Paramount Skydance Corporation (PARA) Earnings Call Transcript & Summary

Okay. Good morning, everybody, and welcome to day 3, Wednesday morning. I'm Ben Swinburne, Morgan Stanley's media analyst. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures or at the registration desk. We're really excited to welcome back to the conference, Bob Bakish, but back for the first time as President and CEO of the newly formed ViacomCBS. And before that, Bob was President and CEO of Viacom since December of 2016. Bob, thanks for being here.

Great to be here, Ben.

So I want to talk -- I want our conversation to really center around the business, the outlook, the new company and all the exciting things you guys are doing, but maybe we should start with what's on everyone's mind, the volatility this week. Obviously, a lot of additional uncertainty around the coronavirus. Just tell us a little bit about how this might impact your company and how you're thinking about it overall as the CEO.

Yes. Sure. So look, to state the obvious, a lot of volatility in the equity markets, and particularly this week, triggered by COVID-19, we've certainly felt a fair bit of pain in the ViacomCBS equity, as have many others. What I'd say is, conceptually, the -- our industry, the broader media industry, on a relative basis is probably less exposed to this than some other industries. And more specifically, ViacomCBS is probably less exposed relative to certain of our competitors. But practically speaking, what I can tell you is, as we looked at our business, we've seen no material effect to date. The only thing that has occurred is we've moved the Sonic release date in a couple of Asian markets, as we've held the film. And so we remain excited about our path ahead. We're on track with our guidance, and of course, we'll continue to monitor the situation. And should anything change dramatically, we'll assess. But for now, we're not seeing any material impact.

That's great. So you closed the merger late last year. Reported your first quarter as a combined company a couple of weeks ago, laid out your priorities for 2020. You talked about the stock price. What do you think -- when you look at the company, the portfolio, the management team, what do you think the market is missing about ViacomCBS?

Look, I think they're missing the extraordinary value of this company, and I'd really point to 5 more specific points. One is the tremendous content value of ViacomCBS. And in a world where we're seeing continued growth in both consumer demand for content as well as third-party demand for content, the content asset that we own, which is a combination of original ongoing production and library, which is across formats and genres and really across geographies, is tremendously valuable as we serve both our own platforms and generate economics on that as well as third-party platforms. So I think people are really missing the value there. The second thing they're missing is the power of the combination. And that starts with -- there are material cost synergies in it. We talked about $750 million on our call. But beyond that, we're going to leverage the fact that, for example, in the U.S., we are the linear -- the leader in linear television on every single demographic. We have configured the company with single points of contact for domestic distribution, advertising and global content licensing. So there's incredible value to create there on the revenue side, and we'll begin to demonstrate that in 2020. I think the third thing they're missing is the fact that we do have a very strong momentum and early scale in streaming, and that's both in our free initiatives with Pluto TV as well as our pay product. And our pay product, I'm tremendously excited about the evolution of where that's going as a house of brands. Fourth thing they're missing is the financial expression of the company, and particularly how that comes to life in 2020 versus 2019. Real power there, including on a free cash flow basis. And then the last thing they're missing is it's not just about operating performance, there are also significant noncore assets in this company that we're committed to unlocking to add to the shareholder value equation. And we'll talk some more about that in a bit. So I think it's a tremendously exciting story, and we're looking forward to people embracing it.

That's great. Well, I'm sure we'll dive into all 5 of those. Before we do that, you guys gave guidance for 2020 a couple of weeks ago, revenue, EBITDA, earnings, free cash flow. What incremental details can you share us -- with us about the drivers of 2020's growth?

