Q1 2021 ViacomCBS Inc Earnings Call

[music].

For Mark.

One or for you to the second slide in that presentation and remind you that certain statements made on this call are forward looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Some of today's financial remarks will focus on adjusted results reconciliation for these non-GAAP.

Financial measures can be found in our earnings release or in our training schedules, which contained supplemental information and in each case can be found in 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 since we laid out our streaming strategy and go I'd heard of that survey.

That we successfully launched Paramount plus in March and I'm thrilled with where we are in streaming and overall.

Today's call I'll cover three topics.

First Viacom C B S as strong Q1.

A quarter with clear operating strength and sequential improvement in key financial metrics.

Second the companies momentum and screaming.

Momentum, which is clearly visible in the metrics across b pay in premium and momentum, which gives us even more confidence in our strategy.

And third our path forward.

An overview of the content, we have coming in our plan to build on the early success is paramount plus by leaning in even more.

Then 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, where I'm pleased to say, we achieved another quarter of year over year growth in revenue adjusted OIBDA and adjusted EPS.

Further demonstrated the strength Viacom C b S and a related recovery from COVID-19 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 in 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 of capital we raised from our equity offering in March.

Now I'd like to spend some time on our strategy and execution in streaming.

Starting with free where Pluto TV is the largest free AD supported streaming service across all metrics monthly active users total viewing hours and revenue.

This based on all publicly disclosed information.

Clearly the top of funnel continues to be robust.

Particularly as Pluto TV added $6 million used in 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.

Fitting from a strong set of underlying drivers and over delivering across all metrics.

In premium streaming Showtime O T T. He had its strongest quarter ever.

Delivering another record setting quarter and sign ups, while generating unprecedented viewership.

In fact, it was the best quarter ever for streams and hours washed on the service.

Viewers were highly engaged driven by kits like shameless and your honor.

And looking forward the content lineup for Showtime over the next year it looks really strong.

And then there's Paramount plus.

As I said in our Investor day, Paramount plus tons of the streaming space with real competitive advantages.

And with a strategy that unique to the marketplace.

As a result of the strong launch a paramount plus on March for and the continued momentum and or other streaming services. We added 6 million new global sin streaming subscribers in the quarter.

Bringing our total global streaming subscribers to 36 million.

Needless to say, we're thrilled with these early results for.

Well 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 multiplatform marketing campaign.

March was our biggest months ever for sign up for.

And consumption with strong with watch time per active subscriber up 17% year over year.

The broadening of the service is clearly working in fact, almost half a subscriber engagement came from original as well as content from Paramount and our cable networks.

And our diversified content mix, including kids content content from M. T V and sports like soccer reduce the average age of new subscribers by six years in the corner.

Looking ahead.

Cited about the AD supported Paramount plus for 99 tier which will be coming in early June per.

Paramount plus joins Pluto T V's premium digital inventory and anchor of ours, Viacom C. B S. I T advertising offering providing us with another powerful tool to showcase the full advertising power of Viacom C. B S and our ability to satisfy the growing demand among advertisers in the.

[noise] category.

Internationally, we launched Paramount plus in Latin America, Nordics in Canada, and these markets are also showing strong initial performance when it comes to both subscriber an engagement Trent.

Particularly from a content perspective.

In February we laid out a content strategy for Paramount plus.

Strategy focused on key pillars that differentiate the service in the market.

<unk>.

News kids.

Unscripted 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 plot.

And Q1 for a series of important events in this lane, including the Super Bowl the wafer the <unk> men's tournament, the PGA tour and <unk> in revenue special with Megan and Harry.

These events were key engagement and sign up driver 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 for 99 AD supported tier.

And as we announced in February inside the NFL will be exclusively available on Paramount plus starting this fall.

And we're continuing to build critical mass in soccer.

CBS sports and Paramount plus recently acquired exclusive U S rights to Syria the prim.

Amir Italian Soccer League.

It's another major step in us, becoming the number one destination for soccer fans with an unbeatable portfolio of now over 1400 soccer matches each year.

With teams, including Juventus real real Madrid and Chelsea.

This 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 renowned characters and global franchises subscribers are 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.

Nickelodeon original like the Spongebob movie sponge on the loan cash.

<unk> Corp, as well 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 in May and Icarly in June new versions of two iconic mixed franchises that have fans pausing and social.

And unscripted in reality, the fastest growing genre in streaming we saw solid early momentum exclusive.

Exclusive 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 starring Dave growth later this month, our new Rupaul in June and later in the year the return a behind the music.

