Please ensure Javascript is enabled for purposes of website accessibility

ViacomCBS Reports a Loss While Trying to Expand into Streaming

By John Ballard – Feb 21, 2020 at 12:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fresh off a merger, management is looking past the recent weak results and eyeing a big prize in the lucrative streaming market.

Less than three months after Viacom and CBS completed a merger agreement, the new ViacomCBS (NASDAQ: VIAC) (PARA.A -3.93%) is moving swiftly to make a big splash in video streaming.

But the company just reported a loss for its first quarter since the transaction. The net loss of $0.44 per share was lower than analysts' estimates of $1.32, or $1.41 on an adjusted basis. That huge miss sent the shares crashing, but CEO Bob Bakish sees a bright future. 

During the fourth-quarter call, Bakish said, "ViacomCBS is one of the largest content producers and providers in the world, and that is an incredibly exciting and valuable place to be at a time when both consumer and commercial demand for premium content is only growing." 

A girl sitting on the couch with a bowl of popcorn.

Image source: Getty Images.

Having a vast content library helps

ViacomCBS has loads of content to be successful in streaming, including the Paramount film library, the Star Trek franchise, as well as content it can bring over from cable TV channels like BET, MTV, Comedy Central, and Nickelodeon. Overall, there are 30,000 episodes in TV and 1,000 movies it can monetize through streaming services, which Bakish calls a "House of Brands" product. 

The opportunity to unlock value from its content library extends beyond the CBS All Access service. For example, Nickelodeon struck a multi-year deal last year to license content to Netflix. Plus, ViacomCBS has the leading free streaming service in Pluto TV with over 22 million users. 

The company's domestic streaming and digital video business, including subscriptions and advertising, generated $1.6 billion in revenue in 2019, and management anticipates that growing between 35% to 40% in 2020. Longer term, "the opportunity is much, much larger," Bakish said. 

John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Paramount Global Stock Quote
Paramount Global
$21.49 (-3.93%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.