Yes. Thanks, Ben. So on our call, we gave guidance on a range of metrics, including adjusted OIBDA, where we pointed to $5.8 billion to $6.1 billion in 2020 as well as adjusted free cash flow of $1.8 billion to $2 billion in 2020. We also said that this is a story that will build through the year, and the reason we said that is there are specific catalysts for that. Those include the benefit of unlocking the combination on the cost side, and they also include specific business catalysts that will occur as the year goes on. And let me give you a little more insight into that. So if you start with domestic cable distribution, domestic affiliate, cable affiliate, we view the fourth quarter as the low point in that cycle. You will see sequential improvement in domestic cable from Q4 to Q1 for -- and then you will see improvement as the year goes on. The reason for that has to do with the cadence of deals and the cadence of built-in rate escalators. So we have clear visibility on that, and that will be a building story. Add to that more broadly on the affiliate side, the impact of very strong growth in retrans and reverse comp, which we also have line of sight into. And that, when combined with cable, will deliver the guidance on a full year basis of low single-digit affiliate growth. Moving to advertising, domestic advertising. That's another story where there are specific things going on in the year that we see. It starts with the first quarter where we do not have the Super Bowl. So we had it in 2019. We have it in 2021. We do not have it in 2020. That is a significant piece of business that will read through in the quarter. To a much lesser extent in the second quarter, we had the NCAA finals -- Final Four and championship in 2019. We don't have it in 2020. We will have it in 2021. That's a much lesser headwind, but it is a headwind in the second quarter. As the year continues to track out, you will see the business grow, you will see the benefit of the combination. And you will see it into Q3, you will see it in Q4, and that's the benefit in terms of pricing and digital video packaging from our market-leading position. Also by the way, as you get into the fourth quarter, you will see what we anticipate to be a record political year. Obviously, on the local side, we've had some political business in Q1, but it's a very Q4-weighted phenomenon. If you strip out the Super Bowl and you strip out political, you'll see us deliver low single-digit growth for the year. Moving to OIBDA, as we manage expense -- as we benefit from expense savings in the combination, and we'll benefit to the tune of about $250 million in 2020, and as we benefit from our prioritization on the content spending side, where we're moving from, at least on a cash content spend, a growth rate of about mid-teens in 2019 to mid-singles in 2020, you'll get the flow-through effect to OIBDA. Now importantly, that is a building story through the year as well. You will only see a modest improvement in OIBDA growth rate, which was a decline in the fourth quarter, will be a decline in the first quarter, you'll have a modest improvement in Q4 to Q1. And then it will build, given the catalysts I talked before, as the year tracks out. And ultimately, we'll deliver the $5.8 billion to $6.1 billion of adjusted OIBDA. So that's -- and then as we -- well, and that's how we're looking at guidance for 2020.

That's great. That's very helpful, especially on the affiliate revenue front. Thank you for that. I'd say probably the #1 question I get from investors on ViacomCBS is the free cash flow trajectory and the conversion of adjusted OIBDA to free cash flow. Can you talk, Bob, about the drivers of the improvement from last year to this year that you talked about on the call? And you even spent some time talking about '21 further improvement. What are the -- what gets us that growth over the 3-year period?

Yes, sure. So building on the sort of OIBDA story. If you flip to free cash flow, the first thing I'd say is I hope investors understand how focused we are on free cash flow generation at ViacomCBS. Our guidance for 2020 is -- provides significant growth from 2019. In terms of how we're getting there, there is the cash benefit of the cost savings that we benefit from in 2020. In addition to that, there is the working cap benefit associated with our prioritization of content spend and the benefit overall. Again, that gets us from a cash content spend from the mid-teens in '19 to mid-singles in '20. So that, in turn, allows us to deliver the $1.8 billion to $2 billion of adjusted free cash flow. Importantly in that, if you look at free cash flow conversion in 2019, that was in the low 20s, adjusted OIBDA and free cash flow. In 2020, you'll see that be in the low 30s. And as we look to 2021, there is an incremental $500 million of cash flow benefit that we have line of sight into driven by additional benefits from our content strategy, evolution and working capital work driven by the benefit of actually having the Super Bowl in 2021. And then offset partially by political, which disappears from 2021, but that's a very real $500 million benefit, and that will be additive to our free cash flow and, importantly, additive to our free cash flow conversion.

Thank you for that. So from free cash flow, I want to talk about -- ask you about your balance sheet. You ended the year over 3x -- a little over 3x levered. You have a target of 2.75. What's a realistic time line for us to be thinking about you getting to that target level?

