Q3 2019 Earnings Call
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[laughter] standby.
Good day, everyone and welcome to the CBS Corporation third quarter 2019 earnings release teleconference. Today's call is being recorded at this time I'd like to turn the call over to the executive Vice President of Investor Relations Mr. Anthony Diclemente. Please go ahead.
Thank you and good morning, everyone and welcome to our third quarter 2019 earnings call joining us with today's remarks are Joe I know, our president and acting CEO , Chris speed, our Chief Financial Officer always Joe and Chris is remark, who will open the call up to question.
Please note that during today's conference call results will be discussed on an adjusted basis, unless otherwise specified reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website.
Also note that statements on this conference call relating to <unk>, which are not historical facts are forward looking statements, which involve risks and uncertainties that could cause actual results to differ risks and uncertainties are disclosed CBS corporations FCC filing in connection with the pending merger with Viacom Inc. CBS has filed a registration statement.
On form S. Four which was declared effective by the FCC on October 20. So it contains important information regarding the transaction today's remarks do not constitute an offer to buy or sell or this workstation of any offer to buy or sell any securities or solicitation of any vote or approval a webcast of this call any earnings release.
Related to today's presentation can also be found on the Investor Relations section of our website at CBS Corporation Dot Com and.
And before we begin I want to note that the focus of this morning's call is to discuss CBS Corporation Standalone financial results.
With that I'll turn the call over to Jim.
Thank you Anthony and good morning, everyone. I'm pleased you can join us today.
Before we discuss our third quarter results I want to give you an update on our merger with Viacom.
As you may have hurt our S. Four has been declared effective and we are on track to close in just a few weeks in the meantime, we continue to announce a number of key leadership positions for Viacom CBS .
Moving to people, who oversee AD sales affiliate revenue and content licensing as well as our top programming and digital executives and we remain fully focused on integrating these two great companies.
As we head into the merger I'm very pleased with the way we have positioned CBS to thrive in this ever changing media landscape.
We have proven we know how to strategically invest in the right content on the right platforms to drive growth.
And the company will reap the benefits going forward.
Our front loaded content investment is the key reason, we are driving sustained revenue growth across direct to consumer content licensing advertising and our linear distribution revenue.
And in terms of dollars the biggest increased during the third quarter came from a revenue source that's been at the forefront of our growth plan retrans reverse comp and virtual NBP, DC, which were up 18%.
Despite CBS being off the air with 18 Ti for more than 20% of the quarter.
And now as a result of our new carriage deals our retrans revenue will accelerate here in the fourth quarter.
Plus about 50% of our reach branch footprint and about 30% of I reverse comp footprint are coming up for renewal next year.
Which means we will have another strong year healthy gains from Retrans and reverse comp in 2020, as we continue to reset the value of our content to current market right.
Our programming investment is also driving dramatic growth in another key part of our strategy direct to consumer.
D to C revenue was up over 39% for both the quarter and year to date as consumer shift from traditional bundles to skinnier bundles to CBS , all access and to Showtime oaky.
We are getting paid higher rates per sub.
Our rapid growth in direct to consumer means that our total subs are growing as well.
Even with the headwinds of the traditional MVP di business. When you include subs from virtual mbps, and our direct to consumer platforms.
Our overall subs at CBS , and Showtime grew 4% year over year.
Which means consumers are actively seeking out our content as they select the platform of their choice.
Our programming investment is also setting us up for growth and content licensing.
In a world where other studios are pulling back from the marketplace, creating a scarcity of premium content.
We will have an opportunity to determine how to best maximize the value of each of our content franchises.
So we are growing our lucrative programming library, and we can unlock the value of that programming when we think its optimal.
We now have more than 1000 episodes of CBS and Showtime content that we have not yet monetized from the likes of Ray Donovan and the fair to seal team and macgyver as well it shows that we have not yet fully monetized, including our global franchise and see I guess.
We are sitting in an enviable position as this opportunity only gets bigger for us.
At the same time, we continue to ramp up our production output.
We are currently creating an all time high of 94 shows up 20% from a year ago, and that's up more than 120% from what we did just five years ago.
So we are adding intellectual property to our content pipeline, which gives us even more strategic when doing opportunities in the years to come.
Meanwhile, our base business continues to be strong and stable.
Our underlying network advertising revenue was up 2% for the quarter and 2% year to date as well.
