Q1 2021 ViacomCBS Inc Earnings Call
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Okay.
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And the earnings release, we have trending schedules containing supplemental information available on our website.
We also have a slide presentation for you to follow along with our remarks.
I want to refer you to the second slide and that presentation and remind you that certain statements made on this call are forward looking statements that involves risks and uncertainties. These risks and uncertainties are discussed and more detail and our filings with the SEC. Some of today's financial remarks will focus on adjusted results reconciliations of these non-GAAP.
Financial measures can be found in our earnings release or and are trending schedules, which contained supplemental information and and each case can be found and the investor Relations section of our web site now I will turn the call over to Bob.
Thanks, Anthony Good morning, everyone and thank you for joining us.
It's been about 10 weeks and so.
And our streaming strategy and go and our invest survey.
Since then we've successfully launched Paramount plus and March and I'm thrilled with where we are and screaming and overall.
Oh, and they just call I'll cover three topics.
First Viacom C B S. A strong Q1.
A quarter with clear operating strength and sequential improvement and key financial matrix.
Second the companies momentum and streaming.
Momentum, which is clearly visible and the metrics across to pay and premium and momentum, which gives us even more confidence and our strategy.
And third our path forward.
And overview of the content and we have coming and our plan to build on the early success and Paramount plus by leaning and even more.
And I'll hand, it over to intervene to provide additional financial and operational detail before opening it up to take your questions.
I'll start with Q1 2021 results.
And I'm pleased to say, we achieved another quarter of year over year growth and revenue.
And OIBDA and adjusted EPS.
Further demonstrating the strength of Viacom C B S and a related recovery from Kobe impact on the desk.
And I'll start with the power of our content and its enduring popularity with audiences.
And two one Viacom C. B S had the number one share of viewing in the U S across key demos.
And must have content.
And we've seen robust growth and global streaming revenue, which is up 65% year over year.
I'll dig into this momentarily.
On top of that we have substantially strengthened our financial position.
Benefiting from the $1 $7 billion of adjusted free cash flow, we generated in the quarter and fortified by the $2 7 billion and capital we raised from our equity offering in March.
Now I'd like to spend some time on our strategy and execution and streaming.
Starting with free where Pluto TV is the largest free AD supported streaming service across all metrics and monthly active users total viewing hours and revenue.
And this based on all publicly disclosed information.
Clearly the top of funnel continues to be robust, particularly as Pluto TV added $6 million menus and the quarter, bringing the total globally monthly active users to nearly $50 million.
Reflecting continued domestic growth and international expansion.
And that user growth is translating into strong advertising performance.
Okay and fell through.
And a fitting from a strong set of underlying drivers and over delivering across all metrics.
And premium streaming Showtime O T T. He had its strongest quarter ever.
Deliver and another record setting quarter and sign ups, while generating unprecedented and viewers shakes.
In fact, it was the best quarter ever for streams and hours washed on the service.
Viewers were highly engaged driven by kids like Shameless and your honor.
And looking forward the content lineup per Showtime over the next year and looks really strong.
And then there's Paramount plus.
As I said, and our Investor day, Paramount plus tons to the streaming space with real competitive advantages and.
And with a strategy that unique to the marketplace.
As a result of the strong launch a paramount plus on March 4th and the continued momentum and our other streaming services, we added 6 million new global sin streaming subscribers in the quarter bring.
Bringing our total global streaming subscribers to 36 million.
Needless to say, we're thrilled with these early results were.
Clearly seeing the benefit of putting the full power of Viacom C. B S behind Paramount slot.
The service benefited from a dramatically expanded and diversified contemplate communicated through a robust multi platform marketing campaign.
March was our biggest months ever for sign ups.
And consumption with strong with watch time proactive subscriber up 17% year over year.
The broadening of the service is clearly working in fact, almost half of subscriber engagement came from original as well as content from Paramount and our cable networks.
And our diversified content next including kids content content from M. T V and sports like soccer reduce the average age of new subscribers by six years and the corner.
Looking ahead.
Cited about the AD supported Paramount plus 499 tier which will be coming in early June per.
Streaming product offerings as well.
Stepping back from this it's clear our unique strategy across free and paid is working.
Which is why we're leaning in even more.
As you know, we completed a $2 $7 billion capital raise in March.
Levine will speak about this in greater detail and a few minutes.
But know that we did this transaction because we saw an attractive opportunity to raise capital to fund incremental content and other investments to further drive our streaming ambition.
And we've already begun to move on a few early opportunities in this regard.
I want to finish by speaking a bit more of what's to come particularly from a content perspective.
In February we laid out our content strategy for Paramount plus our strategy focused on key pillars that differentiate the service and the market.