And in scripted.

<unk> like the stand younger and Star Trek discovery are performing extraordinarily well.

At the end of the year, you'll start to see a substantially scaled the volume of new exclusive originals, including new drama series like the first Yellowstone spin off why $18 83.

Female led drama like why women kill and the good fight.

Comedy such as inside Amy Schumer, Trevor Noah weekly and the game and original franchises like Star Trek Prodigy, and the fourth season of Star Trek Discovery.

In addition, we're expanding our global Paramount plus pipeline.

As a first step in this endeavor, we are adding a number of original is produced by Viacom International Studios.

This will start as soon as this summer with scripted content produced in 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 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 of the film library on the service.

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 of great Paramount films like mission impossible growth Protocol rocket man Sonic the Hedgehog and more.

And I'm thrilled to announce that infinite a SIFI 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 in the world.

In addition, new original movies like paranormal activity in the in between we will premiere on Paramount plus by the end of 'twenty one.

And all of this as a preview to our substantial ramping up of original movies next year.

Where we expect to begin averaging an original movie a week in 2022.

We'll have more on this in 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 footprint 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.

<unk> 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 intervene to cover the quarter's financial performance in greater detail.

<unk>.

Thank you Bob good morning, everyone.

Bob mentioned, we had very strong financial results for the first quarter of 2021 across revenue adjusted OIBDA, adjusted EPS and adjusted free cash flow.

Our results reflect robust growth in streaming where we saw record subscriber additions and revenue growth of 65%.

As well as solid performance in 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 in 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 end.

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 helped streaming subscription revenue growth, 69% to $388 million.

These results include the impact of subscribers, whose free trials extended beyond quarter end.

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 in Q1 and now reached nearly 50 billion and they used 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 from.

Bind with domestic sell through rates that were up 600 basis points drove significant improvements in pluto's 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 in 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 in 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% in 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 in the number of pay TV subscribers.

Licensing and other revenue grew 11% to $1 8 billion keep in mind that licensing revenue is reported on a consolidated basis. After the elimination of significant intercompany licensing transactions related to content on Paramount plus.

<unk> revenue was insignificant in Q1 as we had no releases in the quarter. We are looking forward to our first theatrical release in 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% year over year.

Diluted EPS was $1 52.

Up 36% year over year.

The growth in adjusted OIBDA benefited from our strong revenue growth, partially offset by costs associated with our investments in 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 end. 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 in 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 in particular will benefit from Paramount plus subscribers, who began free trials in 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 for a 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.

In regard 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 in Paramount plus.

Looking further out our enthusiasm for the potential of streaming continues to grow.

The streaming market is global it 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 two are two upside because streaming our foods 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 in many international markets.

And when it comes to ARPA upside, we think that over time. The purse described for 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 arps, who hire 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 in advertising <unk> were both Paramount plus and Pluto TV.

We 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 accretive 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 in 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.

Stead preserving more of these assets for our in house screening services.

We're moving quickly to start deploying this capital in 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.

In the months ahead, we will have more to share on these additional investment plans as we aim to capture an 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 how that might inform some of those investment decisions going forward.

And then also on Pluto I think AD revenue growth is is outpacing that's sort of a combination of of usage and per engagement growth engagement per user growth is that accurate. There's a couple of moving parts in there and can you provide any context for what the upside is for.

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 it 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 a service spanning live sports breaking news at a mountain of entertainment.

We can see that in the sub numbers as we mentioned, we added 6 million pay subs in 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 set.

Second point is Paramount plus is showing great lines in terms of engagement in fact, the percentage of our daily subs, which are active actually percent of our total subs I should say, which are active on a daily basis.

Is up sequentially and up year over year.

And we see strong double digit growth and hours per active user in fact, that's up about 17% in March versus 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 the NCWA golf any way for as we said it includes originals, including the standard star track and others.

It includes Cvs content live content as strong as our shows like Mcis in Hawaii by about.

1000 hours in the U S.

We also look at sellout.

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 on Pluto TV versus linear that Pluto TV AD load is substantially below that of linear.

And then theres pricing.

We see advertisers with significant demand for in particular connected TV inventory and that in turn is supporting a great pricing dynamic.

We haven't actually pushed pricing on Pluto TV in the last two years. So it's really one of the most efficiently priced.

Products on 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 pushing us to 62%. So net net we're in a great situation here on so many levels. Thanks.

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, two if you don't mind, so just following up a little bit as you had noted the quarter end global subscriber number would include anyone that was still on a free trial period and with Paramount plus having 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. Thank you for the color around sort of the for areas Youre looking for sort of lean.