And the momentum continues here in the fourth quarter with strong scatter pricing and steady advertiser demand, which bodes very well for us as we close out the year and head into 2020.
And that's thanks to the CBS television network, which is having another great start to this season.
We have the number one drama and say, yes, the number one comedy in young Sheldon and five of the top eight new shows on television.
Meaning we will benefit from all five over a freshman series into the future and even better is we have ownership in for the five new shows and in more than 85% of our entire primetime schedule, which in turn will lead to more licensing revenue.
So with our balanced schedule of new and establish hits throughout the week, we can already predict that CBS will finish. This season in may of 2020 as Americas, most watched network for the 12 consecutive year.
We will also finished the year number one in late not yet again.
And we're very pleased to have reached multiyear contract renewals with both Stephen Colbert and James Corden, Steven and James have become the two most powerful voices in late night, and we now have them at CBS for years to come.
There is no secret that the ways in which people are viewing content have changed.
They are watching programming on their own time on the platforms of their choice and outside their homes.
And we are changing the business model to capture all of this on demand multiplatform viewing.
In one major example, starting next September Nielsen's measurement of out of home viewing will be included in our ratings. So we will have an opportunity to monetize this viewing for the very first time.
The NFL offers a great example here.
Nine weeks into this season, the NFL on CBS is off to a strong start up 6% year to date.
When you factor in out of home viewing we get an additional 11% lift to that increase.
And while sports is an obvious beneficiary. We're also seeing increases in out of home ratings in our prime time daytime and news programming, which we will begin monetizing next fall.
And Thats CBS news, our emphasis on quality reporting is leading to additional opportunities as well.
Example, because CBS news programming travels well around the world there is significant opportunity for us to grow our international revenue.
And moving the CBS evening news to Washington, DC, just as the political season kicks into high gear will help create premium content that we can monetize well beyond ratings.
This programming will also help feed CBSN, which leads to incremental digital advertising as well as subscription revenue as a complement to CBS all access.
CBS and is already on a number of platforms, including Pluto.
And I am pleased to announce today that we have a deal in place with Viacom to add more but channels on Pluto starting tomorrow.
And we continue to look at our content to see how we can expand our reach of our CBS properties on a growing number of platforms.
Net I'm going to take a minute to talk about the programming at our direct to consumer services CBS , all access and Showtime LPG.
This is the revenue stream that represents one of the biggest growth opportunities.
Each time, we add content to these services, we are accelerating our growth, reaching new viewers and reducing the number of customers who caused their subscriptions.
This progress was demonstrated the during the third quarter in a number of waste.
First.
We launched a new original series on all access why women killed starting Lucy Lu, which was just renewed for a second season and help drive subs for us during the quarter.
Next we had a summer reality show Love Island, which launched on the CBS television network and attracted a much younger audience on all access.
Where more than a third of the view is bins. The show. So this represents an example of our ability to expand our reach across multiple platforms.
In addition.
Combined streams from the NFL and the FCC are up nearly 60% over last year's strong growth.
All of these things along with the premiere of our new fall schedule on the CBS network helped make September this third highest month for new subs in the 60 months since we launched all access.
Meanwhile, the momentum continues here in the fourth quarter as we broaden our reach by adding children's programming to all access.
And the production is nearly complete for four more all access originals coming in 2020, including the highly anticipated Star Trek per card the true Prime drama interrogation and the stand based on Stephen King's bestseller selling novel.
And the investments we are making this year on these premium shows will fuel our subscriber growth on all access next year and beyond.
Well, we are also very excited about a new development for all access.
We will now have exclusive lie marquee sports for the very first time.
The wafer Champions League, including you wafer Europa League and the newly created.
But your European conference, we will be coming to CBS and CBS sports platforms with all matches available on all access and six and select gains airing on broadcast.
We will now have more than 400 matches per year spanning nine months across the calendar.
Soccer fans know these right represent some of the most prestigious and popular soccer tournaments in the world.
So we couldn't be more pleased that we won this hotly contested process.
We are currently finalizing contracts for this multiyear deal and will be built and we will be releasing more details in the coming weeks.
So with over 10000 episodes of library content.
Ketchup viewing from the most watched television network a live stream of your local news and syndicated content.
Big tent pole sporting events.
In a growing sleep.
Premium original series.
