Paramount Skydance Corporation (PARA) Earnings Call Transcript & Summary

Good morning, everybody. Welcome back. Welcome to day 2 of Morgan Stanley's Virtual TMT Conference in 2021. I'm Ben Swinburne, Morgan Stanley's media analyst. Quick disclosure, please note that important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, all appear as a handout available -- sorry, not a handout -- on the Morgan Stanley public website. We are really excited to welcome this morning our keynote conversation with Bob Bakish. Bob is the President and CEO of ViacomCBS. Prior to the merger of these 2 companies, Bob was the President and CEO of Viacom since December 2016. Bob, it's great to see you, and thank you for being here.

Hey, great to be with you, Ben. I only wish it was in person, but we'll get there next year.

We will. We will. Thanks for your time this morning.

This interview is actually happening, I think it's quite timely given last week, you guys had a lot going on and a lot to communicate to the market. You had fourth quarter results. You laid out your outlook. But probably most importantly, you really spent time with us on your streaming strategy. In the background, I'm sure you've noticed your stock has doubled since just November, more than doubled. So clearly, the market is starting to focus on your streaming opportunities. Maybe to start, we're a year plus since the merger. Your streaming plans have now been sort of formalized. How do you frame the longer-term opportunity for ViacomCBS sitting here today?

Yes. So look, the last week really accomplished exactly what we wanted. We obviously delivered a set of strong numbers for the quarter and the year, and people liked those. But the bigger item of course was talking about our streaming strategy and Paramount+ is the centerpiece to that going forward. And to put it simply, I think there were a lot of skeptics going in, but people got really excited about the scale of the offering we're bringing to market with Paramount+. And of course, as we've said before, that's live sports, breaking news and a mountain of entertainment. And what that means is there's real depth and breadth of content. There's something for every demo. There's all genres of television. There's a deep film component. And when people saw that and put it up against the objectives we talked about for 2024, which included 65 million to 75 million global SVOD subs, 100 million to 120 million global MAUs for Pluto and at least $7 billion in global streaming revenue, I think they saw that we had the product to put us on a path there to actually deliver. And by the way, there is something the market missed. I think they didn't fully appreciate yet the value of the $4.99 version of Paramount+ to the ad business because it really is quite substantial, and we're quite excited about it. And as we look forward to Thursday, we are leaning into the biggest marketing campaign in our company's history. What we're going to do -- and it's already started. It started back with the Super Bowl, but it's 6x the size of any initiative that was ever done for CBS All Access. It's a true company-wide effort leveraging all elements of our asset base, our linear portfolio, how we show up in social media, our digital portfolio, in addition to of course some third-party spend to round it out. So it's really exciting times for ViacomCBS. Lastly, you mentioned our stock. As it relates to our stock, clearly it has performed well from the kind of COVID low of 2020. And so far in '21, it's off to a great start. I think there's really 2 things going on there. You mentioned one, but I think the first thing is it does reflect the successful integration and execution of combining Viacom and CBS and unlocking tremendous value and growth as a result. We know when we closed that deal roughly a year ago, there were a lot of skeptics. And there are people saying, "Does this combination make sense?" And then we went on very quickly to create one ad sales force, one distribution force, significantly exceed our cost savings targets, put together one streaming organization, which of course mounted Paramount+, among other things. And that led to the second, which is the market recognizing our potential as a global streaming powerhouse. And even with that, even with the run-up in the stock, here, you look at us relative to our established streaming peers on a multiple basis, and it's still low. So we're really getting somewhere because I think people are now seeing that this combination definitively makes sense and that we are executing against the plan, which is in fact unlocking value from the combination very quickly, including in streaming.

That all makes sense. Let's talk a bit more about Paramount+, Bob. You spent some -- a lot of time on it last week with us. But it's going to be the biggest part of your 65 million to 75 million streaming goal in '24. I thought there was a really interesting slide last week where you and Naveen talked about how many services you think the American consumer will likely be -- or global consumer signing up for. But just spend a minute on what really makes Paramount+ stand out to the consumer in the market because obviously, as you know, there's a lot of services out there. And even CBS All Access has obviously been around for a while. So what really differentiates this product in the eyes of the consumer who's making that decision on spending?

