UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2020~~March 31, 2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-09553

ViacomCBS Inc.

(Exact name of registrant as specified in its charter)

Delaware

04-2949533

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

~~Delaware~~1515 Broadway

New York,

~~04-2949533~~New York

10036

~~(State or other jurisdiction of~~

~~incorporation or organization)~~

~~(I.R.S. Employer Identification No.)~~

~~1515 Broadway~~

~~New York,~~

~~New York~~

~~10036~~

(Address of principal executive offices)

(Zip Code)

(212) 258-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A Common Stock, $0.001 par value

VIACA

The Nasdaq Stock Market LLC

Class B Common Stock, $0.001 par value

VIAC

The Nasdaq Stock Market LLC

5.75% Series A Mandatory Convertible Preferred Stock, $0.001 par value

VIACP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at ~~August~~May 3, ~~2020:~~2021:

Class A Common Stock, par value $.001 per share— ~~52,266,444~~40,707,517

Class B Common Stock, par value $.001 per share— ~~563,771,436~~

605,586,312

VIACOMCBS INC.

INDEX TO FORM 10-Q


				Page
			PART I – FINANCIAL INFORMATION

Item 1.			Financial Statements.	~~Page~~
			~~PART I – FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements.~~

	Consolidated Statements of Operations (Unaudited) for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~	3

			Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~	4

			Consolidated Balance Sheets (Unaudited) at ~~June 30, 2020~~ March 31, 2021 and December 31, ~~2019~~2020	5

			Consolidated Statements of Cash Flows (Unaudited) for the ~~Six~~ Three Months Ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~	6

			Consolidated Statements of ~~Stockholders’~~Stockholders' Equity (Unaudited) for the ~~Three and~~ ~~Six~~Three Months Ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~	7

			Notes to Consolidated Financial Statements (Unaudited)	98

Item 2.			Management’s Discussion and Analysis of Results of Operations and Financial Condition.	3429

Item 3.			Quantitative and Qualitative Disclosures About Market Risk.	6651

Item 4.			Controls and Procedures.	6651

			PART II – OTHER INFORMATION

Item 1.			Legal Proceedings.	6752

Item 1A.			Risk Factors.	6752

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds.	6852

Item 6.			Exhibits.	6953

PART I – FINANCIAL INFORMATION



Item 1.			Financial Statements.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30,						June 30,							March 31,
	2020			2019			2020			2019					2021		2020
Revenues	$	6,275		$	7,143		$	12,944		$	14,243		Revenues		$	7,412	$	6,499
Costs and expenses:													Costs and expenses:
Operating	3,485			4,210			7,550			8,458			Operating		4,363		3,956
Selling, general and administrative	1,222			1,371			2,563			2,684			Selling, general and administrative		1,422		1,298
Depreciation and amortization	124			109			237			215			Depreciation and amortization		99		112
Restructuring and other corporate matters	158			7			391			185			Restructuring and other corporate matters		0		231
Total costs and expenses	4,989			5,697			10,741			11,542			Total costs and expenses		5,884		5,597
Gain on sale of assets	—			—			—			549

Operating income	1,286			1,446			2,203			3,250			Operating income		1,528		902
Interest expense	(263		)	(237		)	(504		)	(477		)	Interest expense		(259)		(241)
Interest income	11			15			25			34			Interest income		13		14
Loss on extinguishment of debt	(103		)	—			(103		)	—			Loss on extinguishment of debt		(128)		0
Other items, net	6			15			(27		)	25			Other items, net		1		(28)
Earnings from continuing operations before income taxes and equity in loss of investee companies	937			1,239			1,594			2,832			Earnings from continuing operations before income taxes and equity in loss of investee companies		1,155		647
(Provision) benefit for income taxes	(202		)	(241		)	(339		)	135
Provision for income taxes													Provision for income taxes		(226)		(134)
Equity in loss of investee companies, net of tax	(12		)	(21		)	(21		)	(39		)	Equity in loss of investee companies, net of tax		(18)		(9)
Net earnings from continuing operations	723			977			1,234			2,928			Net earnings from continuing operations		911		504
Net earnings from discontinued operations, net of tax	3			6			11			19			Net earnings from discontinued operations, net of tax		12		15
Net earnings (ViacomCBS and noncontrolling interests)	726			983			1,245			2,947			Net earnings (ViacomCBS and noncontrolling interests)		923		519
Net earnings attributable to noncontrolling interests	(245		)	(6		)	(248		)	(11		)	Net earnings attributable to noncontrolling interests		(12)		(3)
Net earnings attributable to ViacomCBS	$	481		$	977		$	997		$	2,936		Net earnings attributable to ViacomCBS		$	911	$	516