All access has something for everyone.
And it continues to differentiate itself by offering this unique value proposition to consumers.
Like all access our strategy of adding more programming is also paying off at Showtime.
During the third quarter, we launched three new critically acclaimed series the loudest voice city on a hill and on becoming a God in Central Florida.
And these original series are helping drive sub growth at Showtime OTT TT.
And there's more to come with big programming lineup that rolls right into next year.
Here in the fourth quarter, we have shameless Ray Donovan and a brand new version of the forward and in 2020, we have a number of new shows with lots of star power, including Penny dreadful City of Angels, starting Nathan Lane.
The good Lord Bird, starting Ethan Hawke in your honor starting Bryan Cranston.
It's such a strong programming slate, we expect continued strong growth on Showtime OTT GT in the months ahead.
Turning to local media, while political spending wont really kick in until next year. Our Boston stations are already receiving orders for the New Hampshire primary in February .
And our TV stations in Los Angeles, San Francisco, San Francisco, and Sacramento will all benefit in Q1 from the California primary moving from June the Super Tuesday in March.
Plus by early next year, we will have our local versions of CBS and in all the major CBS markets, where we have local news operations. So we can benefit from a more robust multi platform approach as we head into the next election cycle.
As we said before we expect 2020 to be a record setting year for political AD sales.
In publishing.
Simon and Schuster continues to create great content that inspires programming for our other businesses as well.
This includes the best selling book three women by Lisa Today show, which was recently picked up as a series by Showtime.
And we have a strong publishing lineup near in Q4, including the new edition of the Joy of cooking being released today just in time to help all of us prepare our Thanksgiving meal.
So.
Across our company.
We are focused on creating and distributing premium must have content.
And then you Epstein, we have a strong and consistent track record of monetizing that content in ways that generate incremental revenue and position us for long term success.
We were pioneers in achieving fair value for broadcasters in Retrans and reverse comp.
We were an early entrant in direct to consumer by launching CBS , all access and Showtime OTT GT.
We were leaders in working with Madison Avenue to fully measure and monetize all viewership.
And we strategically exported our shows to create global content franchises that resonate with viewers around the world.
What's most Ics exciting is how we've evolved our traditional businesses by embracing changes in technology and consumer habits and as a result, we have grown CBS into a pre eminent global multi platform premium content company.
I'd like to take a moment to thank all of our hardworking and dedicated CBS employees day in and day out they execute and deliver the success, we continue to see at our Great Company I.
I'm very proud of all that we have accomplished and as always we will keep our eyes on the future.
So as we prepare to close our deal with Viacom We view this as a new beginning a way to take all of our CBS growth opportunities and make them even bigger.
With that I'll turn the call over to Chris.
Thank you Joe and good morning, everyone.
Have you heard our strategy of increasing our investment in premium content continues to fuel our success.
We are driving revenue growth in retrans and reverse comp direct to consumer and constantly.
As a result, we continue to strengthen our business model by diversifying our revenue.
And with our proven record of creating hit shows and monetizing them across platforms and around the world. We are poised for continued growth as the media landscape continues to evolve.
Now, let me tell you more about our third quarter results.
Revenue of $3.3 billion grew 1% from last year, when we had record political spending as you heard. The result, the results were also affected by the temporary impact of a 19 declared with one of our distributors.
Combined these two items affected our revenue growth by two point.
Even though we delivered record revenue for the quarter.
With regard to our three key revenue sources affiliate and subscription fees were up 12% driven by healthy increases in revenue from Retran reverse.
Phil and BTD and direct to consumer as a result affiliate and subscription fees represented 34% of our overall revenue during the quarter, reflecting our more diversified business model.
In addition, our direct to consumer sub continued to grow strongly and were up 62%.
And as we continue to add more original content retention rates are increasing and churn rates are declining.
Content licensing and distribution revenue increased 1%, mainly due to higher sales to third party platform, including these into of insatiable, which dropped on Netflix last month.
By producing more programming for third party as well as for on platform. We are adding to our library programming that we can monetize in the years to comp.
Advertising was down 7% from last year, when we had record political spending as you heard underlying network advertising was up 2% for the quarter and 2% year to date.
And digital advertising for network content across platform grew 19%.
Operating income for the third quarter 2019, with $581 million compared to 736 million last year, which included an increase in non sports programming of more than 20%.