And with your investment on streaming can.

With 30 day free trial ended on March 31, and is no longer in the market.

By the way a little look forward past the end of the quarter, both conversion and churn improved in April.

Versus prior year and versus March so net net we feel great about what we're seeing in this area I'm going to flip it to intervene in a 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, we'll be more originals. We're very excited about what we have in the pipeline on the series side and we see our studios be that Paramount Bee that Nickelodeon B that MTBE 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 ramping that.

And really excited about moving to an 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 in Levine.

So let me try to add a little color in terms of how we see the deployment of that capital playing out.

<unk>.

Bob talked today about some of the ways in which we're already starting to deploy that capital, which as a reminder, it's things like the addition of serious football on Paramount plus.

The infinite movie.

<unk> released on Paramount plus <unk>.

Significant acceleration of our international expansion plans.

It.

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.

I would note that our expectations for full year, OIBDA and free cash flow really haven't changed materially because of the over performance in Q1.

So that's hopefully helpful to you in terms of thinking about some of the timing elements of this.

Thanks, a lot Brad operator, let's take our next question.

Thank you. Our next question comes from the line of Ben 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.

A relaunch or the new tier.

Anything to add on distribution partners or kind of marketing push and then naveen I'd like to just take another swing at one of the topics from the Investor Day, which is your content spending.

Companywide.

Post the capital raise sitting here today can you is there any way to help us think about how you think about the overall growth in content investment for Viacom CBS over the course of the forecast period, you talked about at Investor day. Thanks, both.

Yeah. So we'll take the sequentially Ben so on the for 99 product.

We're really excited about it it obviously brings live 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. It also has cost advantages, which improved margins versus the legacy 599 product, which we will be discontinuing from our new subscriber standpoint.

You step back from it we believe two tiers of Paramount plus really maximizes its ability to drive.

Total addressable market, obviously, the lower price point at $4 99.

Is good for the more cost sensitive consumer and thus helps maximize total subscribers for Paramount plus it also adds another important asset for us in terms of advertising inventory.

Will become part of IQ and because theres, so much opportunity in high quality premium streaming digital advertising.

We see the product actually generating higher <unk> over time than the $9 99 product.

So it really is quite exciting there.

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 in free TV, and the Paramount and Showtime OTT and BT 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 would note. It will launch in early June with broad distribution. So very excited about the 499 product and how it will continue to drive Paramount plus.

Yes, so on.

The content 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 investment in fact.

Streaming content expense in 2021, I think will more than double.

Relative to 2020.

Now it's important to remember that not all of the expense and cash impact is incremental to 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 described is 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 increase now that's all pre capital raise.

With the additional capital we now have the.

Ability to invest more aggressively and so I would expect that streaming content expense and total company expense should be somewhat higher but very importantly over time generate return in the form of incremental subs.

Use streaming revenue.

And as I said earlier most of that impact will really start to be seen in 'twenty, two and beyond and the piece that we're funding.

In 'twenty one.

As I said earlier I think is largely offset by some of the over performance we have seen in Q1.

Great. Thanks, Ben Operator next question please.

Thank you. Our next question comes from the line of Alexia Quadro <unk> with Jpmorgan. Please proceed with your question.

Hi, Thank you just staying on Paramount.

From your competitors experience, a pull forward and growth in income.

On their streaming platform during the pandemic and in Q1, you had the benefit of substantial marketing push in the rebranding.

Which accelerated subscriber growth I'm curious how you think how we should think about growth in subs at Paramount for us over the next couple of quarters and then my follow up question is just sort of circling back to your.

Your comments on international expansion also on Paramount.

I know you highlighted a bunch of markets you gave us some great color, which I really appreciate I'm curious.

Where you see the biggest opportunity what markets and outside of Spanish language are you ramping up in local language like your peers as well.

Yes, sure Alexia, let me take both of those.

Actually I don't think a comparison to peer services and how they did or didn't pull for subscriber growth with COVID-19 is really the right question for us and Thats simply because Paramount plus just launched and it's so it's in a bit of a different situation with Paramount plus we're ramping.

Product for new consumers and so we're focused on generating awareness to those consumers and obviously converting them into subscribers.

And we're focused on executing against the content strategy that I articulated the specific content additions that we talked about coming in particular as 2021 continues to play out is really the primary driver of growth.

And I would remind you that the good news on that trip is that we have a really exciting content slate coming whether you look at the kids space.