Amounts attributable to ViacomCBS:													Amounts attributable to ViacomCBS:
Net earnings from continuing operations	$	478		$	971		$	986		$	2,917		Net earnings from continuing operations		$	899	$	501
Net earnings from discontinued operations, net of tax	3			6			11			19			Net earnings from discontinued operations, net of tax		12		15
Net earnings attributable to ViacomCBS	$	481		$	977		$	997		$	2,936		Net earnings attributable to ViacomCBS		$	911	$	516

Basic net earnings per common share attributable to ViacomCBS:													Basic net earnings per common share attributable to ViacomCBS:
Net earnings from continuing operations	$	.78		$	1.58		$	1.60		$	4.74		Net earnings from continuing operations		$	1.44	$	.82
Net earnings from discontinued operations	$	—		$	.01		$	.02		$	.03		Net earnings from discontinued operations		$	.02	$	.02
Net earnings	$	.78		$	1.59		$	1.62		$	4.77		Net earnings		$	1.46	$	.84

Diluted net earnings per common share attributable to ViacomCBS:													Diluted net earnings per common share attributable to ViacomCBS:
Net earnings from continuing operations	$	.77		$	1.57		$	1.60		$	4.73		Net earnings from continuing operations		$	1.42	$	.81
Net earnings from discontinued operations	$	—		$	.01		$	.02		$	.03		Net earnings from discontinued operations		$	.02	$	.02
Net earnings	$	.78		$	1.58		$	1.62		$	4.76		Net earnings		$	1.44	$	.84

Weighted average number of common shares outstanding:													Weighted average number of common shares outstanding:
Basic	615			615			615			615			Basic		622		614
Diluted	617			617			617			617			Diluted		631		616

See notes to consolidated financial statements.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions)

Other comprehensive income (loss), net of tax

(ViacomCBS and noncontrolling interests)

Less: Comprehensive income attributable to noncontrolling

See notes to consolidated financial statements.

-4-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)


	At				At					At			At
	June 30, 2020				December 31, 2019					March 31, 2021			December 31, 2020
ASSETS									ASSETS
Current Assets:									Current Assets:
Cash and cash equivalents		$	2,288			$	632		Cash and cash equivalents		$	5,499		$	2,984
Receivables, net		7,139				7,206			Receivables, net		7,310			7,017
Programming and other inventory		1,837				2,876			Programming and other inventory		1,137			1,757
Prepaid and other current assets		1,175				1,188			Prepaid and other current assets		1,027			1,391
Current assets of discontinued operations									Current assets of discontinued operations		514			630
Total current assets		12,439				11,902			Total current assets		15,487			13,779
Property and equipment, net		1,995				2,085			Property and equipment, net		1,994			1,994
Programming and other inventory		9,728				8,652			Programming and other inventory		10,755			10,363
Goodwill		17,077				16,980			Goodwill		16,591			16,612
Intangible assets, net		2,948				2,993			Intangible assets, net		2,815			2,826
Operating lease assets		1,841				1,939			Operating lease assets		1,527			1,602
Deferred income tax assets, net		919				939			Deferred income tax assets, net		981			993
Other assets		4,212				4,006			Other assets		3,785			3,657
Assets held for sale		29				23			Assets held for sale		27			28
Assets of discontinued operations									Assets of discontinued operations		811			809
Total Assets		$	51,188			$	49,519		Total Assets		$	54,773		$	52,663

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY									LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:									Current Liabilities:
Accounts payable		$	422			$	667		Accounts payable		$	612		$	571
Accrued expenses		1,553				1,760			Accrued expenses		1,663			1,714
Participants’ share and royalties payable		2,090				1,977			Participants’ share and royalties payable		2,070			2,005
Accrued programming and production costs		1,189				1,500			Accrued programming and production costs		1,392			1,141
Deferred revenues		695				739			Deferred revenues		1,010			978
Debt		364				717			Debt		19			16
Other current liabilities		1,672				1,688			Other current liabilities		1,512			1,391
Current liabilities of discontinued operations									Current liabilities of discontinued operations		423			480
Total current liabilities		7,985				9,048			Total current liabilities		8,701			8,296
Long-term debt		19,704				18,002			Long-term debt		17,768			19,717
Participants’ share and royalties payable		1,485				1,546			Participants’ share and royalties payable		1,351			1,317
Pension and postretirement benefit obligations		2,070				2,121			Pension and postretirement benefit obligations		2,070			2,098
Deferred income tax liabilities, net		708				500			Deferred income tax liabilities, net		852			778
Operating lease liabilities		1,816				1,909			Operating lease liabilities		1,517			1,583
Program rights obligations		252				356			Program rights obligations		212			243
Other liabilities		2,344				2,494			Other liabilities		2,058			2,158
Liabilities of discontinued operations									Liabilities of discontinued operations		212			220
Redeemable noncontrolling interest		274				254			Redeemable noncontrolling interest		189			197

