ViacomCBS’s disappointing earnings report for the fourth quarter of 2019 surprised many analysts, who now believe that the below-par results foretell a rather shaky future for the newly-merged business.
Factoring in the nearly $1 billion in merger-related costs and other expenditures, ViacomCBS posted 97 cents in adjusted earnings per share. That figure represents a 42% decrease from the $1.66 earnings per share for the same period last year. The consensus estimate on Wall Street was $1.41, prompting many to view the results as a negative sign.
Revenue decreased 3% from the same quarter last year to $6.9 billion. Analysts anticipated revenue of $7.3 billion for the quarter. It is interesting to note that a substantial amount of the year-over-year decrease stemmed from a $153 million revenue drop from content licensing fees.
Adding to its fourth quarter financial woes, ViacomCBS’s Paramount studios logged a loss from its meager film offerings for the fourth quarter. To add insult to injury, the company’s guidance for 2020 was lower than that which it had projected just months earlier. As a result of failing to meet expectations, many analysts adjusted their free cash flow and earnings per share predictions downwards.
In 2020, the company anticipates revenue of $28.9 billion to $29.5 billion, compared with $27.8 billion last year. Analysts project $29.7 billion in revenue. The company projects adjusted earnings per share of $5.15 to $5.50 in 2020, up slightly from $5.01 in 2019, while the Street estimates $6.02 for this year.
One difficulty for ViacomCBS is that it was late to the streaming game. Months before its merger, the digital streaming playing field was already starting to get crowed.
It’s difficult to discern with certainty whether the below-average results indicate ViacomCBS’s content offerings are insufficient to compete with existing or well-established streaming services, or whether,