Sports News kids, unscripted and reality scripted and movies.
And since launch that content has already started to scale and show real momentum.
There's no question that live sports and breaking news clearly differentiates Paramount plus.
And Q1 saw a series of important events and this lane, including the Super Bowl and wafer Enc <unk> men's tournament, the PGA tour, and <unk> and a new special with Meg and inherent.
These events were key engagement and sign up drivers and.
And looking forward, we're excited about our expanded soccer slate the return of the NFL and college football and more.
Speaking of football as you know in March we extended our partnership with the NFL for another decade.
This is a partnership with thrilled about and streaming rights are a critical component of that deal.
Among other things Paramount plus we'll have the flexibility to distribute NFL game on both the premium tier at 999, and the new $4 99 AD supported tier.
And as we announced in February and inside the NFL will be exclusively available on Paramount plus starting this fall.
And we're continuing to build critical mass and soccer.
CBS sports and Paramount plus recently acquired exclusive U S rights to Syria, the Premier Italian and Soccer League.
It's another major step and Thats, becoming the number one destination for soccer fans and an unbeatable portfolio and now over 1400 soccer matches each year.
With teams, including Juventus real Madrid and Chelsea.
And on top of all of the other marquee Cvs sporting events, we deliver.
Moving to kids, thanks to our Nickelodeon brand and massive library with we're now and characters and global franchises.
Scribes or discovering new content, we watching some of their favorite shows.
Since the Paramount plus launch we've seen robust audience engagement with kids and family content.
Michelotti and original like the Spongebob movie sponge on the run.
Camp Coral and as long as library content like Paw patrol with some of the strong performers in the quarter.
Driving sign ups and engagement.
And we're excited for the upcoming launches of rug rats, and Mei and Icarly and June <unk>.
New versions of two iconic mixed franchises that have fans pausing and social.
And unscripted and reality the fastest growing genre and streaming we saw solid early momentum.
Gross of original shows like MTV is the challenge all stars and real World Homecoming plus library shows like ink Master all had very strong engagement.
And we continue to ramp up reality series on the platform, including new exclusive originals, starting with cradle to the stage Star and Dave Grohl later this month, our new Rupaul and June and later in the year the return a behind the music.
And and scripted.
And with deals like the stand younger and Star Trek discovery are performing extraordinarily well.
And of the year, you'll start to see a substantially scaled the volume of new exclusive originals, including new drama series and let the first Yellowstone spinoff why $18 83.
Female led drama like why women kill and the good fight.
Comedy such as inside Amy Schumer, and Trevor Noah weekly and the game and original franchises like Star Trek Prodigy, and the fourth season and Star Trek Discovery.
In addition, we're expanding our global Paramount plus pipeline and.
As a first step in this endeavor, we're adding a number of original is produced by Viacom International Studios.
This will start as soon as this summer with scripted content produced and Latin America, and factual content produced out of the U K.
Finally, turning to movies, where we're poised to dramatically enhance the scale of our offering.
In fact, we will shortly kick off a mountain of movies and marketing campaign, where we will highlight the thousands of new movies were adding to paramount plus including blockbuster hits and exclusive original.
We start by greatly expanding the depth and the film library on the surface.
1000 additional movies are going live in early June with additional titles following through July bringing the total to over 2500.
Hits like the Avengers, and Sky fall will be available on the service soon as well as a bunch and great Paramount films like mission impossible gross protocol rocket man Sonic the Hedgehog and more.
And I am thrilled to announce that infinite.
Hi Fi thriller starring Mark Wahlberg, the premiere exclusively on Paramount plus in June.
That will be followed by the streaming premier of a quiet place part too after its 45 day theatrical run and we will follow that with the Paw patrol movie a treat for families eagerly awaiting a feature length version of the most popular preschool characters and the world.
In addition, new original movies like paranormal activity and in between we will premiere on Paramount.
By the end of 'twenty, one and.
And all of this as a preview to a substantial ramping up of original movies next year, where we expect to begin averaging and original movie a week and 2022.
We will have more on this and the months ahead.
And finally, we're moving to accelerate Paramount pluses global expansion.
We have already established ourselves in Canada, the Nordics and all of Latin America, including Brazil.
Next up is Australia on August 11th launch that will include Paramount movies, Showtime and Paramount plus original in addition to a cross section of product from our cable brands and network 10.
By the end of 2021, we will have launched subscription streaming services led by Paramount plus and 25 market.
And now we plan to almost double that by the end of 2022, when our global streaming footprints will reach 45 markets all in less than two years.
Net net we're thrilled with the performance of Paramount plus thus far our strategy is working.
Vesting and content with a disciplined approach we have a lot in the pipeline and we look forward to what's to come.