Yes. So since I became CEO of Viacom at the end of 2016, we've made our balance sheet a priority. And as you know, if you track the story, we significantly delevered Viacom along those ways, kept it solid investment-grade. So the balance sheet is a focus for ViacomCBS. As Ben said, we guided to 2.7x -- 2.75x leverage. When you take into account synergies, we get there through our strong organic free cash flow generation, but we also get there because we will unlock value in noncore assets. We believe there is the opportunity for accretive dispositions of noncore assets. The first example that we're working on is Black Rock. And as you know, we're in the market with that today. We have a set of blue-chip buyers who are engaged in the process. In fact, taking tours, doing diligence as we speak. And so we're very happy with where that process is. And as Chris said on our earnings call, we anticipate closing that deal in 2020 and getting those proceeds. In addition to that, we've been conducting a portfolio review of our company. And coming out of that, we've made the determination that Simon & Schuster is not a core asset of the company. It is not video-based. It doesn't have significant connectivity to our broader business. At the same time, there's no question that it's a marquee asset. It's highly valuable. And we have had -- I've had multiple unsolicited inbound calls about that asset. And so as this market stabilizes, we are going to engage in a process and look at strategic alternatives for Simon & Schuster. And then rest assured, we're going to continue to look for other places where we believe there are opportunities to dispose of assets in an accretive way, but this will produce material cash in 2020.

Thank you, Bob. And Black Rock, for those that may not know, that's the CBS -- the old CBS...

That's the old CBS headquarters. An iconic building in Midtown Manhattan. It's one of the few named buildings, candidly, in the world and certainly in Manhattan and really has generated incredible interest.

And Bob, so as we think about the Black Rock building and Simon & Schuster, how should we think about the use of proceeds from those sale?

Yes. Well, as we've said before, our use of cash essentially follows a waterfall. It starts with our dividend. We are a dividend payer. That's important to us. We also use a small bit of cash for M&A. Again, we're not doing anything transformative. We've done our transformative deal. We're overwhelmingly focused on executing ViacomCBS. But for example, we did a deal to acquire 49% of Miramax. That deal will close in March, and so we need a little bit of cash for that. Then beyond that, it's delevering the company, maintaining our commitment to investment-grade. So we will use proceeds to delever in 2020. Again, we have a target of 2.75x leverage, including the impact of synergies. And then as we get to our target debt ratio, again, thinking about all the cash from organic in these 2 noncore assets, we believe there will be cash available for -- including for acquiring our stock. So we're putting the work together very -- the cash here very systematically to create value for shareholders, and you will see that happen in 2020.

Great. So with that sort of high-level overview, I want to talk about the priorities you laid out on the call a couple of weeks ago. So you talked about maximizing power of content, unlocking value from your biggest revenue lines and accelerating momentum in streaming. So then we start with power of content. I find that investors tend to want to put every media company into 1 of 2 groups, either they're sort of a streaming story or they are a arms dealer to the streamers, which -- it may be a false choice, but that comes up a lot with investors. Do you think about defining ViacomCBS in those 2 boxes? Or do you think that's a false choice and you can do a lot of different things?

Look, I think with the scale of the -- and quality of the ViacomCBS content asset, which again spans original and ongoing production and library, we are fundamentally focused on serving both our owned-and-operated platforms as well as third-party demand. Third-party demand is incredible. Now we think that's the right strategy for Viacom CBS for a couple of reasons. First is, it does make the most of our most valuable asset, which is our content asset. Second, it allows us to serve the largest addressable market from a consumer perspective. And that, in turn, creates opportunities to drive our brands and franchises, including driving "ancillary" businesses like consumer products and recreation. As we access the largest consumer pool, we also access the largest revenue pool. That, too, is important as we balance both free cash flow generation and asset value creation. So again, we put it together. We think that's absolutely the right strategy for the company. We are convinced we have the resources to do both. And if you think about it in terms of bringing it to life, one of our pieces of iconic IP is SpongeBob. And you will see us use not only our overall content asset, but also as an example, SpongeBob, to serve 3 linked businesses. And those 3 linked businesses are: our globe-spanning linear business, where we are a leader; our high growth and coming to scale streaming business; as well as our third-party studio business. Again, we think these are 3 interlinked businesses built around a core content core. So using SpongeBob as an example, we obviously use SpongeBob on linear television all around the world. In the U.S., that allows us to serve roughly 40% of kids. We also use SpongeBob on our streaming platforms, and that's both our free streaming platforms and our pay streaming platforms. That provides additional reach as we build those assets. And then the third part -- the third place we use it is in our studio business, and we use it in 2 flavors. We have our next SpongeBob movie coming in the second quarter, Sponge On The Run. That film has tested very well, too. That access, that provides incremental reach and incremental monetization. We also are doing 2 SpongeBob spinoffs of film length for Netflix. That is a profitable, low-risk business with set margins. By the way, it's a rental business and in this case, we get the property back for linear air also very soon. And together, that constellation of linear streaming and third party, both film and over-the-top, provides tremendous platform for that piece of IP, which we not only monetize directly from those 3 business but also for things like consumer products and recreation. So we're convinced that both an O&O and third-party strategy is absolutely right for ViacomCBS. We believe that maximizes the value of our content asset. That is what we're executing against, and that's what you'll see us deliver value against in 2020 and beyond.

