the first time in four years, thanks in part to increased licensing and production deals with major video-streaming companies. Mr. Bakish said that Paramount licensed the rights to "Beverly Hills Cop," the 1984 action comedy film starring Eddie Murphy, to Netflix Inc.

On Wednesday, Viacom announced that it struck a deal with Netflix to provide new content from its Nickelodeon Animation Studio based on some of its most popular characters, including SpongeBob SquarePants.

Both deals with Netflix are in keeping with Viacom's strategy to feed major streaming services rather than attempting to build rival general-interest subscription streaming services in-house.

Also on the call, Mr. Bakish said the company returned to full-year growth for its U.S. advertising and U.S. affiliate sales businesses, two of its most important revenue streams.

"These are significant achievements, particularly in this dynamic media environment," Mr. Bakish said. "What is perhaps most important is that all of this reflects the delivery of promises we made to you, our investor base."

Viacom is combining with CBS Corp, and both media companies have been consolidating some of their operations. CBS reported earnings earlier this week and logged lower profit, hurt by merger costs and higher programming expenses. Wall Street hasn't reacted well to the merger, with Viacom and CBS shares down more than 20% since the August announcement.

Mr. Bakish said on the call that Viacom and CBS planned to close their merger in early December and are drafting plans for the combined company. He said the new company plans to combine its affiliate sales teams and come up with a cohesive plan for its direct-to-consumer streaming services.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

November 15, 2019 02:47 ET (07:47 GMT)

CBS (NYSE:CBS)
Historical Stock Chart
From Jan 2025 to Feb 2025

CBS (NYSE:CBS)
Historical Stock Chart
From Feb 2024 to Feb 2025