Commitments and contingencies (Note 15)									Commitments and contingencies (Note 15)		0			0

ViacomCBS stockholders’ equity:
Class A Common Stock, par value $.001 per share; 55 shares authorized; 52 (2020 and 2019) shares issued		—				—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,066 (2020) and 1,064 (2019) shares issued		1				1
ViacomCBS stockholders’ equity:									ViacomCBS stockholders’ equity:
5.75% Series A Mandatory Convertible Preferred Stock, par value $.001 per share; 25 shares authorized and 10 shares issued (2021)									5.75% Series A Mandatory Convertible Preferred Stock, par value $.001 per share; 25 shares authorized and 10 shares issued (2021)		0			0
Class A Common Stock, par value $.001 per share; 55 shares authorized; 41 (2021) and 52 (2020) shares issued									Class A Common Stock, par value $.001 per share; 55 shares authorized; 41 (2021) and 52 (2020) shares issued		0			0
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,108 (2021) and 1,068 (2020) shares issued									Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,108 (2021) and 1,068 (2020) shares issued		1			1
Additional paid-in capital		29,680				29,590			Additional paid-in capital		32,866			29,785
Treasury stock, at cost; 502 (2020) and 501 (2019) Class B shares		(22,958		)		(22,908		)
Treasury stock, at cost; 503 (2021 and 2020) Class B shares									Treasury stock, at cost; 503 (2021 and 2020) Class B shares		(22,958)			(22,958)
Retained earnings		9,150				8,494			Retained earnings		11,144			10,375
Accumulated other comprehensive loss		(1,999		)		(1,970		)	Accumulated other comprehensive loss		(1,882)			(1,832)
Total ViacomCBS stockholders’ equity		13,874				13,207			Total ViacomCBS stockholders’ equity		19,171			15,371
Noncontrolling interests		676				82			Noncontrolling interests		672			685
Total Equity		14,550				13,289			Total Equity		19,843			16,056
Total Liabilities and Equity		$	51,188			$	49,519		Total Liabilities and Equity		$	54,773		$	52,663

See notes to consolidated financial statements.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

Six Months Ended
June 30,
2020
2019
Operating Activities:
Net earnings (ViacomCBS and noncontrolling interests) $ 1,245

$ 2,947
Less: Net earnings from discontinued operations, net of tax 11

19
Net earnings from continuing operations 1,234

2,928
Adjustments to reconcile net earnings from continuing operations to net cash flow provided
by operating activities:

Depreciation and amortization 237

215
Deferred tax provision (benefit) 224

(535 )
Stock-based compensation 145

106
Gain on sale of assets —

(549 )
Gains from investments (32 )
(77 )
Loss on extinguishment of debt 103
—
Equity in loss of investee companies, net of tax and distributions 22

41
Change in assets and liabilities (782 )
(940 )
Net cash flow provided by operating activities 1,151

1,189
Investing Activities:

Investments (60 )
(132 )
Capital expenditures (132 )
(142 )
Acquisitions, net of cash acquired (141 )
(361 )
Proceeds from dispositions 146

751
Other investing activities —

4
Net cash flow (used for) provided by investing activities (187 )
120
Financing Activities:

Repayments of short-term debt borrowings, net (698 )
(674 )
Proceeds from issuance of senior notes 4,370

493
Repayment of notes and debentures (2,535 )
(600 )
Dividends (301 )
(299 )
Purchase of Company common stock (58 )
(14 )
Payment of payroll taxes in lieu of issuing shares for stock-based compensation (59 )
(52 )
Other financing activities (70 )
(81 )
Net cash flow provided by (used for) financing activities 649

(1,227 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash (17 )
2
Net increase in cash, cash equivalents and restricted cash 1,596

84
Cash, cash equivalents and restricted cash at beginning of period
(includes $202 (2020) and $120 (2019) of restricted cash)
834