Look, it for sure is a differentiated product. It is not a replica of something else that's already out there. It has tremendous variety and this really unique trifecta of sports, live sports, breaking news and a mountain of entertainment. And that mountain of entertainment is fortified by our flagship brands that have tremendous global recognition. And this whole thing is in one place serving the total household. And obviously the sports, start there, includes the NFL, the NCAA, major golf events, our exclusive UEFA coverage. You look at our kids library. It's the best kids library, really the best kids offering on the planet, whether that's Spongebob, bringing back Rugrats, iCarly and on and on and on. It's a tremendous kids audience built of course on the success of Nickelodeon. It encapsulates the #1 provider of reality TV. And people spend a lot of time with unscripted reality television. Franchises like we brought The Real World, the original reality show back, The Real World New York as part of the Paramount+ launch. We have The Challenge. We have Love Island. We got Big Brother. We got Survivor. I mean it goes on and on and on. It also has fantastic scripted drama. People love scripted in general and certainly in the streaming space. And we bring a whole portfolio of IP to that whether that's Criminal Minds, Yellowstone universe, Star Trek, Halo. That goes on and on and on, too. And then there's a film offering, which is really a film lover's paradise. About 2,800 titles in the library, and then Paramount Pay1 product, including A Quiet Place Part II coming, Mission: Impossible 7 coming, PAW Patrol coming, et cetera. So it is -- has tremendous variety. It has tremendous volume. As I said, 2,800 films. It will have about 1,000 live sporting events per year. We'll have over 50 original series in the next 2 years. We'll have 36 this year. And that will join a catalog of over 30,000 television episodes. And as part of this, we're moving from 16,000, which we have in sort of the end of CBS All Access, to over 30,000 as Paramount+. And it's quality. As I said, this comes from our flagship brands, whether it's Paramount or Nickelodeon or Comedy Central or BET or CBS. And it's also -- and we haven't talked a lot about this yet, but know that it's also fortified by our global production capabilities. So we didn't name check a lot of those titles in the presentation because people wouldn't recognize them. But remember, we have a massive production footprint in Argentina as part of our Telefe broadcaster. We of course produce in the U.K. and other places in Europe. So it is a tremendous offering. It is for sure differentiated. We believe it's compelling. And again, when I talk to people after our event last week, people came away going, "Wow, you're right, this mountain is a lot bigger than we thought. This is actually interesting." So we're tremendously excited for Thursday when we actually flip the switch and CBS All Access becomes Paramount+.

One other thing that was interesting, and I wouldn't say a surprise but new to us last week, was what you're doing on the movies side. And you guys have a lot of research into what the consumer is looking for. What is the role of movies at Paramount+? And how do you -- what do you do with Paramount and its various output deals to sort of make sure you can harness that library and that Pay1 window?

Yes, so sure, a couple of things. One is it is called Paramount+. So it has a film studio, a Hollywood studio name on the door. So it was important to us that it have a quality offering for the film lover. As you guys know or as many know, we did have the Paramount -- we have a big library, which we can access and we did access, including as part of the preview launch for CBS All Access last summer. But our Pay1 deal had a little more to run with EPIX. So one of the things we did is we went and did a strategic deal with EPIX that works for both of us, whereby now the Paramount Pay1 product is coming to Paramount+. A subset of that is going to come in a very short window after theatrical. And we talk about this as a 30- to 45-day window post-theatrical, titles like A Quiet Place Part II, Mission: impossible 7, PAW Patrol will come to Paramount+ exclusively. So they'll be there for a while before they go, in this case, to EPIX. And we think that's compelling. By the way, I believe that is a sustainable offering. Some of these other film moves that have made, it's not clear to me they're sustainable. But this move, it puts the titles in the theaters. So people want to go and get a big screen experience, they can do that. But if you look at the curve, the degradations on most film titles, they do very little business post day 30 and certainly post day 45. So moving -- even though the traditional window is 90 days. So moving to an in-house streaming window at that part, we think, works certainly for us, but also for constituents, including consumers. So we're very excited about that. We also, as part of that deal, got access to additional 2,500 library titles. These are high-quality library titles from the other major Hollywood studios. Those will actually come to the platform on, I believe, June 4th, so a little bit of a delay. And then add to that, we're going to get MGM Pay1 product as well as we have made-for product made by Paramount players and made by our ViacomCBS studios more broadly. So you put the whole thing together, it's a killer offering for film lovers, and we are tremendously excited about it.