And our operating income margin was 18%, which is relatively steady with the first half of the year inline with the expectation contemplated in our long range guidance.
EPS for the third quarter came in at 95 cents compared with a $1.24 Q3 2018.
On a year to date basis. Our results are very strong revenue for the first nine months the year increased 7% to $11.3 billion with growth across our key revenue sources.
Advertising was up 7%.
Content licensing and distribution was up 3% and affiliate and subscription fee revenue was up 13%.
Operating income for the first nine months of 2019 was $2.1 billion compared with 2.2 billion in 2018.
Year to date, we have entered 40% more hours of original programming on Showtime and 40, 848% more hours of original programming CBS all access.
And we will reap the benefits of these investments well into the future.
And EPS for the first nine month 2018, with 3047 cents compared with 3070 cents last year.
Now, let's turn to the quarterly performance of our operating segment.
Entertainment revenue was up 4% $2.3 billion.
Increase was driven by strong growth in affiliate and subscription fee revenue, which was up 22%, reflecting solid gains in reverse comp subscriber growth CBS all access.
Content licensing grew 7% as we continue to see the benefits of our increased production output and licensing the third party platform.
Advertising revenues declined 5% as a result of the move of the PDH Championships Q2 from Q3 as well as a temporary impact of our third.
Entertainment operating income for the third quarter decreased to $302 million, which reflects the execution of our programming strategy.
And our cable network segment revenue grew 6% to $563 million fueled by increases in Showtime.
And as you heard we launched three new original series during the quarter.
So the only hill allowed us to away and on becoming a guidance central Florida, which contributed to the growth.
Cable networks operating income decreased to $196 million, driven by our content investment, including over 60% more hours of original programming. This years third quarter versus Q3 2018.
And for the quarter cable networks operating income margin with a healthy 35 person and on a nine month basis for 2019 with 33%.
Turning to publishing third quarter revenue with $217 million compared with 240 million a year ago. When we had the record breaking Simon and Schuster title fear by Bob Woodward with fell more than a million copies and first week alone.
For this years third quarter, best selling titles, including Institute by Stephen King and the book of that women by Hillary in Chelsea Clinton.
Listening operating income for the third quarter increased 2% $52 million driven by lower production costs.
In local media third quarter revenue decreased 6% to $406 million from Q3 2018, when we had record political ad sale.
This segment was also temporarily affected by our cares.
At the same time Retrans continues to be a strong growth driver for this.
Our local media operating income for the quarter decreased $96 million, mainly as a result of the decline in high margin political dollars.
Turning to free cash flow for the first nine months of the year free cash flow with $247 million compared with $1.1 billion in 2018.
Decrease was mainly driven by two items.
Our higher programming investment and a one time cash tax payments of $260 million from second quarter.
We have consistently said that the highest and best use of our cash to invest in our premium content and our direct to consumer platforms.
This is a key part of our long term growth plan.
Year to date, we have invested about 20% more in programming compared to last year in accordance with strategic plan.
The while we have reduced our debt and improved our leverage ratio our balance sheet remains strong. We have also grown our revenue and accelerated growth of our direct to consumer platform, which is our biggest growth opportunity.
And we achieved all of this well, creating valuable programming assets that we can monetize for years to come.
Now let me tell you what we see ahead for the CBS Corporation.
At our local media segment non political revenue is pacing to be up mid single digits.
At the CBS television network scatter is up more than 30% from upfront pricing here in the fourth quarter and we're seeing strong increases in all entertainment news Daypart.
In addition demand for our brand enhancing digital content remains very strong in Q4 scatter.
Advertisers and viewers alike are attracted to our strong direct to consumer platform.
Led by CBS , all access CBSN, CBS sports HQ, which have killed significant year over year volume growth.
Okay and pharma our strongest category.
And while it's clearly we have seen the beginnings of what we believe will be a very hot political market.
So overall, we expect a strong finish what is shaping up to be a record year for us and advertising.
In content licensing, we continue to add to our programming library and we have a lot of flexibility in ways that we can monetize.
As you heard we now have more than 1000 episode premium CBS Showtime content that we have not yet license.
Which gives us the big opportunity is our peers pulled back from the market.
In addition, we are now creating 94 soon which is 18 more than last year, including a number of new heads for CBS Showtime.
All access and the CW.