That's a great example, and I think it touches on something you talked about, Bob, on the call, which is improving content ROI. I wanted to ask you more about that because it's something certainly investors are focused on as it translates to free cash flow. What does improving content ROI mean when you talk about it? And any examples beyond what you just talk about, which is SpongeBob, that you can provide?

Sure. So as I said, at the core of ViacomCBS' content, at the core of the economic expression is content ROI. And you get to improving content ROI both by prioritization, deciding where you're going to lean in and spend more and where you're going to lean in and spend less. And that will be like across platforms. So for example, one of the things I didn't say in the earnings guidance and the cost side is when you look at us moving from this cash content spend of mid-teens in '19 to mid-singles in '20, one of the ways we're getting is we're allocating content spend towards higher growth areas, in this case streaming and studio, and we're keeping other lower growth areas, things like linear cable, flat. So that's an example of prioritization on content spend across the enterprise. And then within any of those platforms, we're also talking about mix and how do you optimize the delivery of audience on a cost per GRP basis based on content mix. Probably the most powerful example I can point to for you in the room is the Paramount studio, which is an incredible story of improving content ROI. You don't have to look that far back, say 2015, '16, to see that Paramount was not only negative on an earnings basis, but also on a cash flow basis, dramatically so. And we went and -- at the core, we went and improved our content ROI. And we did that by changing our slate strategy, implementing a first, balanced and now, larger slate strategy. We did that by looking at cofinancing and not taking a one-size-fits-all model, but tuning the cofinancing strategy to individual pictures on the slate so that we can optimally manage risk and return. And as you've seen us execute, Paramount's content ROI has improved dramatically. Yes, the fourth quarter of '19 wasn't a great quarter for Paramount. But take that aside, the last 8 were evidence of consistent growth improvement in earnings. And if you look at where we are right now in the current quarter, you see Sonic is an out and out hit, and it's probably a new franchise for Paramount. That film is doing very well. Extremely happy with it. As we've said -- we were talking offline before we came in. Sunday, we're premiering A Quiet Place Part II in New York. That film has got tremendous interest based on screeners and theaters and trailers and the like, and also has tested very well. So we're very excited about bringing that second Quiet Place to market. We talked about the SpongeBob film. And then late in the quarter, we got Mission -- we got -- sorry, Top Gun: Maverick, which has also tested off the charts and has tremendous interest. So very -- feeling very good about how our focus on content ROI has translated into significantly improved paramount performance and sets it up for continued growth. And by the way, simultaneously, we built a real television business there. You go back 4 or 5 years ago, Paramount wasn't in the TV production business. It now has 27 series order to or in production. It's not just making shows, it's making hits, whether it's 13 Reasons or Jack Ryan or others, and that's on a very strong growth trajectory. That both -- it was -- had a bit of a working capital headwind for the first couple of years. But now as we're getting to scale and we've transitioned the mix of customers to more working capital-friendly customers, we're seeing not only nice growth, but real asset value -- the real cash improvement. And because this is overwhelmingly a rental business, we're developing real asset value. So that's a case study of content ROI improvement. And again, we've done it in other areas, and we think that will be a big part of the story on a total enterprise basis for ViacomCBS.

And Bob, you mentioned Paramount as your example. One of the things Paramount has potential for is a pretty lucrative Pay1 deal down the road. How are you thinking about those Pay1 rights both domestically and globally as you think about maybe Showtime as a distributor?