Okay. That's great. So it sounds like that new windowing is probably something that sticks in your mind.

Yes. I mean we're going to put it in place starting with probably A Quiet Place Part II just because that's -- I mean, I say probably just because films still are moving around given COVID. But [ with ] COVID, it looks like that's where we'll start. And again, I think that's a sustainable model, Jim Gianopulos and I have talked a lot about it. And obviously we talk to theaters and the talent and other constituents in the ecosystem, but we believe that's the right model for the future. And I believe our -- as we implement it, the facts will prove that out.

You mentioned, Bob, in June you're making some more changes. Can you just talk about sort of the pricing change in June, the product change in June? And sort of why -- what we should expect or what the consumer should expect as you get to that point in the calendar at Paramount+?

Yes. So the main thing that's happening in June is -- so let me back up a bit. There's going to be 2 versions of Paramount+. There's $9.99 version, which includes the CBS live linear feed and has no advertising in the on-demand product. So there's a little bit -- it's not really ad-free because the live CBS feed has some ads in it. But other than that, it's ad-free. Then there is going to be a $4.99 product that is essentially our ad-supported product. It won't have the live linear feed in it, which gives us more pricing flexibility and promotional flexibility, et cetera. But it will have a tremendous collection of all the originals, et cetera. So those are the 2 products that are going into the marketplace. The $9.99 version will be available at launch, so Thursday. As well, there's currently a $5.99 version of CBS All Access, which is ad-supported live linear feed, that will be available and then we'll sunset it when we bring out the $4.99 version. So I know it's a little confusing, but we needed to get the lower-priced version right so we can maximize the opportunity.

Makes sense.

That's what's really going on in June. I just mentioned the films because the way the EPIX deal works out, those 2,500 films will also show up in early June.

And you touched on this before, Bob, but -- a little bit, which is your global production portfolio. But can you tell us a little bit about how Paramount+ is positioned internationally? Because there's, as you know, there's actually a bigger TAM outside the U.S. than inside the U.S. And I know you spent a lot of your years running Viacom's business overseas, so your perspective would be helpful.

Yes, absolutely. We believe streaming is a global opportunity. We believe that is true both for our free service, Pluto TV as well as our paid product, which will be Paramount+. The difference for Paramount+ outside the United States is really twofold. One is it will essentially be an entertainment product because we don't currently have deep portfolio of sports rights outside the United States. And CBS News is more of a domestic franchise than a global franchise, has some name recognition, but -- so it's going to be entertainment-oriented. And then the other element is it is going to combine Showtime. And in fact, if you look at the -- we're going to launch simultaneously in Latin America, simultaneously with the U.S. and then very quickly thereafter launch Australia and then the Nordics. And that -- all those products are reflective of this entertainment focus, including Showtime. And we're also going to be pretty aggressive on price point there as part of market entry.

And I would imagine in terms of other international markets where you have sizable Showtime output deals, that's probably still something you're working through in terms of the right move?

Well, that's one of the contributors to deciding when you launch in a market, right? We got Paramount output deals too, and for that matter, CVS output deals. So you kind of -- you got to line that up a bit. Sometimes you can start with everything. Sometimes you start with part of your overall basket that you envision and add to it over time. But that's very much a contributor to our rollout schedule.

