Comedy Central, BET, Nickelodeon coming to YouTube TV

Amid the coronavirus crisis, ViacomCBS managed a rare bit of good news: Comedy Central, BET, Nickelodeon, MTV and the Paramount Network are coming to YouTube TV.

The deal, announced Thursday, validates a key motivation to bring the two companies together: America’s most watched TV network, CBS, is strong enough to help lift the weaker Viacom channels when it comes to distribution on pay-TV systems.

Google Inc.’s YouTube TV launched three years ago with the CBS network as an inaugural partner, but the $49.99 a month streaming service didn’t see the need to have MTV, Nickelodeon and the other Viacom channels — until now.

The two companies announced an expanded distribution deal, that kicks in this summer and extends distribution for CBS, Showtime, CW and Pop and also adds 14 Viacom channels. YouTube TV, which has about 2 million subscribers and targets young adults who don’t have cable or satellite TV.

The added distribution “is a clear proof point for the Viacom-CBS combination,” ViacomCBS Chief Executive Bob Bakish said Thursday morning on a conference call with analysts to discuss first-quarter earnings. “ViacomCBS is a resilient company ... and our content is in demand.”

The merger of CBS and Viacom was completed in early December, and its stock has since cratered, falling 60%. But the company’s first-quarter earnings of $516 million, or 84 cents a share, exceeded Wall Street’s expectations. That was down from earnings of $1.96 billion, or $3.20 a share, a year ago.

Revenue of $6.7 billion, down 6% compared with last year, also exceeded estimates. (Last year, CBS televised the Super Bowl in the first quarter, which drove advertising revenue.)

Adjusted earnings were $1.13 a share. Analysts were expecting the company to post earnings of 95 cents a share.

The stronger-than-expected performance led to a rally of ViacomCBS’ shares Thursday. The stock jumped 15% to more than $17 a share in early morning trading.

The company’s Los Angeles-based Paramount Pictures unit turned in a solid quarter. Even though the studio was forced to postpone the release of its highly anticipated “Quiet Place II,” it benefited from “Sonic the Hedgehog,” which brought in $300 million worldwide. Studio revenue increased 11% to $730 million in the quarter.

Licensing revenue grew 18% to $442 million because the studio was cranking out content for other companies. For example, Paramount sold “The Lovebirds” to Netflix in the quarter.

The company said it was aggressively cutting costs, including imposing layoffs and offering buyouts, to achieve cost-savings from the merger.

Meanwhile, analysts have been concerned about a severe drop in advertising revenue because many businesses are shut down to slow the spread of the coronavirus. On Wednesday, Fox Corp. Chief Executive Lachlan Murdoch startled analysts by saying that local TV station advertising revenue was on pace to be 50% lower in the current April through June period, compared with a year ago.

Five categories of advertisers — automakers, movie studios, restaurants, retail stores and travel companies — have slashed their advertising.

“It’s not as bad as what Fox said, that’s for sure, but it’s not pretty either,” Bakish said, noting the ViacomCBS networks have seen glimmers of hope that advertising will pick up this summer. CBS is expecting the Professional Golf Assn. to resume its season in June.

ViacomCBS and its controlling shareholder Shari Redstone have faced scrutiny over the merits of the combination. Some investors have blasted the merger, because it led to a steep decline in the value of CBS, the stronger of the two companies. The two companies were worth more than $30 billion last year, but now the combined company is worth about $10 billion.

A sweeping class action lawsuit was filed earlier this year in Delaware Chancery Court on behalf of two Pennsylvania institutional investors. The suit contends the deal — to reunite the companies after 13 years apart — was forced to protect the fortunes of the Redstone family and its investment vehicle National Amusements Inc., not rank-and-file CBS shareholders. The Redstone family controls 80% of the voting stock of the combined ViacomCBS, and Redstone now presides over ViacomCBS as its chairwoman.