Now I'll turn it over to <unk> to cover the quarter's financial performance and greater detail.
<unk>.
Thank you Bob.
And everyone.
And as Bob mentioned, we had very strong financial results and the first quarter of 2021 across revenue adjusted OIBDA adjusted EPS and adjusted free cash flow.
Our results reflect robust growth and streaming will be.
Record subscriber additions and revenue growth of 65% as well as solid performance and our linear business.
Our first quarter streaming results are evidence of the early positive response, we've seen from the launch of Paramount plus and continued momentum and Pluto TV and Showtime OTT.
We added 6 million global streaming subscribers in Q1, marking a record quarter of subscriber growth and taking us to 36 million global streaming subscribers as of quarter and.
The significant majority of new subscribers were from Paramount plus and of those the significant majority where domestic customers.
The combination of subscriber growth and increased engagement and <unk>.
Help streaming subscription revenue grew 69% to $388 million.
These results include the impact of subscribers, whose free trials extended beyond quarter and al.
And international subscriber growth, where rfps are generally lower relative to domestic subscriptions.
Turning to streaming advertising the largest driver of growth came from Pluto TV, where we added $6 4 million global Pluto TV and they use and Q1 and now reached nearly 50 billion and they use globally.
Pluto TV engagement also continues to improve average monthly watch time for domestic user increased 28% year on year in the first quarter.
The increased engagement and.
Combined with domestic sell through rates that were up 600 basis points drove significant improvements include as domestic ARPA.
The evolution of Pluto's domestic business also gives us confidence that a similar pattern of international monetization growth can be unlocked as we scale globally.
Overall, Pluto TV revenue more than doubled in Q1 on a year over year basis for the third consecutive quarter.
The strong advertising performance from Pluto, TV and our other brand specific streaming sites and apps all of which are critical drivers of our IQ digital AD platform drove a 62% increase and streaming advertising revenue to $428 million.
Advertising revenue, which exclude streaming grew 21% in the quarter to $2 7 billion driven by the success of Super Bowl 55, and the return of the N C. Double a men's basketball tournament, neither of which aired on CBS and the prior year period.
Advertising demand continues to improve with strong scatter pricing relative to the upfront and last year's scatter market.
Affiliate revenue, which also exclude streaming grew 5% and Q1 to $2 1 billion.
We continue to benefit from distribution renewals signed in 2020 that included incremental carriage and improved economics, as well as contractual rate increases, which more than offset the decline and the number of pay TV subscribers.
Licensing and other revenue grew 11% to $1 8 billion and keep in mind that licensing revenue is reported on a consolidated basis. After the elimination of significant intercompany licensing transactions related to content and Paramount plus.
But the actual revenue was insignificant in Q1, as we had no releases and the quarter. We are looking forward to our first theatrical release and over a year with a quiet place two which debuts in theaters on May 28.
Total revenue was $7 4 billion up 14% year over year, leading to adjusted OIBDA of $1 6 billion up 31 per cent year over year.
And diluted EPS was $1 52 up 36% year over year.
The gross and adjusted OIBDA benefited from our strong revenue growth, partially offset by costs associated with our investments and Paramount plus.
Q1, adjusted free cash flow was $1 7 billion benefiting from OIBDA growth and the timing of cash production spend and favorable collections among other factors.
Moving to the balance sheet. During Q1, we redeemed $2 billion of debt and raised $2 7 billion of cash from the sale of equity and mandatory convertible preferred securities.
In combination with our strong free cash flow generation. These transactions resulted in $5 5 billion of cash on hand, and total debt of $17 8 billion at quarter and this translates to a 2.2 times net leverage ratio as of March 31.
I'd now like to share some insights regarding the second quarter.
We expect continued robust growth and streaming revenue with the Q2 growth rates for total streaming revenue streaming advertising revenue and streaming subscription revenue all accelerating versus the Q1 growth rates.
Streaming subscription revenue and particular will benefit from Paramount plus subscribers, who began free trials and Q1, but only start generating revenue in Q2.
We expect another quarter of strong double digit advertising growth as demand continues to improve and scatter pricing remains at all time highs.
We will also benefit from the N C double a final four and championship games, which didn't occur in the prior year period.
Turning to affiliate revenue, we expect to see modest acceleration in the year over year growth in Q2 relative to Q1 as we continue to benefit from several new distribution deals signed in 2020 and early 2021, which include increased pricing and expanded distribution.
For content licensing, we expect revenue to decline year on year, because Q2, 2020 included significant revenue and OIBDA from the licensing of South Park.
And regards to Q2 adjusted free cash flow, we expect some reversal of the working capital tailwind, which benefited Q1, largely driven by the timing of production spend and continued investment and Paramount plus.