Yes. I know you -- I'm sure you've gotten the question because I have, Bob. There's a lot of uncertainty in investors' eyes about what happens with your licensing business, which is obviously substantial. And it's across a lot of different businesses inside of Viacom. As you build out your streaming portfolio, what should we expect that business to look like over the next several years? I assume you redirect a lot of it, but does the overall business grow, decline? What can you tell us about the outlook for licensing?

Yes, sure. It's a popular question, as you state. So we have a significant global content licensing business. And the reason we have that is pretty simple is we have very significant content creation and library assets. So historically we've leveraged the content asset, both for owned and operated uses as well as third-party licensing. More recently as we have scaled our streaming ambitions and approached the launch of Paramount+, we began to tilt more in the O&O direction. And if you look at what we presented last week with respect to those 36 original series, they lean heavily on franchise IP from across the company and certainly from Paramount. So that is very intentional and is part of our strategy. And that means that our licensing business shifts a bit from third party to in-house because there is economic value transfer in-house. As we roll international markets, back to our prior point, you will see that continue, but we envision staying in the third-party licensing business for a couple of reasons. One is it's a big business, and we have a lot of assets. And we believe we can continue to supply it, albeit not at historical levels. Two is it gives value other than just pure financials. So if you look at iCarly, as an example, which we're bringing a new version with the original cast under the Nickelodeon brand to Paramount+ this year, we have a version of that, the historical version with one of the big streamers at the moment, and it's one of their top-rated shows. So it's also a franchise development tool, not just an economic tool. So we see value in the business, but we're clearly in a place where we're share shifting, if you will, more O&O.

Yes. My 7-year-old just finished all whatever number of seasons iCarly ran. I can't remember if that's 6, 7. So she was very excited to hear that it's coming back to Paramount+. Are there any parts of sort of the various genres that won't make sense for Paramount+ globally that will remain part of that third-party business? It sort of feels like you guys are kind of in everything from kids to scripted, et cetera, et cetera.

Yes, yes, yes. I wouldn't say there's a genre cut of what business we're in and we're not. Again, look at the definition of Paramount+. It's an intentionally very broad product designed to appeal to a broad range of viewers, whether that's families with kids or younger professionals, et cetera. So we will populate it with the full set of genres. But within a genre, we will likely still choose to license some -- maybe a library, maybe we'll make a show for someone. But we already have a multiyear road map of IP for Paramount+ that we're locked on.

You and I were chatting before we went live about Pluto, which you guys acquired not that long ago. So I want to talk a bit about that business. I think revenue has more than doubled in the fourth quarter. AVOD as a space, Bob, as you know, has become an area of intense focus in the market. Can you talk a little bit about what makes that business get to the $1 billion level that you guys called out last week, and kind of the level of scale that represents inside of that $7 billion '24 target?

Sure. So look, we love the FAST business, free, ad-supported streaming television, which is what Pluto is. Some people refer to it as AVOD as well. Difference being is it is both pre-programmed linear and on-demand. So that's why the FAST characterization is better than AVOD. But we were the first people, as far as major media company goes, to see that opportunity. And we -- when we acquired Pluto, there were a bunch of questions. "Like what is this? You should be in the SVOD business." And at the time, I felt we didn't have the wherewithal as a company to have -- to mount a first-rate SVOD service. That of course changed with the CBS merger. But we did see the FAST opportunity. We acquired Pluto and very quickly put Viacom legacy content assets on it. And within -- in 2 years and one quarter drove MAUs from 12 million to 43 million. And time spent, engagement has grown faster than that. And monetization has grown faster than that. Pluto, when we acquired in '18, was sub-$100 million. It's not $1 billion yet, but it's big. And so -- and the reason is pretty simple. It's a very high-quality offering. It appeals to consumers who either don't want to pay for television or want a complement to their other services. It is stocked with 150,000 hours of high-quality content across all genres, all formats, all demographics as I said, in '18 -- or '19 was the year we added Viacom content. '20 was the year we added CBS content. And so that business is as I said, it may not be a planet, but it's certainly a rocket ship. We continue to expand Pluto outside the United States. We see big opportunity there. And that opportunity exists both as a stand-alone service in the FAST segment as well as part of an integrated ecosystem that can create value for our pay product, Paramount+. So we love Pluto. It has turned out better than we thought. And when we said back in -- I guess it was early '19, that it would be a billion-dollar business, people I'm sure thought we were crazy. It will for sure be a billion dollar-business, and then it will keep going. But it's a great asset, and it's the #1 asset in the space.

