ViacomCBS, Inc. (VIAC) Presents at UBS Global TMT Broker Conference Call - (Transcript)
ViacomCBS, Inc. (NASDAQ:VIAC) UBS Global TMT Conference December 8, 2020 1:00 PM ET
Company Participants
Bob Bakish - President, CEO & Director
Conference Call Participants
John Hodulik - UBS Investment Bank
John Hodulik
Hi. It's John Hodulik, the telecom, media and communications infrastructure analyst here at UBS. And I am pleased to introduce Bob Bakish, the President and CEO of ViacomCBS as our lunch keynote speaker. Bob, thanks for being here.
Bob Bakish
Thanks, John. Real pleasure to be here virtually. Look forward to doing it in person next time, but great to be here for lunch virtually.
Question-and-Answer Session
Q - John Hodulik
Absolutely. And it's been about a year since we spoke in this forum, which is right after the merger closed. And as you suggested, a lot has happened this year. And maybe to set the stage, could you take us through some of the highlights for ViacomCBS?
Bob Bakish
Yes, sure. So as you said, last time we spoke, it was almost exactly a year ago, just after we closed the Viacom-CBS merger. At the time, I think it's fair to say that you and investors had questions about how we'd unlock value from the combination. Since then, we really have been focused on executing and in fact, have unlocked the power of the combination on multiple dimensions.
We've built a best-in-class management team, which is able to operate one ViacomCBS. You saw us consolidating ad sales, et cetera. And most recently, you saw us create a new, consolidated streaming organization.
We also accelerated our strategy and execution across pay and free streaming. And you see that driving growth in subscribers, monthly active users and revenue.
We, of course, continue to produce hit content, which resonated with consumers across demographics, across genres and across formats. We did a lot of work on the distribution side and in fact, expanded our footprint, unlocking value through cross-company renewals and new deals. We strengthened our positioning in advertising by bringing to bear the power of our combined portfolio and capabilities. We saw that work very well, for example, in this complicated upfront. We definitely improved our operational efficiency and in fact, exceeded the cost synergies we promised for 2020 and are on track to exceed them for the 3-year term that we talked about.
And we've unlocked value from noncore asset sales, including the divestiture of CNET and most recently, Simon & Schuster. So all this we got done despite the complexity of the pandemic. So as you said, 2020 was quite a year. But importantly, 2020 was a year where we delivered on our objectives, and we're really excited about what's to come.
John Hodulik
Great. On your last earnings call, you provided investors with a helpful outlook about -- of how you expected the year to end. I think one of the things we heard yesterday with our ad panel that the ad market was coming back so much stronger than people had expected. Any update you can give us about Q4 trends?
Bob Bakish
Yes. So on our Q3 call, you look at the metrics that we disclosed, it demonstrated real momentum across multiple lines of our business. And on that call, we said we were optimistic about trends heading into Q4. With that, I'm happy to say that the momentum continued as we expected in advertising, as you noted, in affiliate and streaming. And we're reiterating all the guidance that we gave on that call.
So in advertising, you're right, the market is good. We continue to expect improvement in year-on-year growth rates in Q4 relative to Q3. On the affiliate side, we delivered a very strong 10% total affiliate growth and 4% domestic cable affiliate growth in Q3. And we do expect to deliver similar growth rates both -- for both again in Q4.
On the free cash flow side, we'll deliver adjusted free cash flow for the full year well ahead of where we originally expected when we started the year. And then in streaming, we will reach at least 30 million MAUs domestically in free and in fact, cross 40 million globally. And on the pay side, we'll have at least 19 million subscribers.
Importantly, again, thinking about the streaming business, we now see domestic streaming and digital video revenue, which does include some ad sales money at an annual run rate in Q4 of $3 billion. That's up from the $2.8 billion and change we talked about on our Q3 call. And that implies over 50% growth in the quarter.
So you look at that and you can tell why I'm so proud of the progress we've made in streaming. And I also want to say that we're going to hold an investor event in early '21 to discuss our streaming strategy and aspirations in much more detail. There, we'll share more about our plans for Paramount+, including an update on the content slate, our distribution and marketing strategy and our film utilization plans. And here, you'll really see how our brands and franchises, combined with our traditional reach and relationships, will provide real advantage for us in this space.