Looking further out our enthusiasm for the potential of streaming continues to grow.
The streaming market is global and is growing fast and we are well positioned to take share.
Streaming presents a compelling market opportunity for two key reasons, one unit upside where streaming allows for a greater addressable base of viewers the linear and.
And two are two upside because streaming our food and have a more compelling long term trajectory than linear.
The unit upside is especially true internationally, where streaming allows us to reach beyond the pay TV universe, which has limited penetration and many international markets.
And when it comes to our people upside we think that over time the purse describe our economics of streaming can be accretive to linear when considering the combination of advertising and subscription revenue captured by our ecosystem of free pay and premium streaming services.
We see opportunity to drive Paramount plus subscription and <unk> higher as distribution channels and subscriber mix evolve and as we expand our content offering to deliver greater and greater value to customers.
And we see even more growth potential and advertising <unk> were both Paramount plus and Pluto TV.
And will benefit from increased engagement improved targeting dynamic ad loads and sell through optimization.
I would also note that in most instances outside the United States streaming economics are already are treated as international linear <unk> is materially lower than streaming ARPA today.
This attractive market opportunity is one of the primary reasons, we decided to raise capital and March.
We intend to use the additional investment firepower to take our streaming efforts to the next level building on the consistent momentum we've demonstrated over the past few quarters and leaning even more aggressively industry.
You will see us deploy new capital in four major areas.
First we intend to fund development of more original series and movies exclusively for streaming.
Second we will pursue incremental streaming sports rights.
Third we will look to accelerate international launches and market expansion.
And fourth we plan to further reduce the amount of content, we licensed to third party streamers and.
Instead preserving more of these assets for our in house screening services.
We're moving quickly to start deploying this capital and fact, Bob shared some of our early investment initiatives, including the addition of Syria football a paramount plus exclusive release of the movie incident.
And the acceleration of our international deployment plan.
Nonetheless, the bulk of our investments will occur in 2022 and beyond.
And the months ahead, we will have more to share on these additional investment plans as we aim to capture and even greater share of a growing long term market opportunity.
With that we can now open the line for questions.
The expanded product and if anything on the content side in particular is maybe surprised you compared to what you were anticipating and and how that might inform some of those investment decisions going forward and.
And then also on Pluto I think AD revenue growth is outpacing that's sort of a combination of of usage and per engagement growth engagement per user growth is that accurate and there's a couple of moving parts and there and can you kind of provide any context for what the upside is for.
Pluto, maybe compared to how you monetize your linear audiences. Thank you.
Sure Yeah, Thanks, Mike Nice meaty, two parter to open here. So in terms of your first question. We are Super excited about what we're seeing with Paramount plus and I'd say I'd start with the overwhelming learning from what we've seen is that our content strategy is working there's no.
Question that consumers are embracing and service spanning live sports breaking news and a mountain of entertainment.
And we can see that and the sub numbers as we mentioned, we added 6 million pay subs and the quarter globally, but the overwhelming piece of that was from Pete fair amount plus domestic.
And importantly that includes adding younger subs with an average age of new subs down six years. So.
Second point is Paramount plus it's showing great lines in terms of engagement and fact the percent of our daily subs, which are active actually percent of our total subs I should say, which are active on a daily basis.
And is up sequentially and up year over year and.
And we see strong double digit growth and hours per active user and fact, that's up about 17% in March vs. The prior year.
When you look under that in terms of content, which is obviously the key driver.
We continue to see the power of what work before that includes sports, where we obviously benefited from the superbowl and the empty double a golf and UEFA as we said it includes original including the standard star track and others.
And include Cvs content live content as strong as our shows like Ncis and Hawaii by about.
1000 hours and the U S.
We also look at sellout.
And that was actually up about 600 basis points year to year, but we're nowhere near 100% and so we do have substantial room to run.
And.
Equally importantly, if you look at AD load and Pluto TV versus linear that Pluto TV AD load is substantially below that of linear.
And then there is pricing.
We see advertisers with significant demand for in particular connected TV inventory and that in turn and supporting a great pricing dynamic.
We haven't actually pushed pricing on Pluto TV and the last two years. So it's really one of the most efficiently priced.
Product from the marketplace and that gives us a really great pricing lane going forward, when we choose to pull that lever.
Last thing I'd say is Pluto TV revenue now more than doubled for the third sequential quarter in a row.
Overwhelming driver of that is volume and that's a combination of <unk> and time spent again, we havent pushed the price lever and we havent pushed sellout much.
And Thats part of our overall streaming growth story, it's the biggest part and it's what helped push us to 62%. So net net we're in a great situation here.
And so many levels.
Thanks, a lot Mike operator, let's take our next question.
Thank you. Our next question comes from the line of Brett Feldman with Goldman Sachs. Please proceed with your question.