Yes. What's the pitch to advertisers who are starting to move money more aggressively over to that world from linear? What does it give them that is differentiated from the linear buy?

Well, among other things, it gives them incremental reach. It's high quality. Pluto is viewed on mobile, web and connected TV. The connected TV is the largest source of engagement, i.e., minutes. And it's the closest thing to traditional television advertising on the planet. And so for an advertiser that wants to open a movie or what have you, it is great reach, both on a stand-alone basis and when packaged with our linear assets, and so just like I love Pluto, advertisers love Pluto. Because it helps them deliver their messages in a high-quality environment, in an environment where they're comfortable having their messages seen.

What's the governor on growing that business? Is it convincing advertisers that it's an attractive offering? Or is it just that the inventory is growing so fast, you can't sell it as fast as the impressions?

I don't think -- I mean, I guess as a governor on anything, but it is a very high-growth business. I mean you're in 50% to 70% growth, and there -- we don't see -- it's interesting through the pandemic, obviously, advertising in the U.S., or globally for that matter, took a big hit including in the second quarter. The first quarter was almost done. We lost the NCAAs and all. But the second quarter was really the quarter where it got crushed and then we began to build out from there. But within like a month or 2, Pluto was already back at pre-pandemic. And Pluto moved through its budget for 2020, even with the pandemic. So there's tremendous demand there. And yes, it's a function of MAUs and minutes spent through pricing and sell-out and all that. But it's a good model, and it has plenty of road to run.

What can you do with Pluto, given its broad reach, which is obviously growing rapidly globally to help drive Paramount+ and Showtime?

Well, think about it as it's a tremendous promotional engine and funnel for our base services. Just like, by the way, our linear platforms are. And that's something we're deploying, starting call it this week to launch Paramount+ in the U.S. and initially in Latin America. We're using all of our assets, our linear feeds. We use our linear feeds. We're running spots. We're previewing shows. We're using our social handles, and we're the #1 entertainment company in social. And we're using Pluto. So it's part of it -- just like for advertisers, it's high-quality reach. Guess what, in this form, we're in advertising. And we're more than the advertiser running spots. So for example this year, we spun off a Showtime channel. And we actually got more subs sent to Showtime than the Showtime YouTube channel sent. So -- and why? Because these people are interested in high-quality television. So yes, it's a great piece of the equation. And one of the benefits we have of now an integrated streaming organization is we have Tom Ryan running it, thinking about -- while I'm responsible for both of these things, how do we use them together, versus when it was 2 organizations, I was there legislating some of that, but it's better when one person owns both.

Sure. Given that it's an internet delivered product, can you use it for provisioning? Can you use it for -- to enable sign-ups of Paramount+ Showtime directly through Pluto or a more direct feedback loop?

Yes. Well, you'll see us do a lot of that progressively over time. We're really going to build out one -- look, we're the only major media company to embrace free, pay and premium streaming. And the reason is we see those as 3 lanes that help us serve the widest addressable market. And in combination, they can create value lowering subscription, [ fiber ] acquisition costs, increasing lifetime value, lowering churn. And what you just referenced as far as Pluto model for sign-ups is part of that. But also you want to catch people who might pause their subscription and keep them in free ad-supported. There's a range of things you're going to see us do as we build this out over time.

