By Helen Coster and Neha Malara
(Reuters) - Media company ViacomCBS Inc (O:VIAC) 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.
The jump echoes the growth of streaming service Netflix Inc (O:NFLX), which also posted strong net subscriber additions in the quarter.
Shares were up nearly 20% at $17.80 in premarket 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.
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.
In March, the company withdrew its forecast for the year, warning of a hit from the novel coronavirus outbreak, but reaffirmed its goal of exiting 2020 with 16 million domestic streaming subscribers.
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.
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 (N:DIS), Apple Inc (O:AAPL) 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.
ViacomCBS said the fees it collected from cable and satellite operators rose 1.5% to $2.2 billion.
Adjusted earnings of $1.13 per share beat analysts' expectations of $0.96, according to IBES data from Refinitiv. The company reported a net income of $516 million, or 84 cents per share, compared with $1.96 billion, or $3.18 per share.