Thanks, and two if you don't mind. So just following up a little bit as you had noted the quarter and global subscriber number would include anyone that was still and a free trial period and with Paramount plus have been launched in early March anyone who signed up after the launch would have been in their free trial at the end of the quarter. So.
You are now two months past the launch many of those customers have gone through the free months some of them have gone through a paid months can you give us any insight into what the free to paid conversion is looking like and maybe how that has compared to what you've historically saw with CBS. All access and then Levine and thank you for the color around sort of the four areas Youre looking just would've lean.
And with your investment on streaming can.
And the 30 day free trial ended on March 31st and is no longer and the market.
By the way a little look forward past the end of the quarter, both conversion insurance improved and April.
Both vs. Prior year and vs March so net net we feel great about what we're seeing in this area I'm going to flip it tends to be and and the second for the second part of your question, but I do want to say he lives highlighted before investment areas.
Probably the biggest investment area when push comes to shove will be more originals. We're very excited about what we have and the pipeline on the series side and and we see our studios be that paramount be that Nickelodeon and be that MTV entertainment.
Ramping original studios as part of this capital raise and we're working on that and of course, we talked about movies and how we're ramp and that.
And really excited about moving too and exclusive original movie per week as we get part of the way into 2022.
So a lot going on there in terms of our plans to deploy that capital and Levine Yeah. So let me try to add a little color in terms of how we see the deployment of that capital playing out you heard.
Bob talk today about some of the ways and which were already starting to deploy that capital which is reminder, it's things like the addition of Syria football on Paramount plus.
The infinite movie.
Being released on Paramount plus.
Significant acceleration of our international expansion plans.
And starting to ramp up to getting and original movie each week on Paramount plus.
So those things will allow us to start deploying some of the incremental cash.
As I said and the second half of of 21.
Being said, we're obviously not going to spend two $7 billion overnight. So the bulk of the investment will happen over a multiyear period of time.
And we are continuing to be diligent and even.
Evaluating a variety of different investment options against one another.
And we're very focused on the ROI of those across all of the different buckets that we articulated so.
So I would expect that as we commit to some of those specific plans.
We will look to share more about the expense magnitude the timing of the cash vs. The expense, which could be different by the way.
And I think perhaps most importantly, how those investment plans affect our goals for subscriber and revenue growth, which is obviously.
The intent the motivation behind any of those investments.
Is to try to.
Exceed some of the goals that we've already set for ourselves.
One other point that.
I think it's important just to be aware of from a timing perspective as as I said, we are starting to fund some of those these early initiatives.
This year.
Though I'd note that our expectations for full year, OIBDA and free cash flow really haven't changed materially because of the over performance and Q1.
So that it's hopefully helpful to you in terms of thinking about some of the timing elements of this.
And Barbara operating let's take our next question.
Thank you. Our next question comes from the line and then Swinburne with Morgan Stanley. Please proceed with your question.
Good morning.
Bob can you talk a little bit more about what we should be expecting with the June product and a few.
Quite a relaunch or the new tier.
Anything to add on distribution partners or kind of marketing push and then and divina I'd like to just take another swing and one of the topics from the Investor Day, which is your content spending company.
Company wide.
Post the capital Reyes sitting here today can you is there any way to help us think about how you think about the overall growth and content investment for Viacom Cvs over the course of the sort of forecast period, you talked about it and Investor day. Thanks both.
Yeah. So we'll take the sequentially band so on the 499 product.
We're really excited about it and obviously brings life sports breaking news and amount of entertainment, including this expanded original slate to the market at a lower price point.
That's great from a consumer perspective for us and it also has cost advantages, which improved margins vs. The legacy $5 99 product, which we will be discontinuing from a new subscriber standpoint.
Step back from it and we believe two tiers of Paramount plus really maximizes its ability to draw.
The total addressable market, obviously, this lower price point at 499 and.
Is good for the more cost sensitive consumer and that helps maximize total subscribers from Paramount plus it also adds another important asset for us in terms of advertising inventory and.
It will become part of it too and because there's so much opportunity and high quality premium streaming digital advertising.
We see the product actually generating higher <unk> over time, and then the 999 product.
So it really is quite exciting there.
And I'd also point out that adding this to our quiver.
Broadened the portfolio, we have to work with distributors to meet their objectives really strengthens our position as a supplier of choice.
We add that to our existing offerings, both and free television and the Paramount and Showtime OTT MBT plus paint products. Obviously, it's at the lower end of the price point. So it could work for a subset of their consumer base.
It also related to the cost structure gives us more flexibility on promotions and so that's something we're excited to deploy and lastly, I'd note. It will launch in early June with broad distribution. So very excited about the 499 product and how it will continue to drive per amount plus.