Yes. So I've said consistently that in the context of Pay1, time is our friend. And what I mean by that is Paramount's performance continues to strengthen. The slate is building momentum. Jim Gianopulos and his team have done a great job rebuilding and now expanding that slate. And simultaneously, product is disappearing from the market. So Paramount's Pay1 deal has tremendous value. We've certainly gotten calls about it. At the same time, it also has potentially real strategic value to us as we attack the business. So I'm very much looking forward to being able to do something with the Pay1 window. But that's not a decision we're making now because, again, it's only getting more valuable.

One thing we haven't talked about yet but we should is sports. It's obviously a big part of -- particularly the CBS programming strategy. How are you thinking about your sports portfolio, Bob? You've added some stuff on the streaming side, and obviously, there's a lot of focus right now on the NFL front. So maybe you could touch on all of that.

Sure. So sports is fundamentally important to and valuable to CBS. As you know, Ben, we have a portfolio of really important sport properties on the network, and we also have a CBS Sports Cable Network. Those include, obviously, the NFL. I'll come back to that. They include the NCAA. They include a whole range of marquee golf. So sports is fundamental to CBS and is a place where we've consistently created value. We've created value through the distribution side, retransmission consent and reverse comp. We've created value through the advertising side, and we'll continue to do so. By the way, we're also benefiting from a relatively unique set of platforms in the U.S., which now include not only linear leadership but also our over-the-top products, including our pay over-the-top product. So an example of that is UEFA, where we did an innovative deal and announced it, I guess, earlier this year or late last year, whereby UEFA is coming to CBS, but it'll be a mix. There will be some matches that are on linear television, the CBS network, and an increased volume of matches that will be on our All Access product, CBS All Access. We were differentiated in our bid for UEFA because of that combination. They like the visibility of linear, and they -- and we also use -- understood it as going to be a key driver for over the top. So that's an example of extending in sports in new and creative ways. We also recently announced a gaming partnership with William Hill, which is another example of our ability to create value in the sports space. So sports is fundamental. So let's talk about the NFL. A lot of people talking about the NFL. The NFL clearly has value to CBS, and CBS -- ViacomCBS has value to the NFL. We are known for the highest quality of production. If you ask the NFL, they will tell you that. And then beyond that, we obviously have great linear television reach. If you ask the NFL, they'll tell you that's important. They're in the mass market business. This is, in many respects, a family product, co-viewing and the like. Now we also in the context of ViacomCBS, have a broader platform. That includes young adult reach through both our linear and over-the-top networks, which are beneficial to long-term brand development and bringing new consumers in. That doesn't mean necessarily airing games on those platforms, but you can do other things, leveraging those platforms with respect to events and players and narratives, et cetera. And we also have international reach, including broadcast reach in a number of markets. And that, too, is important for long-term brand development. So the combination is tremendously valuable. You may also have noticed that we re-signed Tony Romo. That re-signing allows us now to credibly claim we have the best announcing team in the business, we have the highest quality production. And I believe, again back to platforms, we have the most compelling total set of platforms in the industry when you span linear broadcast, when you span additional linear reach into young audiences, when you span a growing collection of streaming product, which we'll talk about some more, and you span international. So the NFL is a great partners to ViacomCBS. ViacomCBS is a great partner to the NFL, and I'm very excited about our joint future together.

Thank you. That's helpful. And congrats again to Tony Romo deal done. I think everyone's excited about keeping Tony on CBS. Let me ask you about the next one on the revenue -- unlocking more value from the revenue lines. Bob, you mentioned earlier the affiliate revenue trajectory through this year, a lot of focus on cord-cutting and sort of the relationship with distribution partners. It is what it is, but what gives you confidence in the ability to sort of stable at distribution revenues over time in the company?