We'll also give you an update on our entire streaming ecosystem, and that includes Pluto TV as well as Showtime OTT, and we'll share with you how we're using the assets of this great company to pursue a global streaming strategy. So again, really excited about what we're seeing in the quarter.
John Hodulik
Great. Before we dig into each one of these and hopefully try to front run your D2C event next year, you mentioned the Simon & Schuster sale. That was the sort of most recent news you guys had out there. Just some details on that. When do you expect the deal to close? Anything you could tell us about the tax basis and the -- maybe use of proceeds from that transaction?
Bob Bakish
Yes. So late last month, we entered into a definitive agreement to sell Simon & Schuster to Penguin Random House. That's a wholly owned subsidiary of Bertelsmann for $2.175 billion in cash. And that's an extraordinary value, but it's reflective of the fact that Simon & Schuster is a global publisher with some of the world's best-known books, and it's firing on all cylinders. And it's also the outcome of a highly competitive auction that really attracted interest from buyers, including buyers all around the world.
I think it's worth noting that the divestiture follows a strategic review of ViacomCBS assets that we undertook in early 2020, one where we identified noncore assets based on the lack of a fit with our studios, networks and streaming focus. As you know, we already closed on the sale of CNET in October, and we expect to close on the sale of Simon & Schuster in 2021. Put those transactions together and the result is gross proceeds of just short of $2.7 billion. We'll use those proceeds to invest in our strategic growth priorities. We'll fund our dividend, and we'll pay down debt in order to reach our 2.75x leverage target.
John Hodulik
Got you. So we're here at a time of massive change in the media industry, and we've heard about all the efforts going into the shift in the business models that are taking place as consumption of video migrates. Can you talk about how ViacomCBS is positioned to capture these new opportunities? You talked about the launch of Paramount+ in 2021. How should we think about how the company is positioned in this new playing field?
Bob Bakish
Yes. So look, this is definitely a time of change, and streaming certainly matters more than ever. And we're aggressively leaning into it on a global basis and using our strength in content, in brands and distribution to accelerate that streaming business.
Now we believe in broadly serving consumers. And so what we're doing is progressively building a linked ecosystem of differentiated offerings across free and pay streaming. And that ecosystem is centered on Pluto TV in free and Paramount+ and Showtime OTT on the pay side. So in free, as you know, Pluto TV is the leader in free ad-supported streaming television or FAST, as it's called. And we're really excited about its trajectory as we focus on growing it here in the U.S. and abroad. I think it's fair to say that the world is quickly embracing free streaming, which is why Pluto TV is key to our strategy. And as we progressively build out this ecosystem, Pluto is going to serve as a powerful gateway to and funnel for our pay services.
Flipping to pay, on the broad pay side, we're transforming CBS All Access and relaunching it as Paramount+ in early 2021. And that's something I'm super excited about. Paramount+ is going to combine live sports, breaking news and a mountain of entertainment. And that entertainment includes a deep roster of exclusive originals and franchises for every audience. This is a cross-demographic product.
Now you're going to hear more about our content slate at our investor event in early '21. Now to date, we've talked about a few titles as a preview. Those include The Offer, which is a scripted limited series that tells the story behind the making of the Godfather, the Godfather trilogy, clearly, one of the most iconic film franchises of all time. Includes Kamp Koral, which is a new kid series from the SpongeBob SquarePants universe that we're spinning out that we will release after we drop the SpongeBob Movie: Sponge on the Run, which will be exclusive to Paramount+ in the United States.
Consistent with our history and legacy, we're going to do a new addition of Behind the Music, iconic music series that we think has a home for today. We're doing a new series from Yellowstone creator, Taylor Sheridan. As you know, Yellowstone was the biggest hit on cable this year. It is, of course, coming back next year for another season. And there's going to be a whole lot more that we're going to talk about at this event because this really is the tip of the iceberg or maybe the tip of the mountain.
Now those offerings will also complement our premium product, Showtime OTT. Showtime OTT continues to deliver robust subscriber growth, and that combination will really create an ecosystem that will take us to the next level in the streaming space. There's no question in my mind that our streaming strategy is working and that we have clear momentum, again, evidenced by strong growth in subscribers, monthly active users and revenues in 2020 and certainly in Q3, and you'll see in Q4. And we look forward to updating you and the investor community and others in greater detail at the streaming-focused investor event early next year.
