Paramount Global

Good day, everyone, and welcome to the ViacomCBS conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Executive Vice President of Investor Relations, Mr. Anthony DiComonte. Please go ahead, sir.

Good morning, everyone. Thank you for taking the time to join us for our third quarter 2021 earnings call. Joining us for today's discussion are Bob Bakish, our President and CEO, and Naveen Chopra, our CFO. Please note that in addition to our earnings release, we have trending schedules containing supplemental information available on our website. We want to 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. Reconciliations of these non-GAAP financial measures can be found in our earnings release or in our trending schedules. which contains supplemental information, and in each case, can be found in the investor relations section of our website. Now, I will turn the call over to Bob.

Good morning, and thank you for joining us. On today's call, I'll cover two key topics. First, I'll briefly discuss ViacomCBS's third quarter results. Then, I'll talk about streaming, where we're executing against a global strategy that leans into our distinct competitive advantages. and where our strong momentum shows how we're uniquely positioned for success. Let me start with the company's third quarter results, where we achieved another quarter of strong performance, as total company revenue grew 13% year over year, reflecting growth across all revenue streams. In affiliate, revenue grew as we continued to benefit from the expanded distribution of ViacomCBS's renowned brands. We also struck a series of distribution renewals, including with Charter, Cox, and just last month, Altice. And despite a tough comparison against political advertising in the prior year quarter, we grew advertising revenue in Q3, benefiting from an improved marketplace. Turning to streaming, we had another fantastic quarter of growth. The strength and momentum of both Paramount Plus and Pluto TV are clearly evident. and demonstrate the power of the strategy we laid out at our investor event earlier this year. Overall, quarterly global streaming revenue surpassed $1 billion for the first time, driven by robust growth in both subscription and advertising, including the addition of 4.3 million global streaming subscribers. These strong streaming results reinforce our conviction that our strategy is working. and that we're well positioned to capture the significant opportunity in the global streaming ecosystem. To that end, I want to remind you of three key enablers driving the ViacomCBS strategy, all of which are seeing in action. First, an incredible breadth and depth of compelling content, which is critical to attracting and retaining consumers globally. Second, robust distribution and marketing, which ensures we can build the broadest reach and awareness. And third, a strong and flexible financial engine to enable streaming investment, drive ROI, and maximize shareholder value. First, content. ViacomCBS is uniquely positioned with a vast library and production capabilities across genres, demos, and geographies, including world-class studios aligned with broadly recognized brands, which enables us to produce a diversity of compelling and engaging content on a global scale. Content that's already fueling Paramount Plus' growth. When we introduced Paramount Plus nine months ago, we told you it would be a differentiated product with broad appeal, composed of a full range of content, including news, sports, movies, kids and family, unscripted and original dramas. Our consumer data tells us the diversity of content on Paramount Plus is a huge attraction. and it has served as a key tool for customer acquisition, as well as for driving customer satisfaction, thus improving churn. As evidence, just look at the third quarter, starting with kids and family content, which was the top genre on Paramount Plus for both acquisition and engagement in the quarter. In fact, over half of our subscribers streamed kids and family content from our globally loved Nickelodeon brand. What's even more impressive is that content consumption was balanced across new originals and library, both film and television, including enduring franchises like SpongeBob and Paw Patrol, and young adult content such as the new iCarly. Movies are also proving to be a key attraction to the service. And as we continue to experiment with different release strategies, we're seeing success across all of them. This quarter, A Quiet Place Part II and Paw Patrol the Movie were the top two titles for acquisition and engagement on Paramount+. And the results were impressive, both in theatrical and on Paramount+. And following the global success of Paw Patrol the Movie, we're thrilled to announce a sequel, which will debut in 2023. In addition, a new Paw Patrol spinoff series for Nick and Paramount Plus is in development called This is ViacomCBS Franchise Management ratcheting up to the next level. Next week, we have another family film, day-and-date theatrical and Paramount Plus premiere, with Clifford the Big Red Dog, which is tracking very well. And finally, as we told you, we're also creating films exclusively for Paramount Plus. Just this past weekend, the latest paranormal activity, Next of Kin, debuted, and we like how this model is working, too. So clearly, movies are a hit for Paramount+. And they'll continue to be, because Paramount Plus is only one of a handful of streaming services in the world that can draw from an established and legendary movie studio like Paramount Pictures to provide it with a steady supply of world-class films. And then there's live sports. This quarter, we welcome back the highly anticipated return of the NFL and soccer, including UEFA, and the fans came back in droves. Look across it and you'll find that one-third of all active domestic Paramount Plus subscribers watch sports. And importantly, we're engaging with our sports fans after the