Let's shift gears to -- on to the investment side of this business, Bob. The other, I'm sure you've heard, major investor debate or question I've gotten is around content spending, right? And particularly for a company like yours that's already spending a lot, it's hard for us to have a lot of visibility or conviction around how much incremental spending is necessary to deliver the numbers that you guys have laid out. How did you guys think about that? How did you arrive at the sort of streaming investment levels you laid out last week and get comfortable that that's enough to hit your targets?

Yes, so a couple of things. One is start with -- we spend about 15 million -- $15 billion on content a year. That's what we were budgeting to spend in '20. We didn't quite spend that because of COVID, but that's the ZIP code we're in. And that puts us in a pretty unique club. You saw us, including last week, talk about leveraging library assets. Now when we leverage library assets, they come from years and years and years, in the case of Paramount over 100 years, of cumulative spending to build them. And then yes, you're paying an allocation of amortization, but it's in no way reflecting what it would actually cause you to recreate it. So that $15 billion gives us some real advantages in the form of library assets that have been built over time and in the form of IP that people know, like, look at our -- the NFL. [ Okay, ] the NFL's on live linear and it's on CBS All Access going to Paramount+. The fact that, that is enabled by that $15 billion. So that's kind of point one. Point two is when we put the -- well, Paramount+ is a company-wide effort. It is not Tom Ryan's project, and he's the only one who needs to worry about it. And what I mean by that is the slate that you guys saw last week was a function of each of the content leads for the company delivering against the mandate of how can we bring -- how can we create the most successful streaming broad pay streaming service leveraging our assets? And that was an iterative process over months with Jim Gianopulos; and George Cheeks, who runs CGS; and Chris McCarthy, who runs Entertainment and Youth; and Brian Robbins, who runs Nickelodeon. Now those originals, we have to pay for. But we didn't start by saying, "Okay, you have $1 billion," or whatever the number is. We started by -- I started by saying, "How do we make this compelling, Brian? Take -- I want a compelling version of Nickelodeon that's going to lead kids as part of Paramount+. What is it? And that led to, "Let's do The Spongebob Movie." Of course, that was with Jim G also there, that led to Camp Coral, that led to the new version of Rugrats, that led to iCarly. I mean when you look at our kids offering, it's a killer. But that's because we have the best kids asset in the business actually working on Paramount+. So the second point is we didn't actually define the launch number as here's a number back, solve for it. We said, "Create a great product. Let's see how much will cost us." And that number was $1 billion in 2020. It's obviously more than that in 2021, but it's not crazy, no. And we guided towards -- the third point is a '24 number of $5 billion, which is really a layered cake build from where we are continuing to grow [ volume ]. Is that going to be enough to be competitive? Well, I start with people didn't expect us to mount the product we mounted on last week. And obviously we didn't spend [ $20 billion ] on it. The second point though is as this thing tracks out, we're going to see what's working, what's not working, where do we want to lean in more, where we want to lean in less. And we certainly can spend more from a financial envelope. So I'm very excited about the content plan that we have in place. It's more than planned. We're obviously in production. We have some economic advantages given our assets. I believe we have a plan that will create success. But we will of course monitor the plan, monitor the results and course correct as necessary to take advantage of what we learn.

Yes. Is there a way -- and my guess is there's probably no answer to this yet. But is there a way to think about overall content spending at the company level over the course of these next 4 years? Do you think this is all incremental spend? Or how would you frame it for us?

No, it's not all incremental spend. The $4 billion, if you will, [ $1 billion to $5 billion ] is not all incremental. Part of this is remix from traditional to streaming. There is incremental spend in there too. And again, that's one -- we did not give any guidance on total company spend, but obviously we have a plan. We know what we believe it will be. And again, we're going to execute. And we're going to fine tune, taking advantage of places where we win and shoring up areas that might need it.

I want to sneak a Showtime question, and that was one -- there's certainly been a debate in the market whether Showtime would get folded into Paramount+, you've decided to keep it as a stand-alone product in the U.S. How has Showtime been performing in arguably the most competitive part of streaming is scripted drama, which is really their bread and butter?