976
Cash, cash equivalents and restricted cash at end of period
(includes $142 (2020) and $122 (2019) of restricted cash)
$ 2,430

$ 1,060


	Three Months Ended
	March 31,
	2021		2020
Operating Activities:
Net earnings (ViacomCBS and noncontrolling interests)	$	923	$	519
Less: Net earnings from discontinued operations, net of tax	12		15
Net earnings from continuing operations	911		504
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities:
Depreciation and amortization	99		112
Deferred tax provision	95		153
Stock-based compensation	52		87


Loss on extinguishment of debt	128		0
Equity in loss of investee companies, net of tax and distributions	18		9
Change in assets and liabilities	348		(508)

Net cash flow provided by operating activities from continuing operations	1,651		357
Net cash flow provided by (used for) operating activities from discontinued operations	72		(1)
Net cash flow provided by operating activities	1,723		356
Investing Activities:
Investments	(40)		(46)
Capital expenditures	(62)		(51)

Proceeds from sale of investments	213		146
Other investing activities	(25)		0


Net cash flow provided by investing activities	86		49
Financing Activities:
Repayments of short-term debt borrowings, net	0		(186)

Repayment of long-term debt	(2,117)		0


Dividends paid on common stock	(151)		(152)
Proceeds from issuance of preferred stock	983		0
Proceeds from issuance of common stock	1,672		0
Purchase of Company common stock	0		(58)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(35)		(50)
Proceeds from exercise of stock options	408		5
Other financing activities	(37)		(38)
Net cash flow provided by (used for) financing activities	723		(479)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(19)		(29)
Net increase (decrease) in cash, cash equivalents and restricted cash	2,513		(103)
Cash, cash equivalents and restricted cash at beginning of period (includes $135 (2021) and $202 (2020) of restricted cash)	3,119		834
Cash, cash equivalents and restricted cash at end of period (includes $133 (2021) and $142 (2020) of restricted cash)	$	5,632	$	731

See notes to consolidated financial statements.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


	Three Months Ended March 31, 2021
	Preferred Stock			Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total ViacomCBS Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)			(Shares)
December 31, 2020	0	$	0	617	$	1		$	29,785	$	(22,958)		$	10,375		$	(1,832)		$	15,371		$	685	$	16,056
Stock-based compensation activity	—	—		9	—			426		—			—			—			426			—		426
Stock issuances	10	—		20	—			2,655		—			—			—			2,655			—		2,655
Preferred stock dividends	—	—		—	—			—		—			(1)			—			(1)			—		(1)
Common stock dividends	—	—		—	—			—		—			(152)			—			(152)			—		(152)
Noncontrolling interests	—	—		—	—			—		—			11			—			11			(24)		(13)
Net earnings	—	—		—	—			—		—			911			—			911			12		923
Other comprehensive loss	—	—		—	—			—		—			—			(50)			(50)			(1)		(51)
March 31, 2021	10	$	0	646	$	1		$	32,866	$	(22,958)		$	11,144		$	(1,882)		$	19,171		$	672	$	19,843

Three Months Ended June 30, 2020
Class A and B Common Stock Additional Paid-In Capital
Treasury
Stock
Retained Earnings Accumulated Other Comprehensive Loss Total ViacomCBS Stockholders’ Equity Non-Controlling Interests Total Equity
(Shares)
March 31, 2020 615
$ 1
$ 29,633
$ (22,958 ) $ 8,827
$ (2,054 ) $ 13,449
$ 72
$ 13,521
Stock-based compensation
activity and other
1
—
47
—
—
—
47
—
47
Dividends —
—
—
—
(150 ) —
(150 ) —
(150 )
Noncontrolling interests —
—
—
—
(8 ) —
(8 ) 359
^(a)
351
Net earnings —
—
—
—
481
—
481
245
726
Other comprehensive
income
—
—
—
—
—
55
55
—
55
June 30, 2020 616
$ 1
$ 29,680
$ (22,958 ) $ 9,150
$ (1,999 ) $ 13,874
$ 676
$ 14,550