game too, building out the content slates of those genres that we know sports fans love from our long history with broadcast and cable. This is critical to maximizing our ROI on sports. And our Paramount Plus content lineup is only getting stronger. The fourth quarter, we'll see our biggest scripted original lineup yet. First up, from Yellowstone creator and hit maker Taylor Sheridan, is Mayor of Kingstown, starring Jeremy Renner. Next is the Yellowstone prequel, 1883, starring Tim McGraw and Faith Hill. We'll launch both of these shows behind the most popular show on cable television, Yellowstone, introducing them to a weekly audience of over 7 million viewers to drive awareness and anticipation among a loyal fan base before they move exclusively to Paramount+. These are amazing series and will no doubt be fan favorites when released. And on November 25th, Kyle, Stan, Kenny, and Cartman will make their highly anticipated debut on Paramount+, as we exclusively premiere the first of our South Park made-for-streaming movies, titled South Park Post-COVID. And the second exclusive South Park made-for-streaming movie will stream in December. Moving from content to the second key enabler of our streaming success, which is leveraging ViacomCBS's robust distribution and marketing capabilities to build the broadest reach and awareness. We are benefiting from our broadcast, cable, and social reach, driving consumers to Paramount+. which is both an efficient and effective way to promote our new and existing series, movies, and events in streaming. Of course, that includes running spots and leveraging the social followings of our franchises and talent. But it's much more than that. I already mentioned what we're doing with Taylor's shows. We just moved Seal Team exclusively to Paramount Plus after four episodes ran on CBS. We moved Evil earlier in the year, and we're doing similar things outside the U.S. as well. In terms of streaming distribution, you'll see us continue to scale both new and traditional platforms. For example, we just announced a broad distribution agreement with T-Mobile to bring Paramount Plus Essential to the carrier's large customer base across the U.S. Suffice to say, we're thrilled to have T-Mobile welcome more fans to Paramount Plus's diverse and compelling content slate. But streaming is not just about the U.S. I really see our international footprint as a key accelerant for the company to unlock the very significant opportunity in streaming outside the United States. Here, we're rapidly making great strides. Last week, we launched Pluto TV in Italy, continuing its international expansion. This week, we announced an agreement to acquire a majority stake in Fox TeleColumbia and Estudios TeleMexico. which, when combined with our existing assets, including Chile Vision and Telefe, solidifies ViacomCBS as one of the largest Spanish language content creators in the world. On our last call in August, we announced a strategic partnership with Sky to launch Paramount Plus in key Western European countries next year, including the UK, Germany, and Italy, putting us on track to achieve 45 markets by the end of 2022. We have since announced Sky Showtime, a joint venture with Comcast, which will include premium and original content from both companies. Launching in 2022, Sky Showtime will reach an additional 20 European territories covering 90 million homes. The third enabler that positions us to win in streaming is our strong and flexible financial engine. Here, there are a number of elements to highlight. It starts with a streaming financial model based on multiple revenue streams, which enables us to monetize content both through advertising and subscription. Multi-revenue stream businesses have attractive characteristics when it comes to size and diversification. Multiple revenue streams made the cable network business extremely attractive. They will do the same for streaming, and the total addressable market for streaming is even larger. Let me put our streaming ad business in context for you. As the leading free ad-supported streaming TV service on the market, Pluto TV is winning in both scale and engagement, and it will be a $1 billion revenue business this year. Add to that global expansion and significant upside from our ad-supported version of Paramount+, and you have a long runway of streaming advertising growth ahead. And then there's subscription. This is already a huge market, and while it's still early in for us, our ViacomCBS business is well ahead of our long-term growth plan, and we like what we see ahead. Our financial strength and flexibility is also reinforced by our ability to leverage our streaming content investment across geographies and platforms. Global is obviously important for content ROI, and we are a global company, both as a content maker and as a network and streaming operator. Lastly, the combination of the strong cash flow of our legacy business, our aggressive approach to non-core asset dispositions, and our capital raise earlier in the year has allowed us to build a substantial incremental capital base to invest in streaming. As we said we would, we began deploying that capital in the third quarter to accelerate our streaming growth. These investments have attractive returns and result in more original series and movies for streaming. As I mentioned earlier, we have a great content pipeline for Q4 and anticipate we'll have a positive effect on our subscriber growth, which will be larger than in Q3. This will also be the case for Pluto MAUs in Q4. And as a reminder, we're also deploying this capital to drive our international expansion. Finally, I'm excited to tell you we will hold an investor event early next year to provide an update on our streaming business, including showcasing our content to come and providing more transparency around our plans and progress. With that, I'll hand it over to Naveen to share additional financial and operational highlights.