Things like new version of <unk>, New version of Icarly, both of which are in the current quarter and then of course Star Trek Prodigy later in the year and those are just examples.

Scripted space, we're super excited about the first yellow Yellowstone spinoff, that's something that franchise has a big fan base and so bringing a new version exclusively to Paramount plus.

Late in the 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 discovery.

Reality really our wheelhouse for us.

And related to that the music space, which is more general unscripted it's.

<unk> stage show.

We have with Dave Grohl is cool Rupaul has a huge fan base. So a new version of Rupaul common.

Et cetera, and we got comedies, we talked about movies are moving to push.

Starting in June is massive and by the way it's true to the Paramount name. So I think movies, all the great home and be a great product for Paramount plus all this content to varying degrees will be supported with marketing to make sure again consumers have awareness and we convert them into subscribers.

The biggest piece probably will be our movie campaign.

Mountain of 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 in 45 markets by the end of 2022.

Content is of course key to that.

And this company really has critical mass across genres and across geographies. So that starts with the Viacom media networks and that includes channel five network 10, Tennessee, MTV Nickelodeon comedy Central they bring library, they bring local format derivatives and they bring made for market local.

That library gets a scale out of the gate the local content of format and originals add really critical elements for subscriber acquisition and retention in many many key markets.

These young adds another important piece to this equation.

To your question International content.

We will 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 in <unk>.

Terms of access to incremental creativity really attractive economics, and they help us drive volume further faster.

We mentioned and I mentioned it a bit in my prepared remarks, we're at the very early stages of 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 giving.

Giving us incremental access to content from Paramount and CBS and Showtime. So put it together, we've got a lot of content to work with outside the United States for Paramount plus and.

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 our on the ground operations in neighboring real additional advantages unlocking that streaming opportunity.

That starts with relationships, whether they are creative for commercial and you heard two examples of that coming to life in my remarks, with Mega Cobbler and Mercado Libre those are on the ground relationships that we were able to convert into streaming opportunity.

As we look out it's possible that we will do some partnerships in select international markets additional markets.

But net net I look at this.

I'm Super excited about the global opportunity for Viacom CBS in streaming and we really do see a strong runway of growth outside the U S.

Thanks, Alexia operator next question.

Thank you. Our next question comes from the line of Rich Greenfield with Lakehead Partners. Please proceed with your question.

Hi, Thanks for taking the questions.

A couple of them first I wanted to just dig in a little bit deeper into the comment about what people are actually doing on Paramount plus.

It seems like Nickelodeon just looking at like sort of the top shows every day seeing things like Spongebob and Paw patrol.

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.

A big picture question is like you said double digits like is it half as kids like how substantial is kids programming and how do you get more viewership of some of the adults skewing fair I'd be curious how youre thinking about the marketing message because it seems like kids has been a very powerful force for you and then I just want to follow up on <unk>.

Things one you said.

You haven't commented our Paramount plus subs higher today than 36 million could you give us any clarity on that and then I think you mentioned one moving one original movie a week in 2022 does that include the 45 day. After movies that are coming out in theaters or is that a dedicated original movie every single week I just wasn't clear what you meant.

Net.

Sure Rich.

A lot there so on Paramount plus and kids.

Clearly kids is working for us and no. It is not half of the consumption.

Material double digit percentages, but nowhere near half.

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 in other categories.

But volume.

Exciting exclusive original linked to known franchises and that in particular was the combination of the Spongebob movie, which obviously was a theatrical movie we chose to redeploy on Paramount plus and the new sponge about series camp Coral.

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'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.

MTV the challenge there there was a little more volume, but it's the first CRA is as the year plays out we basically have one new exclusive original in 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 fan bases are the other one I'd really highlight is movies I mean, we have permit we have movies on Paramount plus but frankly today, but frankly not that many of them.

Game changes dramatically in <unk>.

June where we first drop an additional 1000 and there are real movies, they're not deep library.

Then we late in June have.

Infinite, which would create a lot of noise I've seen the films and film people Love Mark Wahlberg.

And then that leads to more lot more I call. It library again, not deep library, including pay one library.

In July.

And then quiet place on a short window from theatrical leading into later in the summer of Paw patrol. So we got a lot going on and people love movies in premium TV, They love movies and streaming they already based on engagement love movies on Paramount plus we just don't have the volume were.

The half let me use that to actually go to your third question for a second which is around.

A movie a week doesn't include short window.

<unk> or not yes. It includes short window pay one call that it doesn't picture of the year.