Showtime had a fantastic year in 2020 on a financial basis and on a streaming subscriber basis, including every quarter. And it had a great January and a great February too. It's -- the programming lineup it has is resonating. If you haven't seen Your Honor, you should see it. It's a great show. It turned out to be the #1 launch for Showtime of 2020, and it was a good sub driver. And then it's got returning franchises. So Showtime is doing very well. Probably the reason it is as it has it a distinct play. It is edgier. It is more risk taking. Yes, it's a little more coastal than Paramount+, which is a broader product. And we think it makes sense at this point in time to maintain that differentiation. Obviously at the same time internationally where we don't have a Showtime business, and therefore it's been simpler, we're going to run an aggregate product and we'll see how that goes. But the Showtime brand is strong. And given what some other people are doing in the premium space, if anything, I think, its hand is improving over time.

How would you think -- or how would you suggest we think about the profitability of the streaming business over the long term? Because again investors, I think, are very focused on the margin profile of the linear business, obviously it has been incredibly attractive for a long time. No one is making money in streaming yet other than Netflix at 200 million subs. So what's your perspective on the scalability of these businesses as someone who's obviously building them at Viacom?

Yes. So right now, we're certainly in the growth leg of that business. But as we model it out, we see a nicely profitable business. We do see a business that scales. Clearly, the size of your sub base matters or the size of your MAU base matters. On the free side, Pluto has some advantages in that is largely from a content perspective, a rev share and an internally library model. So that's pretty efficient. And on the pay side, as subscribers scale, we see that being profitable. It is also a multi-revenue stream back to the $4.99 product. We see nice ARPU from the advertising side coming. So yes, it's a real business.

Good. We've got about 10 minutes left, Bob. So I want to shift gears and focus in on a couple of kind of programming ecosystem question. So you guys have sports, live sports at Paramount+, which is a differentiator. You actually were highlighting a lot of soccer last week as part of the offering. Talk about the role of sports for ViacomCBS over time. Do you expect to be doing more of this versus less? And how much -- how important is sports to where you're going with streaming?

Yes. So the sports position comes from the CBS side of the house. CBS has a long, long legacy in sports and very strong capabilities in sports, a very strong brand in sports. So we absolutely see an important role for our company in sports going forward. That's true both in the traditional linear side of the business as well as now on the streaming side of the business. We have a portfolio of sports properties and partnerships that we work in, obviously anchored by the NFL, but far beyond that we continue to look at opportunity and see what incremental things we want to do. The biggest incremental thing we've done recently is obviously UEFA. So far so good on that. We like how it started. And by the way, we were able to start that early, which we are very happy about. We also own a small mixed martial arts business, but it is the #2 mixed martial arts business in Bellator. We'll look to continue to grow that. So yes, sports are important. Why are sports important? Because at least the American consumer, because that's where we do -- we're in the sports business predominantly love sports. And so we see that as a way to bring consumers in. We are -- our partners, MVPDs, affiliate stations, see value in our sports. Advertisers see value in our sports. And so yes, you'll see us continue to play in that space because it works for us.

The transition of sports into streaming raises obviously lots of big questions around -- about the business. I don't know, Bob, what you can say, if anything, about the NFL. There's been a lot of press even in the last 24 hours. It looks like the deals are almost done. But whether you can comment or not, can you just talk about how the NFL might fit in longer term to Paramount+, given these look like they're going to be 10-year deals? I'd imagine you're trying to think about the flexibility these rights will give you as the business pivots.

Yes. So I don't have any new news on the NFL to talk about today. But we've had a long-standing mutually beneficial partnership with the NFL. We were early to the NFL on both linear and streaming, and we like that model. We obviously showcased the NFL in Paramount+ last week. We found it is an effective piece of programming to have from a subscriber acquisition standpoint. So again, we love the NFL product. We love the NFL management. We have a very good relationship, and I'm confident we'll be in business with them for a long time. And that, that business will span both our linear business, which will also be around for a long time as well as streaming.