And almost 20% of these shows our for third party platform, which is another lucrative source of licensing revenue.
But with production well underway on a number of new original series, including nearly 70 episodes and so that's launched in 2020.
CBS all access and Showtime, we are making programming investment this year that will pay off for us next year and into the future.
Affiliate and subscription fees continue to grow strongly across the board and here too we are set up for continued success.
As we renegotiate deals that recognize the fair value of our content. We're on track to reach our target of $2.5 billion in Retrans and reverse comp revenue in 2020.
And as we continue to accelerate the growth of our direct to consumer services with our investment in premium content. We're also confident we will reach 25 million subscribers combined on CBS , all access and Showtime OTT Kiki in 2022.
In summary for the first nine months of the year, we've achieved record revenue for the CBS Corporation.
We believe our disciplined approach to investing in more premium content growth for the long term, while also maintaining a healthy margin strong balance sheet is a prudent strategy for future success.
We are positioning CBS and ultimately now Viacom CBS for continued growth across our key revenue stream in advertising content licensing and affiliate and subscription fees.
And we are set up for particularly strong growth in our biggest revenue opportunity our direct to consumer services.
All of this bodes extremely well for us as we enter into our merger with Viacom, which as Joe said will enhance our growth prospects. So that we can further compete in this rapidly changing media landscape.
During our February 2020 call, which will be our first call Viacom EMEA, we will be giving you pro forma guidance for 2020.
In the meantime, we look forward to closing our transformational deal with Viacom early next month.
And with that Matt we can open the line for question.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad Youre using a speaker phone. Please make sure. Your mute function is turned off to like your signal to reach our equipment.
Again that is star one if you'd like to ask a question and then the interest of time. Please limit yourself to one question and one follow up question.
Our first question will come from Ben Swinburn with Morgan Stanley . Please go ahead.
Thanks, Good morning.
I'd love to hear from you guys.
A little bit more about the content investment strategy and plans looking forward one of the things that I think the S. Four forecast at our brought to light is how mature.
Investing back in the business when you talked a bit about in your prepared remarks, but I just want to give you a chance to talk a little bit more about where that money is being directed.
Think about producing content for your own platform to third parties and maybe most importantly, Joe how you how you think about monetizing it because.
Yeah, obviously ramping production quite a bit across a lot of the different businesses at CBS , but I.
I think it'd be important to help us think about how you view.
Ultimately, earning attractive return on that.
And then I'd just add as a follow up but related on the sports sizable Champions League decision was really interesting how do you think about getting bigger in sports.
Either on the digital or how you think about it sports rights on digital versus linear platforms. As you look out over the next kind of three to five years. So it's really a contact question, but touching on both entertainment and sports.
Got it been.
Look I think.
Our investment I mean, we really view it as kind of success based capex.
So as you see we've been ramping up the spend I mean, just use all access as a as a barometer we had zero originals on watch US a few years ago. We didn't go from zero to 11, we went from zero to three to seven to 11. So we've really seeing the proof points along the way that justify that investment were.
Seeing hot much higher usage rates were seeing win.
When folks come to the service for an original any view to two originals the retention rate is significantly higher.
So we look at that and that investment is driving value not just on D to C, but obviously on advertising as well.
As well as content licensing I think you make the point that we can monetize these things down the road, we'd like to think about it we called strategic when doing so we have you know the content on all access you seen as do that with the good fight machine. The season, one come to the CBS broadcast network in the summer. So we're really trying to be strategic to drive more subscribe.
Yes to the direct to consumer services and like I said, the same applies really for Showtime so on the entertainment side.
In the investment spend is our best in highest use and we can see we continue to validate that with with every proof point on the sports side. We're really excited about this this opportunity I.
I think one of the reserves. We won the these rights was really because we had digital and broadcast because what we will do is we'll take certain matches Im kind of the championships. If you will the playoffs and air those on the CBS broadcast network, which has been the massive reach so that was very important to the league.
The league.
Didn't win for our bid so I think where you can have the volume and we're talking about over 400 games over on a nine month.
Season, it's just it's a lot it's a lot of games a lot of volume, we think it's going to reduce churn we take a drive subscribers. There were a loyal fans. It is obviously the.
Most populous sport in the world.
So we're going to continue to drive and make these prudent investments because again.
We are seeing the returns and we want to stay focused on being smart about that.
