ViacomCBS CEO Bob Bakish On Streaming, Pluto Profits, Simon & Schuster

ViacomCBS

ViacomCBS’s Bob Bakish said he and chair Shari Redstone both bought stock last month in a show of faith that the shares are undervalued and investors to will start acknowledge that, with a few prods.

The company will start breaking out a new financial reporting segment just for direct-to-consumer, which Bakish said looks set to hit $5 billion in revenue this year based on fourth quarter numbers to day. “We’ll provide DTC segment, top and bottom line, separately from the legacy business and we think it’s going to help you understand better the value we are creating on the streaming and the traditional side. It will help you with sum of the parts,” he told investors at a virtual UBS media conference Tuesday.

He also let drop that free, ad-supported Pluto TV’s domestic operations are profitable this year at “at margins approaching broadcast.” Profits on the subscription side for the owner of Paramount+ “will take a couple of years, as it has for everyone, to get to profitability. But we look at our plans and we get to that as well.” Paramount+ is beating internal projections, he said. Executives will lay out the business in detail at an investor day planned early 2022.

DTC will see an uptick in net new subscribers in the fourth quarter (from 47M in the third) at a time when some other streamers have been struggling to grow after rapid gains during Covid.

Bakish also addressed a venture that isn’t going so smoothly – it’s proposed $2.175 billion sale of publisher Simon & Schuster to Penguin Random House owner Bertelsmann. The Justice Department has sued to block that deal as anticompetitive. The CEO noted that Penguin is the party on the hook to defend the transaction, including through litigation, and that’s what they will do, saying, “We look forward to resolving this as soon as possible.”

Bakish said ViacomCBS has raised about $5 billion in sales of non-core assets — including the recent sale of CBS Studio City lot in LA — which has and will help it invest in content, pay dividends, deleverage and look at “tuck-in acquisitions.” However, despite the spate of reported and rumored M&A in the space this year, Bakish said ViacomCBS will focus “overwhelmingly on organic execution.”

ViacomCBS shares are trading up nicely 2.8% at $32. But that’s a far cry from their 52-week high of over $100 in March. Investors are struggling over how to value media companies, focusing on a mix of subscriber growth (good), heavy content investment (scary) and scale (is a company big enough to compete?).