Yes. So look, let's start with -- as a combined company basis, we are extraordinarily important to the linear TV ecosystem. We have the #1 viewing share in aggregate and #1 share on every demographic. Add to that, it's not only being #1, but it's a portfolio of must-watch programming, and that includes sports. We just talked about the NFL. But it's also golf events and NCAA, et cetera, so it's broader than that. It's also news, and it's obviously entertainment, and whether that entertainment is scripted entertainment where by the way, CBS had 5 of the top 6 freshman shows this season. So our programming continues to be compelling. We had about half of the top 10 overall. And also in the unscripted space, where again, many of our networks, whether it's BET or MTV or Comedy Central, et cetera, really are our wheelhouse for those demographics. So our audience proposition is very strong. Add to that, and this is really more Viacom legacy over the last couple of years, where we've broadened the aperture around how we do business with distributors. We're not only in this grinding linear rate discussion, but also have found a path to incremental value for both of us in places like advanced ad sales, in places now like broadband product, including with Pluto, which last couple of deals, whether it's Comcast or Cox or AT&T include components there. So we have, as a combined company, even more levers to pull as we get mutually attractive deals done against this backdrop of must-have linear programming. So yes, there's always another negotiation to do, and people name check them all the time. But we have consistently got deals done. If you ask MVPDs, they'll tell you we know how to get deals done, and so I feel good about that. And I think that's particularly important because in today's world, it's not everyone winning. There's going to be winners and losers in that game, and ViacomCBS is clearly going to be a winner.

You talked about your value proposition to distributors, maybe we could now take that to the advertising side of the business. You guys are a big advertising revenue base at ViacomCBS. Can you give us an update on the environment there? And what are the opportunities as a combined company to drive advertising revenues over time?

Look, one of the things I'm most excited about in the context of ViacomCBS is our ability to serve and solve marketing problems, particularly in the United States. The combination of Viacom, CBS introduces again this #1 linear position across the board with what's widely regarded as the industry's strongest portfolio of advanced solutions and a rapidly growing portfolio of digital inventory, including inventory on Pluto TV, including inventory on CBS All Access, including inventory broadly distributed on the Internet through our digital studios. So it's a tremendous portfolio of product to bring to market. We also now have arrayed that product at a single point of contact. So we engage agencies and their clients and provide them a holistic solution that makes us easier to do business with, which particularly in the agency world is very important. These agencies are under extraordinary margin pressure. They can't deal with an ever-growing list of people to go buy stuff from and the fact that we can aggregate, again, this linear position, which essentially they can't buy around with this digital position and do it in a way that we're easy to do business with really makes us a first choice solution for advertisers. As I said, under Jo Ann Ross' leadership, who now runs the combined company U.S. ad sales force, together with our COO, John Halley, who really was instrumental in the advanced side, they are now going to market together. And I believe we will be very well positioned in -- certainly, the '20/'21 upfront, which we're already candidly in conversations with people on. And so I think it's an enormous opportunity for the company. And it is all about -- it's not really ultimately about price. Pricing will be very strong in linear television given the dearth of supply. There's no question about that. But what it really is about is about driving volume outside of linear television in a package which helps advertisers get the reach they need, which helps them manage problems with frequency, which they typically run into if they just go buy a digital platform by having a flight that runs across linear and multiple digital platforms in a synchronized way. You can deal with frequency caps. That's a big deal. It also lets them manage inflation because there will be tremendous linear inflation again this year. Look at the scatter market today, 25% to 35% above upfront. Again, a lot of demand, not enough supply, so that's driving inflation. But by again putting some of that money in nonlinear in a way that meets reach criteria, that deals with frequency caps, you can also help them manage inflation. And you can do it as a single point of interface and take a lot of complexity about it. So we're exceptionally well positioned. And again, when you go to what I told you earlier on today about the cadence of the year and how that plays out, as this year plays out, particularly in Q3 and Q4, you'll really see the power of that come to market. And it's just a tremendous value creation opportunity for the company.

Great. So in the time we have left, I want to focus on the third driver and the fastest-growing piece, which is your streaming initiatives. You've guided to 35% to 40% growth in digital revenue in 2020. First, Bob, what kind of investment do you need to make in content to drive that kind of growth? So help us think about sort of the profit piece. And secondly, how are you planning to evolve CBS All access and Showtime over-the-top as you think about building the combined companies' digital businesses?