Yes, so on the.
The content and expense.
As you will remember Ben from our Investor Day, we highlighted the fact that we expect streaming content expense to increase materially between 2020 in 2024.
And I would say that our plan for this year 2021 does incorporate some rapid progress in ramping up streaming content and in fact.
Streaming content expense in 2021, I think will more than double.
Relative to 2020.
And that's important to remember that not all of the expense and cash impact is incremental total company spend.
Because we do expect to continue to reallocate content from linear to either a shared context, where it's doing double duty on both linear and streaming or.
Exclude exclusively on streaming.
That being said, we do expect that what we've described to sort of roughly $15 billion of total company content expense to increase modestly over the next few years. So not the entire amount of the increase of streaming investment will not be incremental to the total company but.
There will be some inquiries now that's all pre capital Reyes.
With the additional capital we now have the ability to to invest more aggressively and so I would expect that streaming content expense and total company expense should be somewhat higher but very importantly, overtime generate return and the form of incremental subs and they use <unk>.
And revenue.
And as I said earlier most of that impact will really start to be seen in 22 and beyond and the peace that we're funding.
In 21.
As I said earlier I think is largely offset by some of the over performance, we've seen and Q1.
Great. Thanks been operating next question please.
Thank you. Our next question comes from the line and relaxing and quite Johnny with J P. Morgan. Please proceed with your question.
Hi, Thank you and just hang on and Paramount class and that we've seen coming up and kind of just experience and co forward and Gravitons and sad I'm understanding platform. During the pandemic and then you wanted to add the benefit of substantial marketing crashed and the rebranding.
Like kick Salivated subscriber growth and I'm curious, how you think how we should think about growth and stabs at Paramount plants over the next couple of quarters and then my final question and just sort of circling back to.
And your comments on international expansion also and Paramount pie.
And a bunch of markets and give us some great color, which I really appreciate I'm curious, where you see the biggest opportunity and what markets and outside of Spanish language are you ramping up and local language like your parents as well.
Yeah sure Alexia, let me take both of those so actually I don't think a comparison appear services and how they did or didn't pull forward subscriber growth with COVID-19 is really the right question for us and that's simply because Paramount plus just launch.
And it's so it's and a bit of a different situation with Panama and plus we're ramping up product for new consumers and so we're focused on generating awareness to those consumers and obviously converting them into subscribers to that and we're focused on executing against the content strategy that.
Articulated the specific content editions that we talked about coming in particular as 2021 and continues to play out as really the primary driver of growth.
And I would remind you that the good news on that tip is that we have a really exciting content slate coming whether you look at the kids space things like new version of Rug rats, New version of Icarly, both of which are and the current quarter and then of course Star Trek Prodigy later and the year and those are just examples scripted.
Scripted space, we're super excited about the first yellow to Yellowstone spinoff, that's something that franchise has a big fan base and so bringing a new version exclusively to Paramount plus.
And year will be great and that joins a whole bunch of other scripted shows some that are coming back like why women kill and Star Trek discover.
Reality really wheelhouse for us.
And related to that the music space, which is more general unscripted and this cradle the stage show.
We have with Dave Grohl is cool rupaul as a huge fan base, so a new version and Rupaul common etsy.
Et cetera, and we got comedies, we talked about movies are movies push.
Starting in June is massive and by the way it's true to the Paramount name. So I think movies, while the great home and be a great product for Paramount plus all this content to varying degrees will be supporting with marketing to make sure again consumers have awareness and we convert them and the subscribers.
The biggest piece probably will be our movie campaign, a mountain and movies, which is about to kick off. So you should look to us to continue to build our global sub base and actually accelerate revenue growth.
As the year goes on.
To your second question on international.
Look this is something that's near and Dear to my heart I look at the international streaming opportunity and it's clearly global and we're going after it as I mentioned will now be and 45 markets by the end of 2022.
Content is of course key to that and.
And this company really has critical mass across genres and across geographies see that starts with the Viacom media networks and that includes channel five network 10, 10, a day MTV Nickelodeon comedy Central they bring library, they bring local format derivatives and they bring made for market local content.
And that library gets a scale out of the gate the local content of format and original AD really critical elements force subscriber acquisition and retention and.
And many many key markets.
And chili these young ads and the other important piece to this equation.
To your question International content.
We'll also be an important part of fortifying the global Paramount plus pipeline, it's not just about Spanish I would highlight it's about using our international studio assets to create a robust pipeline for Paramount plus because those studio assets outside the United States bring benefits and.
Terms of access to incremental creativity.
Really attractive economics, and they help us drive volume further faster.
