ViacomCBS said its direct-to-consumer business lost about $1 billion in 2021, and the company expects losses to grow by another $500 million in 2022.
During the company’s presentation to analysts Tuesday, CFO Naveen Chopra said the company expects DTC content expenses to grow to more than $6 billion in 2023 from $2.2 billion last year.
“Given these Investments. We forecast D-to-C OIBITA [operating income before interest, taxes and amortization] losses will be greatest in 2023, but will improve in 2024 when our Global D-to-C businesses will start to see the benefits of our full content slate including Paramount, pay one movies,” he said.
Also: ViacomCBS Changing Company Name to Paramount
“And longer-term our model suggests that the D to C segment will approach margins similar to our current TV media business,” he added.
The company said it expects to have $9 billion in streaming revenue by 2024, up from its previous forecast of $7 billion, which included $1 billion in digital advertising that moves to the company’s TV media segment. The increase will be fed by increased prices for subscribers and growth in advertising, Chopra said.
Streaming has been a big bet for ViacomCBS and other media companies as technology evolves and consumers cut the cable cord. Chopra said it is crucial for ViacomCBS to pivot to streaming because the company’s pay TV footprint represents 300 million households, while streaming will help the company’s potential reach more than double to more than 600 million broadband homes. The company is also looking to create plans for mobile-only customers, unlocking an even larger market.
Content spending helps build the business. Over the past three quarters, as content selection expanded on Paramount Plus, domestic subscribers spent more time with the service, and as they spent more time with the service, retention increased. “So does the lifetime value of a Paramount Plus subscriber,” he said.
In the fourth quarter, ViacomCBS added 9.4 million streaming subscribers. The vast majority of new subscribers were for Paramount Plus, but Showtime OTT also had record additions in the quarter, he said.
By the end of 2021, Paramount Plus had 32.8 million global streaming subscribers. The streaming service generated $1.3 billion in revenue in 2021, up 115% from the previous year.
Global streaming revenue was up 50% to $1.3 billion in the quarter, with subscription growth up 84%.
ViacomCBS’s fourth-quarter net earnings were $2.06 billion, or $3.11 a share, compared to $$810 million, or $1.31 a share, a year ago. The earnings include $2.223 billion in net gains from asset sales.
Revenue rose 16% to $8 billion.
Ad revenue was up 1% to $2.6 billion and affiliate revenue rose 2% to 2.1 billion. ■