John Hodulik
Great. What do you view -- maybe starting with the All Access and Paramount+ product. What do you see as the sort of main keys to success for that product? Is it content? I mean it's an increasingly crowded field. We just had the Discovery Plus announcement last week, and we're getting more news from Disney on Thursday. Are there other areas that you've been working on aside from content that you hope to leverage to drive growth in that -- with that service?
Bob Bakish
Yes, for sure. But let's start with the fact that the streaming market presents a large opportunity. And it's clearly a growing global opportunity. You look at it today, there's probably over 90 million homes in the U.S. that subscribe to at least one service and probably nearly 300 million SVOD subscriptions total. 2/3 of those 90 million households stream over 5 hours of content per week, and the percentage of households that subscribe to more than one SVOD service continues to increase. It's almost double what it was 5 years ago. Today, the average household subscribes to 3.1 SVOD services per home. And that's up from just over 2, 2 years ago.
So it's definitely a growing category. We see it continuing to grow. We do not believe it is a winner-takes-all market. We believe there's a place for a number of streaming services to be successful. And in that kind of setup, this is why we believe in a differentiated approach, complementary approach. And in fact, we do have differentiated and valuable assets.
You look at us on the traditional side, we do have the #1 broadcast network. We do have the #1 cable portfolio on multiple demographics. We have a huge library of Paramount films. We have live sports partnerships and news. We are going to have this strategy, and we already do. In fact, it spans free and pay, and we have momentum.
So to your question, is content key? Yes, absolutely, content is key. And that's both library content. It's living under brands, and our flagship brands have near universal recognition. And it's new content, including new originals. And ViacomCBS has among the most robust production capabilities in the world.
It is also brand. One of the things we're great believers in at ViacomCBS, because it makes a difference, is brand. And so you've seen us carve out very clear brand position for Pluto, which Pluto is a beacon of free. And likewise, Paramount+ is a pay brand. It's a premium brand, has a long legacy of association with people paying for great content. And so brand is important, and we're very focused on that, and you'll see us execute that in our campaigns.
The other thing I'd say is really important is distribution. ViacomCBS has always believed in ubiquitous distribution working with -- across the MVPD then satellite then vMVPD universes, obviously, our content licensing business. There's all kinds of people. And our streaming strategy has also been based on ubiquitous distribution. You looked at it. We do -- we have distribution through traditional operators. We have distribution through mobile operators. We have distribution through over-the-top players, whether that's channel stores or platforms. And we think that combination is really powerful. And by the way, we believe we benefit from the fact that we don't have a -- our own in-house channel that we got to go protect.
So it's content, it's brand, it's distribution. We're well positioned on all 3 of those, again, across both free and pay. And we believe that will lead to continued momentum and success in the streaming space.
John Hodulik
Got you. And let's talk about sports on the All Access, Paramount+ platform. I mean has that played a big role in driving growth? And do you expect it to take on -- I mean, obviously, you've got NFL, you've got Champions League soccer. Do you expect sports to be -- take on a bigger role as you grow that platform?
Bob Bakish
Well, I think it starts with -- when we think about Paramount+, what are we calling it? We're calling it live sports, breaking news and a mountain of entertainment. So sports, we believe, matter. Sports, we believe, are a differentiator relative to other offerings in the marketplace. And sports, we have seen, drive performance for our platforms, particularly CBS All Access.
So if you look at Q3 as an example, what drove Q3 for All Access? Well, two of the things that drove it were sports: UEFA and the return of the NFL. Some entertainment stuff mattered, too: reality, which was all Big Brother and Love Island; and the addition of ViacomCBS content and a new Star Track variant, Lower Decks. But clearly, sports mattered there. And if you look at the last two months, NFL has mattered. SEC has mattered. UEFA has continued to matter.
So we like that. You look into the March time frame of '21, you have the NCAAs. That has historically mattered. Unfortunately, it didn't matter in 2020 because we all know what happened with the NCAAs. But there's no question that there is a consumer base out there for sports, including in over-the-top. There's no question that sports can drive new subscribers as well as drive regular engagement. And so yes, it's an important part of the strategy. And again, I think we're early to that, and it's part of the differentiation we're pursuing.
John Hodulik
Do you think -- you mentioned March -- or the NCAA tournament. Do you think March Madness can be a driver of growth with the launch of Paramount+ given the timing?