How does the MVPD world handle this shift that's happening at Viacom as well as the overall industry? Because I'm sure you've heard some of the comments from the Charlie Ergens of the world. I'll be speaking with Tom Rutledge later. They're paying for your product and you're redirecting capital into streaming. Do you anticipate any tension there, even though you've had a year of really strong success on the distribution front post merger?

Look, we have multifaceted partnerships with most of these distributors. And that's really the course of action that we implemented back at Viacom legacy probably 4 years ago, where we said we don't want to just license linear feeds, we want to be in the advanced ad business with them. Then once we acquired Pluto, we said we want to be in the app business, both for set-top box and broadband. And you look at major MSOs, that's exactly where we are. So the business is broader than it used to be, and our ability to provide -- create value for our partners is broader than it used to be. Now what -- we did that because we knew the landscape was changing and having a one-dimensional business was probably not in our best interest or their best interest. What's key is that you provide value, value that obviously people are willing to pay for. Because there will always be negotiations and negotiations are negotiations. But at the end of the day, I look at the value that our portfolio of content assets provide, whether that's the CBS assets, the cable network assets, Paramount assets, now the Pluto assets, now the Paramount+ assets. We are one of the most important content suppliers in the world full stop. We know how to get deals done. We know how to transition businesses and deal with complexity. So I'm quite confident that we will continue to be in business and probably in a broader business with these folks for years and years to come as the distribution base writ large broadens, mobile operators, over-the-top players, device manufacturers, et cetera. What's key is to have great content, and that's what we're focused on.

Maybe in our last couple of minutes, I wanted to hit the advertising market. You guys had a very strong fourth quarter, outperforming at least expectations on the advertising front. You mentioned the strength of Pluto. Any update on the ad environment across your footprint? And what are you guys going to do in the upfront this year given the broad portfolio that you now have at the company?

Yes. So ad business has been on a continuum from the sort of second quarter COVID bottom, which was super early. It's been on a nice turnaround path, and as you saw in our fourth quarter results, returned to positive growth. And that's obviously -- and most categories are back. There's still some issues obviously with film because no one's opening pictures at scale and still some travel stuff. But the ad business is for sure improving with reopening. And I think the trajectory ahead given vaccines, et cetera, should provide for that to continue. So we feel good about the ad business. Also, there are some good comps for us early in '21. Q1, we had the Super Bowl in Q1. We didn't last year. That's a big piece of business. Q2 -- the end of Q1, the NCAAs we have, they were canceled last year. All indications are that those will go forward. So I think the ad business, we like the ad business. We continue to scale our digital product. This [ iQ ] product, which spans all of our high-quality digital inventory, including Pluto, including CBS All Access. So I feel good about the ad business. I think Jo Ann Ross has put together a fantastic team with real marketing problem solvers. So again, I think we'll continue to see improvement, and that goes to the underlying fundamentals of the business. And again, people look at that. That should also contribute to the comfort of our -- on valuation.

Well, that's a good note to end on. You guys have a big day coming up here on Thursday. Good luck. Anything you want to wrap up with, a final point?

Yes. Ben, look, I would just say these are exciting times at Viacom. Picking up where we just left off and where we are right now as we're seeing the sort of traditional business benefiting from a bit of a rebound out of COVID, which we think has legs. And of course we're simultaneously leaning into the most important growth opportunity in our business: streaming, and I believe after last week, in a very credible way. So we're tremendously excited about ViacomCBS as a company. We've proven the skeptics wrong. This company does make sense as one company. We are unlocking value. Yes, thankfully, the stock has moved. But it still has value -- significant value creation ahead, and that's what we're focused on. So thanks for the time. Stay well. And again, I look forward to in-person next year.

Yes. Absolutely. Thank you, everybody, for joining us. Bob, thank you for your time, and have a great rest of the day today. Thank you.