Coronavirus: ViacomCBS issues profits warning, launches $2.5BN debt offering
Details
Joseph O'Halloran
| 29 March 2020

Anticipating, just like all other media firms, strong headwinds caused by the Covid-19 outbreak, media mega company ViacomCBS has announced that it has agreed to sell up to $2.5 billion in debt and withdraw previous guidance for its financial year.

The debt offering comes just after ViacomCBS filed a Form 8-K with US financial regulators updating the company’s 2020 outlook in light of global concerns about the Coronavirus disease, warning of diminished returns.

The financing offer amounts to $1.25 billion in aggregate principal amount of 4.750% senior notes due 2025 at a price equal to 99.498% of the principal amount thereof and $1.25 billion in aggregate principal amount of 4.950% senior notes due 2031 at a price equal to 98.036% of the principal amount thereof. The sale of the Senior Notes is expected to close on April 1, 2020, subject to customary closing conditions.

ViacomCBS’ senior unsecured debt is currently rated BBB (stable) by Fitch Ratings, Baa2 (stable) by Moody’s Investors Service and BBB (negative) by S&P Global Ratings. The company added that it intends to use the net proceeds from the offering for general corporate purposes, which may include repayment of outstanding indebtedness.

In its notification of the hard road ahead, the company emphasised that global concerns about Covid-19 have impacted the macroeconomic environment, as well as its own business. As a result of the outbreak and measures to mitigate its spread, including that working proactively to offset a portion of anticipated revenue losses through cost savings initiatives, ViacomCBS said that it was necessary to withdraw its previous guidance as to its 2020 financial results.

ViacomCBS reaffirmed its expectation to achieve $750 million of full run-rate merger-related cost synergies over the next three years and also reaffirming its expectation to have approximately 16 million domestic streaming subscribers in pay and approximately 30 million monthly active users on the Pluto TV advertising video-on-demand (AVOD) service by the end of 2020. The company also noted its recent multi-year agreements to renew CBS affiliations with local stations across the US.

That said, ViacomCBS accepted that the impact of Covid-19 on businesses – including the postponement of theatrical releases, cancellation or rescheduling of sports events for which it had broadcast rights, and production delays in TV and filmed entertainment programming – could be material to operating results, cash flows and financial position. It stressed in its finanical filing that the full magnitude of the impacts would depend on the duration and extent of the pandemic and the impact of federal, state, local and foreign governmental actions and consumer behaviour in response.