Bob Bakish
Without question. Without question.
John Hodulik
Yes, makes sense.
Bob Bakish
And by the way, I'm happy they're going to go play in a -- looks like they're playing in a bubble in Indianapolis. They actually will -- because the pandemic will still be here. I mean we will have vaccinations, hopefully, but that's not going to be at scale. And so we're going to continue to be in a risk mitigation world. And that strategy was proven to work for the NBA. And so I think they're very smart, the NCAA, to be pursuing that strategy. And that increases the probability that, that product will be a real benefit for Paramount+ in the March time frame.
John Hodulik
Yes. All right. So last question on Paramount+ content. Earlier today, we had John Stankey speak and then after him, Jeff Shell from Universal. Obviously, Warner Bros. Making a lot of noise with their decision to release the 2021 slate on HBO Max at the same time as they release in theaters.
Just your thoughts on that strategic decision. Obviously, Paramount is, to a certain extent, in the same position. You've got great slate for next year. But a lot of questions around whether people will be back in those theaters and at the same time, launching a new high-profile streaming service where the equation really leans towards growth and the need for growth. How do you sort of balance all the different constituencies as you sort of release that slate next year?
Bob Bakish
Yes. So look, John, you're right. We have a great slate for '21. We have 12 films on the docket. That's led by 4 franchise films: Quiet Place, Part 2, which we had to pull at the last minute in '20 when the pandemic set in. It's a fantastic film; Top Gun: Maverick, which is the long-awaited sequel to the original. That film is amazing. We got Mission: Impossible 7, which actually finishing shooting up in Europe as we speak. And then we got a G.I. Joe film, Snake Eyes. So 4 of the 12 were really franchise films. So feeling very good about our product.
Obviously, we're living in what we call COVID rules, and theaters are fundamentally not open at scale. And so what we've been doing, we've been really employing a range of tactics. One is we've obviously delayed some films every -- or 3 of the 4 films I mentioned had public moving of dates as we wait for a better theatrical environment. At the same time, we've chosen to monetize some films with the streaming category. That was a way that we could sort of replicate longer-term economics in the current day and get a return on our investment.
We've also announced that one of our films, SpongeBob: Sponge on the Run, is going to be deployed against the Paramount+ rebrand. And after a short PVOD run, it's going to be exclusively on Paramount+ in the United States. And then as part of that, we'll also drop a new SpongeBob series.
So look, we're doing a range of these things. As we look at it and look to emerging from this COVID world, it's pretty clear that the theatrical windows will evolve and get shorter. I've said that for a while now, and I think that's certainly going to be the case. I think there's a role for theatrical. Particularly you think of a film like Top Gun, it would be a shame to watch it on a mobile phone because it really is an incredible spectacle.
But in parallel, some of these new monetization paths that we're seeing are going to be more common. People are going to use films to drive over-the-top products. People are going to look for alternate monetization, and that's going to be the norm. The good news is we have a substantial collection of IP. We have robust production capacity. In fact, we're taking our Paramount Players label and also deploying that against made-for-streamer titles. So I think the film category will continue to be strategic and valuable but certainly is evolving. And again, that's giving us more flexibility, more optionality as we go unlock value for Paramount and for ViacomCBS writ large.
John Hodulik
So do you think as part of this whole -- do you think the windowing that we've seen, I mean, which has been evolving, do you think coming out of the pandemic, there's lasting changes to windowing as we currently see it?
Bob Bakish
I think coming out of the pandemic, you have a more multifaceted film business, and you have shorter theatrical windows, which is different than saying I think the theatrical business goes away.
John Hodulik
Right.
Bob Bakish
Because again, it is appropriate, particularly for certain types of films. There are consumers who love going to the theater. There are people who don't as well. So -- but I think the net effect of it will be shorter theatrical windows and again, films being in other environments as well.
John Hodulik
Got it. On the last conference call, you announced that the company is going to be shutting down a number of the smaller D2C platforms, such as MTV Hits. Is Noggin and Comedy Central now included in that list of D2C labels that will be either wound down or combined with All Access? And how many subs are we talking in terms of the total number?
Bob Bakish
Yes. So as part of our transformation of All Access into Paramount+, we've obviously added our flagship brands. And so in our preview launch this summer, you saw MTV take up residence, Nickelodeon, BET, Comedy Central, Smithsonian. That's really a precursor to our Paramount+ launch early in '21.