We mentioned and then I mentioned and a bit and my prepared remarks were at the very early stages and bringing this to bear what is going to be another exciting piece of the equation.
Add to that of course, we've got output deals that routinely come up give.
Giving us incremental access to content from Paramount and Cvs and Showtime. So put it together, we've got a lot of content to work with outside the United States for Paramount plus.
And a lot more is coming and when you look at international and Viacom CBS and Paramount plus it's not just the content story. The other differentiating piece here is are on the ground operations and neighboring real additional advantages unlock and that streaming opportunity.
And that starts with relationships, whether they are creative or commercial and you heard two examples of that coming to life and my remarks, with Mega Cobbler and Mercado Libra those are on the ground relationships that we were able to convert into streaming opportunity.
As we look out it's possible that will do some partnerships and select international markets additional markets.
But net net I look at this and and I'm Super excited about the global opportunity for Viacom Cvs and streaming and we really do see a strong runway of growth outside the U S.
Thanks, Alexia operator next question.
Thinking our next question comes from the line and French Greenfield with Latex partners. Please proceed with your question.
Hey, Thanks for taking the questions Uhm, a couple of them first I want to just dig in a little bit deeper into the comment about what people are actually doing on Paramount and plus.
It seems like Nickelodeon just looking at like sort of the top shows every day seeing things like Spongebob and poor patrol and you know.
It seems like they are driving a very substantial part of viewership and wondering like when you look at sort of the promotion you talked about sports and some of the stuff that you have and you certainly have had some original but it looks like the Kid stuff is really driving viewership I guess a big picture question is like you said double digit like is it half as kids like.
How substantial is kids programming and how do you get more viewership of some of the adult skewing fair and I'd be curious, how you're thinking about the marketing message cause it seems like kids has been a very powerful force for you and then I just want to follow up on two things. One you said you you haven't commented are are Paramount and <unk>.
Subs higher today, and 36 million could you give us any clarity on that and then I think you mentioned one movie one original movie a week in 2022 does that include the 45 day. After movies that are coming out and theaters or is that a dedicated original movie every single week I just wasn't clear and what you meant by that.
Sure Rich.
Lot there so on Paramount plus and kids.
Clearly kids is working for us and no. It is not half of the consumption again material double digit percentages, but nowhere near have what.
What's driving that relative to the other call. It genres and demographics is really the fact that we were able to at launch provide not only critical massive library product, which we could do and other categories, but but volume.
Exciting exclusive original link to known franchises and that in particular was the combination of the sponge, Bob movie, which obviously with a theatrical moving we chose to redeploy on Paramount plus and the new Spongebob series camp Coral we.
We had that ready to go because we had a movie for theaters and because we had a series that we're going to launch on Nickelodeon call. It linear.
As you look forward those kind of things start to happen in the other genres I mean, I'm very excited about what's going on with reality as you know we launched with real World New York. It was only a couple of episodes. So it wasn't really volume.
And MTV the challenge there there was a little more volume, but it's the first theories and the year plays out we basically have one new exclusive original and the reality space and unscripted space every month.
So that's more fuel for that tank and that should start converting that that genre lane for Paramount plus and we will.
Market that particularly leveraging our linear networks and social where we know those and bases are the other one I would really highlight is movies I mean, we have permanent we have movies on Paramount plus but Frank today, but frankly not that many of them that chick game changes dramatically in June where we first draw.
<unk> and additional thousand and they're a real movies, they're not deep library.
And then we laid and dune have.
Infinite, which and create a lot of noise I've seen the films Unfilmed people Love Mark Wahlberg.
And then that leads to more lot more I caught library again, not deep library, including pay one library.
In July and.
And then quiet place on a short window from theatrical leading into later in the summer poor patrols. So we got a lot going on and people love movies and premium television they love movies and streaming they already based on engagement love movies on Paramount plus we just don't have the volume where it.
'bout to have Uhm, let me use that to actually go to your third question for a second which is alone.
Movie a week doesn't include short window pay one or know yes. It includes short window pay one call that you know it doesn't picture of the year.
The original movie per week will be and exciting movie per week. It will be a range of different kinds of movies. Some of them will be blockbusters that are heavily marketed from theatrical and the quiet place to type films. Some of them. The vast majority of them will be made for Paramount plus those will be so.
First from Paramount through our Paramount players.
Studio or sub studio as well as through other.
Studio operations, we have including Nickelodeon as you know we have the awesomeness side of look and Nickelodeon, which has done a great series of why movies, including for streamers.
So really excited about deploying that and getting that to have something on the platform every week, that's fresh for someone to watch.
Your second question I have a mark here as of 36, plus yes, I think it was asking about.
The end of the quarter, we're not providing any numbers, but just remember that 36 is total global streaming subscribers rich not just the Paramount plus.
