#ViacomCBS beats profit forecasts on Super Bowl ads, streaming revenue

ViacomCBS, the home of “SpongeBob,” “Star Trek” and “Billions,” beat Wall Street’s first-quarter estimates, thanks to strong streaming revenue and advertising sales due to its broadcast of this year’s Super Bowl.

ViacomCBS said it added 6 million new streaming subscribers to both Paramount+ and Showtime, bringing the tally to 36 million. It did not offer a subscriber breakdown by service. The company added that it almost has 50 million subscribers in free, ad-supported TV service Pluto TV, which it acquired in 2019.

Despite the results, shares of the New York-based company dipped over 3 percent in midday trading Thursday.

The company, which includes Paramount Studios, CBS, Nickelodeon and Comedy Central, said net income rose 77 percent to $911 million, or $1.44 a share, from year-ago income of $516 million, or 84 cents a share. Adjusted EPS totaled $1.52, beating analysts’ estimates of $1.22. Revenue grew 14 percent to $7.41 billion, bolstered by a 65 percent jump in streaming revenue to $816 million, as well as a 21 percent gain advertising sales to $2.68 billion.

“Our early momentum in streaming is a testament to the breadth and relevance of our differentiated offerings, as well as our opportunities for growth through Paramount+, as we continue to ramp the availability of live sports, original series and blockbuster movies over the course of the year,” said president and chief executive officer Bob Bakish.

During the quarter, the company also took advantage of an unusually lively market for its stock and issued new shares to raise $2.7 billion in capital.

The company’s stock has been on a wild ride in recent months, hitting an all-time high of $101.97 on March 15, or rising nearly 800 percent from its 2020 low-point nearly a year ago. But shares precipitously cratered to the $40-range where it has hovered in recent weeks, after the Archegos Captial Management saga.

The New York-based company’s stock crashed after the stock sale on March 22.

At the time, little-known hedge fund Archegos, which was backed by some of the biggest banks, including Morgan Stanley, Credit Suisse, Goldman Sachs and JP Morgan, owned big positions in ViacomCBS. The tepid response to the stock sale alarmed the banks, which called on the fund for more collateral. Archegos defaulted on the margin call, which set off a scramble among Wall Street banks that had financed its trades to start unwinding them.

Since then, ViacomCBS’ shares have remained stable in recent weeks, causing analysts to reverse earlier calls to “sell” or “hold.” Citi analyst Jason Bazinet recently upgraded ViacomCBS to “buy,” citing its “digital pivot” as it invests more in streaming through its Paramount+ service.

Meanwhile, MoffettNathanson analyst Michael Nathanson gave the stock a “neutral” rating based on its stabilization after the Archegos blow up.

Nathanson said that while shares will be supported by a “simple growth narrative” from streaming, there are overall headwinds facing the company. The analyst pointed to increased competition in the streaming landscape as giants like Netflix, Disney+ and Amazon Prime Video continue to shell out the big bucks on content creation, as well as the acceleration of cord cutting, which impacts the firm’s TV business.