And so as we do that, we have some small services, MTV Hits, as an example, Comedy Central service, which really don't make sense on a stand-alone basis. And so we're sunsetting those 2 services in the fourth quarter as we prepare to fully embed that content inside of Paramount+.
Noggin and BET are different. Noggin and BET both are very well-defined services that have very good subscriber momentum that we see as continuing to exist in the marketplace. We do believe that as they exist, there are some opportunities to bundle those products and create other kinds of consumer packages. But no, we are not going to -- we're not planning on sunsetting either BET Plus or Noggin.
John Hodulik
Right. And what about Showtime? I mean you had some positive things to say earlier in the session. Is that a property that will eventually be combined with Paramount+?
Bob Bakish
Yes. So I'm very pleased with the year Showtime is having in 2020. The brand really has very good momentum. It's over-the-top product. It's doing very well from a subscriber standpoint and an engagement standpoint for that matter. We've seen it benefit from hits like Billions and Homeland and Ray Donovan. And in fact, we just launched a new show the other day, Your Honor, and had a tremendous day for Showtime OTT.
And part of the reason all that's true and part of the reason we believe this premium tier is relevant is, first of all, the premium tier has always existed. Second of all, you look at the product on Showtime, it is more coastal. It is more R-rated. It is not as broad as we intend Paramount+ to be. And therefore, we think there is a role for it, broadly speaking, in the ecosystem. And by the way, we like Showtime's lane even more relative to the competition -- traditional competition, given what's going on in the category.
So I feel very good about Showtime. The team has really put together a great programming slate with more to come, obviously, in '21. And I think the Showtime OTT product has a continued good run ahead of it.
John Hodulik
Got you. Maybe let's shift to Pluto. Obviously, you guys were early in that move. A lot of transactions followed you, and other launches followed your acquisition of Pluto. Can you talk about how that property is positioned in the field? And how it's impacting the overall business? And what the reception has been to advertisers?
Bob Bakish
Yes. So look, I couldn't be happier with Pluto. It is the U.S. leader in free ad-supported streaming TV or FAST. When we acquired that company towards -- in '18, I remember talking to a whole bunch of people, and they're like, you will what? What is that? Free ad-supported, why would you do that? What about SVOD?
And the reality is we did it because we saw the category. We believe that free is a big category. And candidly, we were early to that. As you point out, others have followed us there. But we continue to have the #1 service. Why do we have the #1 service? Because look at our content offering, well over 100,000 hours of high-quality content available to U.S. viewers. And that's a mix of our own IP and third-party content.
And if you look at that through 2020, really 2019 was the year of adding Viacom content to Pluto. 2020 is more the year of adding CBS content to Pluto. And you look at two recent examples of us using our own IP on Pluto, an example of each, in November, we -- on the BET Pluto channel, we dedicated the entire month to the world of Tyler Perry, and we saw tremendous viewership growth throughout that month for that service.
And then last week, in a different version, we introduced a Showtime, we called it the Showtime Select channel on Pluto TV. And we added 70 hours of exclusive premium content to the service, including titles like Californication and Ray Donovan and The L Word as well as episode one samples of new shows like Your Honor and Love Fraud. And that's examples of Pluto TV's content leadership.
As you heard me earlier, I mean, we're really seeing audiences flock to the service. When we announced that we -- when we closed on Pluto's acquisition in early '19, because we did the deal at the end of '18, it had 12 million monthly active users. In Q3, on the domestic side, we grew monthly actives 57% year-on-year to 28.4 million MAUs. If you add into that international, at the end of Q3, we're around 36 million MAUs. And that's really a tripling off a double-digit millions base in under 2 years, which is extraordinary. And we're on track to reach over 30 million MAUs domestically and 40 million MAUs globally by the end of this month. So really, really happy with what we see in terms of consumer traction there.
I talked about distribution as being important to streaming, and Pluto is a great example of that. We have very ubiquitous distribution on Pluto, and we continue to build on it. We launched Pluto on Verizon mobile this summer. That was our first mobile deal for Pluto. And while that's -- while it's early, that's definitely working.