The original movie per week will be an exciting movie per week. It will be a range of different kinds of moving some of them will be blockbusters that are heavily marketed from theatrical the a quiet place two type films some of them. The vast majority of them will be made for Paramount plus those will be sourced.

From Paramount through our Paramount players.

Studio or sub studio.

As well as through other.

Studio operations rehab, including Nickelodeon as you know we have.

The awesomeness side of Nickelodeon, which has done a great series of why a 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.

Mark here of 36, plus yes, I think he was asking about.

At the end of the quarter, we're not providing any numbers, but just remember the 36% as total global streaming subscribers rich not just paramount plus.

Alright, Thanks, a lot rich operator, we have.

Time for one last question.

Okay.

Thank you. Our next question comes from the line of John <unk> with Wolfe Research. Please proceed with your question.

Thank you Bob a lot of questions on the coming up about the value of traditional linear networks and the historical pricing not a breaking as direct to consumer rollouts accelerate so I wanted to ask you to what extent do you see changes in pricing for TV or cable networks as Paramount plus scales into the tens of millions domestically.

And then separately how are you.

Thinking about the go to market strategy and programming budget going forward for Showtime is a range of 10 to 15 original notes a year in the ballpark or does that need to be stepped up.

Yeah sure John So.

On your first question.

I'd start with the fact that Viacom CBS.

Is a critically important content supplier to the Mvpds ecosystem why do I say that we do have the number one linear portfolio on 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 in the advanced AD space and we've advanced that partnerships with most of the large mvpds at this point and more recently, we've become a supplier.

Here to the App space with both free and pay streaming products and we supply those to both their set top box.

And their broadband only infrastructure things like flex so that gives us even more to work with and you look at 2020 and you look at through the first quarter of 2021, and you see that we're using that asset base.

To consistently closed deal deals with companies that are formidable the likes of Comcast Verizon Youtube Hulu.

And when you take the.

Contractual when you take that and then you combine the contractual rate increases increases for deals that are in flight, you've seen that drive affiliate growth and incremental distribution in linear.

So it's a powerful combination as.

As we look forward, including to a world as you described with DTC and Paramount plus growing et cetera.

Like our position we are among the most important content suppliers in the industry. We know how to get deals done. The addition of streaming including Paramount plus gives us even more to work with and remember that helps us drive value for those customers and simultaneously helps them evolve their business.

As consumers increasingly embrace broadband.

Versus say set top box.

And our ability to do that in turn drives real revenue and asset value for Viacom CBS.

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 in the business.

I feel great about the outlook.

Our partnerships with Mvpds for you.

For a second question Showtime.

Showtime is on a really nice roll it produces great content.

And as we look at the segmentation of the consumer in the United States. There is no question that there is a significant market for a more upscale more coastal a more automated offering that's what premium is and as you saw Showtime really continued its great run.

In the first quarter. It had the top two scripted premium series with your honor and Shameless It had record OTT sub growth and growth in total subscribers and it had record engagement.

So it's working the fundamental driver here is content.

Original in particular again shameless in your honor in the first quarter movies are important too as they are.

Always have been in the premium cat.

Category as we look forward with Showtime because it is a part of your question.

Like our slate, we currently have about 10 or 12.

10 pole series per year.

And we support that or package that with three to five kind of lower cost original series.

You look whats come in it's the return of Dexter the return $1 billion for New series called American Russ with Jeff Daniels, New series called Yellow Jackets with Juliette Lewis.

Kristina Ricky it's that's pretty hairy kind of series, it's about a plane crash in Latin America on a growth soccer team and kind of what happens in that.

Doing a great project on first ladies you could think quasi crown of the U S.

And starting with the Ola Davis planned Michelle Obama.

Really excited about that we're going to do a ray Donovan movie. So the list goes on and that product by the way is not only good for Showtime in the U S where it will continue to drive engagement and performance in the category, but it's also going to increasingly benefit Paramount plus outside the U S, where showtime product as an integral.

<unk>.

<unk> of the offering.

By the way the movie outlooks, good for Showtime to and we have Optionality in house. So we're feeling great about Showtime both Standalone and is an integral part of Viacom CBS, including in streaming.

So with that.

In closing I, just want to say a couple of things clearly very exciting times at Viacom CBS, we have strong operating momentum we have amazing content and we have a streaming strategy that is really delivering.

All of that in our first quarter and it really positions us well moving forward as.

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 a 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 CBS growth opportunity and finally I'd like to thank all of the Viacom CBS 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.

Yes.

Thank you ladies and gentlemen that concludes today's conference you may now disconnect your lines and have a wonderful day.