Yes. So let me kind of start general. So we -- as I said, we have real momentum and growing scale in streaming. As we said on our call, between our free service, which is led by Pluto TV -- we also have things like CBSN, et cetera. But the Pluto TV is the wheelhouse of it. That service was 22.4 million monthly active users circa the end of December. We guided to 30 million for 2020. And our Pay products, which is really bouquet of Pay products spanning Showtime and CBS All Access principally, but we have Noggin and BET Plus, et cetera. That's a portfolio that was 11 million subs, pay subs, in the U.S., the Pluto number is a U.S.-only number, growing to $16 million in 2020. And that, together, our digital -- our streaming and digital video business was about $1.6 billion in revenue in 2019. And again, as Ben said, we anticipate growing in the 35% to 40% range. So this is a material position already from a consumption standpoint and already has a pretty significant financial expression, particularly as you look at the growth trajectory.

And what are you thinking on international as you put all these brands together on the streaming front? Do you think that's an important initiative for the company to be a distributor or have your own streaming services overseas?

So look, I ran our international network groups for a decade. There is tremendous opportunity outside the U.S. in general and certainly with respect to streaming. The big thing on streaming is it gives you access to our larger addressable market than, for sure, traditional pay TV. So it's a big opportunity. We're in the very early stages of unlocking that on the free side. Pluto TV, again, not in the numbers I gave you. But it's in the U.K., Germany, Austria and Switzerland. It entered that late in '19, so we're starting to see nice growth there. We are launching all of Spanish-speaking Latin America for Pluto TV this month. And then later in the year, we'll add Portuguese, Brazil, et cetera. So international is an area of opportunity, one we are quickly moving to unlock. Secondly, on the pay side, right now, CBS All Access is really -- and Showtime, very U.S.-centric. We do have an All Access product in Australia. We do have an All Access product in Canada. But you will see us, as we transition to this house of brands, which I want to touch on for a moment, you will see us, once we build that in the U.S., you will see us then move outside the U.S. So that is clearly also a global opportunity. Just briefly, the way we look at streaming is like traditional television, we believe there's a free segment that used to be broadcast-only, think about it as broadband-only. We believe there is a broad segment, basic cable, if you will. That's where our house of brands product will play, and we believe it's a premium segment. Showtime, going to Showtime OTT. I'm tremendously excited about what we're going to do in the broad segment, taking and building on the CBS All Access platform, which truly is differentiated. Bain was doing our integration, they told me best platform they've ever seen. I was kind of skeptical. They were kind of skeptical, but this thing does live linear. It does local on a content basis and is not only entertainment, it also has news and sports. So it's a differentiated offering today, and we're going to layer on our house of brands. So we'll bring content from the Viacom flagship brands and from Smithsonian. We'll add real depth of films, and we're going to create a very compelling and differentiated product. We will soft launch that product in the domestic U.S. in 2020, and then we'll move to expand it beyond. And I do also want to say, we've done all this without spending billions and billions of dollars in terms of cash burn. The Pluto model is very working capital efficient, largely revenue -- rev share, because we have a lot of third-party content on that, but also because it is a broad platform, but also we use library product on that, which is essentially already amortized. And then on the pay side, we also built this All Access, a Showtime-led position, without a big capital burn. And so worth nothing, and we see tremendous road ahead.

Well, thanks, Bob. Maybe just to wrap up then. We've talked a lot about the businesses at ViacomCBS. You highlighted on your call that you really believe the scale of this new company is unique. When you look long term, do you think that you have enough scale to delivery the kind of growth that you want to deliver and drive shareholder value?

So we have an incredible asset collection at ViacomCBS. That asset collection is allowing us to both generate free cash flow today, principally through our linear businesses, while simultaneously using that to build asset value, including -- in streaming. We are a core solution in video in the U.S. We are a core solution in advertising in the U.S. We have a tremendous platform to build outside the U.S. One of the powerful things about this deal was you took Viacom's operating footprint outside the U.S., which CBS didn't really have one, and then you add more content to that, and you can use that to grow share in both linear and drive streaming. So the value creation opportunities, including accretive dispositions of some things we don't necessarily need to execute our strategy, Black Rock, Simon & Schuster , it's a tremendous value creation opportunity. It's going to be a tremendous company. You will see that as we get deep into 2020, and we're tremendously excited for the road ahead.

Terrific. Well, thanks for being here. Thanks very much.

Thanks, Ben. Appreciate it.

Thanks, everybody.