More recently, we did a really cool deal with Sony, where Pluto TV became a launch partner for PS5. And that was actually Pluto's first global distribution partner launch, where we launched in 20 European and Latin American territories in addition to the U.S. simultaneously.
So a lot going on in the distribution space. If you add in the recent deal we did with LG, because we do a lot in the connected TV space, we've actually added over 100 million incremental devices worldwide to the Pluto footprint. So see that as a nice incremental growth catalyst for the coming months.
So love what we're seeing with Pluto. Love that we were early to it. But just because we're early, we're not stepping back. We're leaning in, and we're going to progressively build that product out globally. And we are going to integrate it into our overall streaming strategy as we have our pay products benefit from it as well.
John Hodulik
Got you. Do you think these products -- the rise of the whole sort of FAST ecosystem -- and there's been a lot of activity since you guys, you said, since you guys bought Pluto, plus all the launches of all these new apps, these new D2C platforms. Do you think that puts incremental pressure on the linear ecosystem? Just your view on sort of cord cutting and whether or not just all the activity and all the content going up online impacts the pace of decline there.
Bob Bakish
If you look at Pluto and really the FAST category writ large, it's all library services. Certainly -- and Pluto has some news on it as well of a variety of different -- from a variety of different brands, including CBS and others. But it's really library-chronic. You don't get that exclusive original product that you get on broadcast, on cable and on pay streaming.
So what you see is it definitely appeals to a category of people that maybe only want a free service or want a free service as a complement to other things they're doing, including on-the-go. But look, the whole video consumption category is evolving.
We continue to believe in the pay linear space and the value of the bundle. And of course, we service that market, including with original product. We simultaneously have been building out, if you will, our broadband product, both in free and in pay. Because that allows us to serve incremental consumers or the same consumers with an additional offering. And we think that's the way to serve the widest array of consumers. We think that's the best use of our content assets. We think that's the best way to solve advertiser problems.
And look, we have leadership positions in linear. We have leadership position in FAST, and we're very quickly building an important position on the pay side. And I think that's what you got to think about. It's like this market is segmenting. You got to serve the whole thing, and that's what we're focused on.
John Hodulik
Got you. How should we think about content spend over -- actually, maybe just an update on your return to content production. How is that going? And when do you expect to get back to sort of pre-COVID levels?
Bob Bakish
Yes. So look, knock on wood, I'm very happy with where we are from a production standpoint. Obviously, earlier in '20, COVID had a material negative impact on production. And you really saw almost everything but news shutting down.
Today, we are almost fully back. If you look at CBS, we have all our series back in production and many of them -- or most of them actually at this point, back on air. On the cable side, we are also 95% back with all key franchises, whether that's The Challenge on MTV or Yellowstone coming to Paramount Network or others, that production is in a very good place. The Paramount+ originals are on track. And then Paramount itself is still transitioning back, but we'll be back to essentially full speed as we get to '21.
Importantly, we've done all this very focused on the safety of our crews and our talent, implementing a whole set of protocols, including things like A zones and B zones, et cetera, lots of testing. And again, we have figured out a way to produce compelling content. We altered some scripts. We've dealt with location.
But yes, the good news is we're back to production at scale. We have fresh content on air, including on our linear networks. That's great for consumers. That's great for advertisers. And we've certainly learned a lot through this process.
John Hodulik
Got you. So how should we think of the growth of your content spend over time? And then are there any -- obviously, I think it's not just ViacomCBS, but companies are sort of shifting the resources from linear to the growth areas in D2C. How should we think of that decision process within the company?
Bob Bakish
Yes, sure. So we expect to grow our overall content investment on a ViacomCBS basis in 2021. As we consider the magnitude and composition of our content investment, we do think about it relative to growth opportunities. Clearly, and we've talked about it today, streaming is a big opportunity. We will invest more there. The good news is we've got several years of experience and increasing momentum. So it's not like we're walking into that picture greenfield. We actually have metrics. We know it works. And so that can benefit us as we scale up.
I'd also point out that our domestic streaming and digital video revenue is growing north of 15% and will generate this $3 billion of domestic annual run rate revenue in Q4. Again, those are metrics you would invest in, and we're going to invest in them. Note that as we invest more in streaming, some of that investment is funded by growth. You have more revenue, you have more subscribers. And some of it is funded by incremental cost synergies.