Alright, Thanks, a lot rich operator, we have.
Time from one last question.
Thinking our next question comes from the line of John Dangerous Most research and please proceed with your question.
Oh, Thank you Bob a lot of questions from was coming up about the value of traditional later and networks and the historical pricing amount of breaking as direct to consumer rollouts accelerate so I wanted to ask you to what extent do you see changes and pricing for T V or cable networks, as Paramount plus scales and to the tens of millions domestically.
And then separately how are you taking about to go to market strategy and program and budget going forward for Showtime is a range of 10 to 15 original knows a year and the ballpark or does that need to be stepped up.
Yeah sure John So uhm on your first question.
And start with the fact that Viacom Cvs.
Is a critically important content supplier to the Mvpds ecosystem, why do I say that we.
We do have the number one linear portfolio and share and we do lead on a range of key demographics.
Within that we have must have content, including sports, including the NFL.
Beyond that we have a really broad opportunity to work with them to create value and you see that for example.
As we deploy our assets and the advanced AD space and we have advanced that partnership with most of the large mvpds at this point and more recently, we've become a supplier to the app space with both free and pay streaming products and we supply those to both their set top box and.
Broadband only infrastructure things like flex so that gives us even more to work with and you look at 2020 and you look it through the first quarter of 2021, and you see that we're using that asset base.
Two consistently closed deal deals with companies that are formidable the likes of Comcast Verizon Youtube Hulu.
And when you take the <unk>.
Contractual when you take that and then you combine the contractual right inclusive increases for deals that are in flight, you've seen that drive affiliate growth and incremental distribution and linear.
So it is a powerful combination.
As we look forward, including to a world as you describe with <unk> and Paramount plus growing et cetera, we like our position we are among the most important content suppliers and the industry. We know how to get deals done. The addition of streaming including Paramount plus gives us even more to work with and.
And remember that helps us drive value for those customers and simultaneously helps them evolve their business as consumers increasingly embraced broadband.
Vs say set top box.
And our ability to do that and turn drives real revenue and asset value for Viacom Cvs.
So yeah negotiations might be a little more complicated than they have been in the past, but I feel very good about our asset base. We have the best affiliate team and the business and I feel great about the outlook of partnerships with Mvpds to your second question Showtime.
Showtime is on a really nice roll it produces great content and.
And as we look at the segmentation of the consumer in the United States. There's no question that there is a significant market for a more upscale more coastal more R rated offering that's with premium is and as you saw Showtime really continued it's great run and.
And the first quarter it had the top two scripted premium series with your honor and Shameless It had record ott's sub growth and growth and total subscribers and it had record engagement.
So it's working the fundamental driver here is content original in particular again shameless and your honor and the first quarter movies are important too as they always have been and the premium.
Category as we look forward with Showtime and because this is part of your question.
Like our slate, we currently have about 10 or 12.
10 pole series per year.
And we support that or or package that with three to five kind of lower cost original series.
You look what's come and it's the return of Dexter the return of billions and a new series called American Russ with Jeff Daniels and a new series called Yellow jackets with Juliette Lewis.
And Christina Ricci, it's that's pretty hairy kind of series, it's about a plane crash and Latin America, and a girl soccer team and kind of what happens and that we.
And we're doing a great project on first ladies you could think quasi crown of the U S.
And and starting with the all the Davis play and Michelle Obama.
Really excited about that we're going to do a radon and his movie. So the list goes on and that product by the way is not only good for Showtime and the U S where it will continue to drive engagement and performance and the category, but it's also going to increasingly benefit Paramount plus outside the U S, where showtime product as an integral.
Component of the offering.
By the way the movie outlooks, good for Showtime too and we have Optionality and house. So we're feeling great about Showtime both stand alone and is an integral part of Viacom Cvs, including and screaming.
So with that and.
And clothes and I just wanted to say a couple of things clearly very exciting time at Viacom Cvs, we have strong operating momentum we have amazing content and we have a streaming strategy that is really deliver and you see all of that and our first quarter and it really positions as well and moving forward.
As management, we have a focus on value creation and delivering for our shareholders. That's true overall and certainly with respect to streaming as we build on these strong early results and momentum, particularly with respect to Paramount plus it's differentiated product, it's a product with real competitive advantages and we're investing.
To deliver on its promise so thank you for your time today. Thank you for your support we look forward to continuing the dialogue as we execute and deliver on the Viacom Cvs growth opportunity and finally I'd like to thank all the Viacom Cvs employees for all they do every day to drive our company forward stay well everyone.
Thanks, Bob and thank you all for joining us that concludes our earnings call.
Thank you ladies and gentlemen that concludes today's conference you may now disconnect your lines and have a wonderful day.