Hi, Ben if there is that I would just.
And the key word there that Joe that is prudent investment. So again, it's about the proof points leaning into what we see it's also doing it in a way that weekend and our cash flow and a smart way being our investment grade rating.
Thank you both thanks Ben.
Operator, we'll take our next question please.
Certainly and your next question will come from Jessica Reif Ehrlich with Bank of America Merrill Lynch. Please go ahead.
Thank you I have on our last both my questions now.
You have been unusually large amount of retrans and reverse comp yields coming over the next year and at least that some of the deals coming up our longer term deals, which implies there on the price in today's market. So can you talk about your approach to the next set of negotiation, including potentially bundling with viacom's channels and the second question is now.
I think you've announced all these management changes and for the New company.
Advertising your could everything as a Joanne Ross so it's probably the most experience.
In respect your advertising executive in the USA today can you talk about half your approach will be different with larger portfolio of assets.
Sure.
Thanks, Jessica in Retrans reverse comp that's right as I said in my prepared remarks on the retrench side, we have about 50% of our footprint and on the reverse comp side about 30%.
Really just timing we do have on one in particular deal that was longer term that has to be resets, but it's really to current market rates. So we don't we never negotiate deals as percentage increases.
We negotiate deals in terms of dollars incense and I think.
All of our distribution partners know what the current fair market value rate that we're getting four for reach Retrans. So I don't I don't think thats will be any surprise, but again, that's why we think it's going to be another strong year.
For Retrans and reverse compensation and I'd add that even looking beyond that we think we still have a ways to go to get paid for the value. We are we're bringing I think we offer a significant value to our distribution partners because we are the largest.
Network out there and so so we think it's really a win win relationship.
As far as a management changes I mean, you've seen them. We couldn't agree more we think Joanne is the best AD sales executive.
In the business she is going to look at the entire portfolio and the massive reach that these viacom CBS portfolio brings to our clients and we would expect to be paid fair market value for that and Joanne is going to deliver on that.
Great. Thanks, Jessica operator, we'll take our next question. Please.
And next we will hear from Alexia Quadrani with JP Morgan. Please go ahead.
Thank you so much on my question is really also on their renewals you're coming up on the expiration of a 10 year deal with Comcast Im assuming the one that's why the ones for next year I believe that agreement includes Showtime I guess, given the challenges occurring and another premium cable network right now with comp.
I guess, how should we think about this negotiation in terms of what it means for Showtime.
And just my follow up is really you've mentioned Nielsen's changed ratings next year I'm curious if you have any sense on how great it benefit that might be for advertising payback.
Yes, sure Alexia I appreciate it.
You are right, we do have an agreement coming up with Comcast next year and Showtime is part of that.
Our approach as as we said previously will be the same I don't believe all content is created equal where you can interchange.
You know shows for people people again, as we see seek out.
The content they want.
Again, I look at the track record of Showtime and the quality content. They have on the air as well as the CBS television network.
So again I think the approaches the same and we've been successful with every other distributor getting paid fair market value. So we would fully expect the same as far as Nielsen. So when the next broadcast season starts we will finally have out of home.
It is a significant lift.
In ratings.
For example, the Super Bowl.
Had an over 10% lift and that means that over a.
11 million people.
Watch that we're not in the rating so having that local.
National News is also another one lever not daytime content is also big lifts. So people are watching as we've said on their own time wherever they are and that that is a convenience and so we're.
Very excited and so.
You know kind of overdue to have Nielsen have this in the measurement for the currency that we were Joanne and her team can finally monetize so.
Stay tuned as we go into the upfront.
Next may.
Thank you very much thank you Alexia.
Thanks, Operator, we'll take our next now I will take our next question. Please.
Thank you we will now hear from Michael Morris with Guggenheim. Please go ahead.
Thank you good morning, a couple of topics first can you just talked about how demand is in the third party market right now for your off network content.
It seems to be maturing of course, both domestically and we don't have much visibility in our internationally. So if you could share that and also talk about kind of VR.
Incremental demand that we're expecting or that you're expecting from the third party services to the streaming services.
Companies like Disney in one or pull there is back are you starting to have those discussions.
In terms of making.
Duct available and then just on all access could you share any updated details on kind of mix of consumption. There Joe you talked about the NFL and FCC stream is being up 60% how is.