It's also worth noting that unlike a pure-play streaming company, our content investment has broader leverage. Every dollar we spend on content can benefit a broader company ecosystem. That includes streaming, linear, film and adjacent businesses like consumer products. And that gives us an opportunity to allocate and sometimes reallocate spend across multiple channels. So we look at this really closely. We do a lot of work on content ROI. We think about trade-offs of where we're putting content. And I feel very good about our plan for '21 and the value we're going to create leveraging this incredible content asset, which spans both library and original production.
John Hodulik
Got you. And should -- from a content licensing standpoint, obviously, those have been even sort of growing in a couple of areas. The content licensing business over time has been growing. Given the pandemic and the increased focus on the D2C platforms, should we expect your content licensing to third parties to come down over time?
Bob Bakish
Yes. So a lot of conversation on this. Licensing is an important business. It is also one that is evolving for ViacomCBS as our business and priorities evolve. If you look at it big picture, again, we have very significant content assets and production capabilities. When we look at that asset, which includes our library, across Paramount, across CBS, across Viacom, media networks, et cetera, we don't believe it makes sense to keep all that content for only an owned-and-operated streaming service. We're very confident in our current plans for those services and that those plans will create a compelling, differentiated offering for a rapidly growing base of consumers of our owned and operated services.
And at the same time, we continue to see very strong demand from third parties. Why? Because we are proven hit makers and, therefore, we can reliably and profitably monetize that demand. And when we do it, remember, it's overwhelmingly a rental model. So the IP does return to our library overwhelmingly over time. And as we do it, it's not only for the financial expression, there is also strategic value to licensing. We can and do use third-party platforms to extend and expand audience. That can help us launch a new spin-out series. That can help us drive consumer products. That can help us launch a film variant. And so we do look at those third-party deals as also having strategic value beyond the monetary value.
That said, our strategy is clearly evolving in a more O&O-based direction. In fact, the decisions we made at Paramount+, even though we don't have it in the market, has already impacted our content licensing decisions. We do have a 2-year slate for Paramount+ on the original side. That slate leans heavily on franchise IP from across the company. And again, you'll hear more about that in our upcoming investor session, early '20 event -- early in '21.
In terms of the library, if you track our announcements, what you've seen is that we've increasingly moved to co-exclusive or nonexclusive models. We used to license content exclusively. We really don't do that on the library side anymore. And we do that so that Paramount+ will be able to benefit from the product in terms of driving customer engagement. This library product, not necessarily highly valuable for acquiring new subs, but it's definitely valuable for engagement. And so we need to ensure that we retain that benefit for our owned and operated.
We are extending the strategic use of product into the movie or film space as well. Now when we looked at it, a single title probably doesn't move the needle that much, certainly not a single library title. But what does is a compelling catalog of movies for the service. And that's something we already have and we'll continue to build on. Case in point, we added 190 titles to the preview launch, and we doubled film engagement overnight. And there are more titles to come as we rotate compelling product through Paramount+.
We also like the franchise angle there. We talked about The Offer, which is The Godfather. You can safely assume there is more of that type of thing to come. And another example, obviously, is the SpongeBob: Sponge on the Run. So we will be using that lever as well. And again, you'll hear more about that in early '21. What you should assume is that our content is highly valuable, and we will use it in a strategic way as we build a meaningful presence in the streaming space, although that doesn't mean we'll totally exit the content licensing business. Because, again, we have very deep resources here.
John Hodulik
Well, that's great, Bob. We're about out of time. Any closing comments you want to leave us with?
Bob Bakish
Yes. Look, thanks, John. I'd just end by saying how thrilled I am 1 year into the ViacomCBS merger. You see that in our focused execution. You see that in a positive trend line in our results on a range of metrics. You see that in the value we're unlocking in noncore asset disposition. And you see that in the very real momentum we have in streaming, both in the free space and the pay space.
And I'm super excited about what's to come in '21, as we ramp out of COVID, as we continue to gain momentum, broadly speaking, and as we demonstrate the value of what I feel is a truly differentiated strategy in streaming. There's a lot more value here to unlock, and as management, we are committed to delivering on that.
So exciting times ahead. John, thanks for having me. Stay well, everyone. Have a happy and safe holiday, and we'll see you in the new year.
John Hodulik
Sounds good. Thanks for the time today, Bob. Thanks, everyone, for joining.
