By Helen Coster and Neha Malara
Media company ViacomCBS Inc on Thursday beat first-quarter revenue and profit estimates, as higher demand for its streaming services from people hunkered down at home more than offset a drop in advertising revenue due to the coronavirus pandemic.
Shares were up nearly 15% to $17.1 in morning trading.
ViacomCBS reported over 13.5 million domestic streaming subscribers, up 50% year-over-year, based on demand for original programming such as "Star Trek: Picard" on CBS All Access and "Homeland" on Showtime OTT.
"The appeal of our streaming and digital offerings has been made even more clear over the last six weeks, where we've seen a strong acceleration in momentum across both free and pay as audiences follow stay-at-home guidelines," Chief Executive Officer Robert Bakish said on a conference call with analysts.
Total advertising revenue declined 19% to $2.48 billion, due in part to the cancellation of the NCAA "March Madness" basketball tournament because of the pandemic.
Chief Financial Officer Christina Spade, speaking on the same call, said the company expects "significantly lower ad demand" in the second quarter, with advertising improving in the third and fourth quarters if businesses reopen.
ViacomCBS, which produces content for other streaming services in addition to distributing its own films and TV shows, has been preparing to launch a new streaming service that will build on CBS All Access. Bakish said the company is accelerating its plans for that service, with major changes coming this summer.
The company also announced that it entered into an expanded distribution agreement with Alphabet Inc's Google for YouTube TV subscribers, adding 14 new ViacomCBS channels to the service.
Spade said the company does not expect to release any new movies in the second quarter or until theaters reopen broadly.
Viacom and CBS -- controlled by Sumner and Shari Redstone's National Amusements Inc, -- completed their merger in December to better compete against Netflix, Walt Disney Co, Apple Inc and other media and technology giants. The company has said the deal would result in $750 million in cost savings, up from the previous target of $500 million.
Revenue fell 6.1% to $6.67 billion in the quarter ended March 31, but beat the average analyst estimate of $6.59 billion, according to IBES data from Refinitiv.
Revenue from domestic streaming and digital video jumped 51% to $471 million.
Adjusted earnings of $1.13 per share beat analysts' expectations of $0.96, according to IBES data from Refinitiv. The company reported net income of $516 million, or 84 cents per share, compared with $1.96 billion, or $3.18 per share.
(Reporting by Helen Coster in New York and Neha Malara in Bengaluru; Editing by Bernadette Baum and Paul Simao)