Live sports comparing to your premium content comparing to catch up viewing wondering if there's been any evolution there. Thanks.
Yes, sure Mike look demand continues to be strong, let let's break it down between domestic and international as you suggest international it's steady I think we approved proven.
Global hits that resonate.
Around the world clearly the streaming players there are new ones coming in I think the existing platforms are certainly going to want.
To see that consumption I think if you looked at the data for the US screaming players I think you'll see a lot of consumption on kind of off net shows.
But as important the entire cable marketplace relies on proven hit shows I mean again part of their.
Budgets are acquisitions, because that's where most of the ratings points are coming from so for their business model. So we think there is actually going to be a resurgence.
Lots of cable nets, you know.
For for the Beach front content that we produce so what we're doing is we're trying to be strategic and really pause as we closed our deal with Viacom to really think about how should we approach the marketplace. So like I said is I think the opportunities only grow from here, but I would say demand for international steady and strong.
US changing and we're pulling back for a moment as we see it really settled and making sure we're not under selling any of our our content.
We're all access I think.
The mix is I mean, I said it in my remarks is kind of everybody comes for a different reason, but what we're seeing is the folks who come for originals of stay longer. They live event live live television is also a differentiator for us. So the two drivers are really originals and wide.
Television all access by the ways. The only service that has live television news and sports on there because we reached it deals with our affiliates that we have locked in for for multi years. So we are the only network that has been able to figure out a model. That's a win win in so it really driving.
The consumption and then that's where you're going to see I think the kids product and all of our ketchup viewing and will and library, so really keeps them in the system and we're reducing what we call churn because.
We used to use that word churn because people would switch, but now it's actually should be called we said pause because it's what we call easy on easy off so it's easy to come in and out of the subscription services. So what we're trying to do is make sure. We have these subscribers year round, which just really improves the lifetime value of that.
Subscriber to our focus is really always on that lifetime value. The revenue that we can get from each subscriber and and we're seeing that and that's why we're making these these investments in these originals and sport so they're very targeted and those investments.
Great. Thank you Mike operator.
Operator, we have time for one last question.
Thank you and we will take our final question from Laura Martin with Needham. Please go ahead.
Hey, there so.
Wanted to follow up on a local streaming data could you talk about.
The numbers right it sounds like.
13 million SaaS, if you're up 4% and we now that the TV ecosystem is shrinking so I'd love your comments on whether that number sounds right for the two combined streaming services and then one of the things that a lot of your competitors are doing bundling in time have you thought about making it less easy to actually turned off and turn on the system.
And so you don't have this issue a pausing walk people and maybe with a price discount or with some other pass the assets that.
Yes offers.
And then finally just gone.
As we think about integrating with Pluto did I hear your line it sounds like maybe you're going to launch some new free services that we haven't heard about yet on the Pluto platform did I hear that line.
Yes, I think stay tuned for more thanks, Laura I stay tuned for more announcements as we're getting CBS content on onto a Pluto as we said starting tomorrow you will see some of that you'll see more of that.
In the coming weeks. So so we are focused on doing that inspur its win win because its greater distribution. It's the top of the funnel like like we'd like to say.
So it's really additives.
The making you more difficult for people to you know.
Unsubscribe.
Certainly I'm sure lots of media companies thought about it but I mean current marketplace is really again to consumers and control and so we're really earning their business based on the content. You know you know investment that we make in it and so we think they're going to want to subscribe. We think the content is going to be compelling at a price point that's really.
Has a high value utility to them.
The 4% went up to 4% I should I should clarify the I was adding in the traditional MPPD subs that we haven't Showtime in all all access.
The traditional business as well as direct to consumer and as well as virtual NV feed MPPD. So Laura that number just 4% just just so you are clear not 13 million. It's over 60 million you know so thats overall sub so why we think that's important because theres a lot of headwinds in into traditional business.
And our point is when you factor all of that and we are growing subs and so because obviously the direct to consumer will be growing it, but if you're losing it into traditional business.
It's offsetting so thats why we thought that statistic was meaningful that consumers are seeking out.
Our content on other platforms, which bodes well for our future. Thanks right. Thank you right.
Thanks, everybody thanks, everybody for joining us and with that this concludes today's earnings call.
And once again that does conclude the call for today. Thank you for your participation you may now disconnect.
Yes.
Thanks.
Yes.
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