Six Months Ended June 30, 2020
Class A and B Common Stock Additional Paid-In Capital
Treasury
Stock
Retained Earnings Accumulated Other Comprehensive Loss Total ViacomCBS Stockholders’ Equity Non-Controlling Interests Total Equity
(Shares)
December 31, 2019 615
$ 1
$ 29,590
$ (22,908 ) $ 8,494
$ (1,970 ) $ 13,207
$ 82
$ 13,289
Stock-based compensation
activity and other
2
—
90
—
—
—
90
—
90
Class B Common Stock
purchased
(1 ) —
—
(50 ) —
—
(50 ) —
(50 )
Dividends —
—
—
—
(300 ) —
(300 ) —
(300 )
Noncontrolling interests —
—
—
—
(41 ) —
(41 ) 349
^(a)
308
Net earnings —
—
—
—
997
—
997
248
1,245
Other comprehensive
loss
—
—
—
—
—
(29 ) (29 ) (3 ) (32 )
June 30, 2020 616
$ 1
$ 29,680
$ (22,958 ) $ 9,150
$ (1,999 ) $ 13,874
$ 676
$ 14,550

~~(a) Primarily reflects the acquisition of Miramax. (See Note 2.)~~


	Three Months Ended March 31, 2020
	Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock		Retained Earnings			Accumulated Other Comprehensive Loss			Total ViacomCBS Stockholders’ Equity			Noncontrolling Interests			Total Equity
	(Shares)
December 31, 2019	615	$	1		$	29,590	$	(22,908)		$	8,494		$	(1,970)		$	13,207		$	82	$	13,289
Stock-based compensation activity	1	—			43		—			—			—			43			—		43
Class B Common Stock purchased	(1)	—			—		(50)			—			—			(50)			—		(50)
Common stock dividends	—	—			—		—			(150)			—			(150)			—		(150)
Noncontrolling interests	—	—					—			(33)			—			(33)			(10)		(43)
Net earnings	—	—			—		—			516			—			516			3		519

Other comprehensive loss	—	—			—		—			—			(84)			(84)			(3)		(87)
March 31, 2020	615	$	1		$	29,633	$	(22,958)		$	8,827		$	(2,054)		$	13,449		$	72	$	13,521

See notes to consolidated financial statements.

VIACOMCBS INC. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)~~

~~(Unaudited; in millions)~~

Three Months Ended June 30, 2019
Class A and B Common Stock Additional Paid-In Capital
Treasury
Stock
Retained Earnings Accumulated Other Comprehensive Loss Total ViacomCBS Stockholders’ Equity Non-Controlling Interests Total Equity
(Shares)
March 31, 2019 615
$ 1
$ 49,927
$ (43,412 ) $ 7,594
$ (1,811 ) $ 12,299
$ 49
$ 12,348
Stock-based compensation
activity and other
—
—
27
13
—
—
40
—
40
Dividends —
—
—
—
(149 ) —
(149 ) —
(149 )
Noncontrolling interests —
—
(10 ) —
(4 ) —
(14 ) (11 ) (25 )
Net earnings —
—
—
—
977
—
977
6
983
Other comprehensive
income (loss)
—
—
—
—
—
8
8
(1 ) 7
June 30, 2019 615
$ 1
$ 49,944
$ (43,399 ) $ 8,418
$ (1,803 ) $ 13,161
$ 43
$ 13,204

Six Months Ended June 30, 2019
Class A and B Common Stock Additional Paid-In Capital
Treasury
Stock
Retained Earnings Accumulated Other Comprehensive Loss Total ViacomCBS Stockholders’ Equity Non-Controlling Interests Total Equity
(Shares)
December 31, 2018 613
$ 1
$ 49,907
$ (43,420 ) $ 5,569
$ (1,608 ) $ 10,449
$ 54
$ 10,503
Stock-based compensation
activity and other
2
—
47
21
(4 ) —
64
—
64
Dividends —
—
—
—
(299 ) —
(299 ) —
(299 )
Noncontrolling interests —
—
(10 ) —
(14 ) —
(24 ) (24 ) (48 )
Net earnings —
—
—
—
2,936
—
2,936
11
2,947
Reclassification of income
tax effect of the Tax
Reform Act
—
—
—
—
230
(230 ) —
—
—
Other comprehensive
income
—
—
—
—
—
35
35
2
37
June 30, 2019 615
$ 1
$ 49,944
$ (43,399 ) $ 8,418
$ (1,803 ) $ 13,161
$ 43
$ 13,204

~~See notes to consolidated financial statements.~~

~~VIACOMCBS INC. AND SUBSIDIARIES~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION

Description of ~~Business-~~Business—ViacomCBS Inc. is comprised of the following segments: TV Entertainment (CBS Television ~~Network,~~Network; CBS ~~Television Studios,~~Studios; CBS ~~Television Distribution, CBS Interactive,~~Media Ventures; streaming services, including Paramount+ and CBSN; CBS Sports Network and CBS Television ~~Stations and CBS-branded streaming services)~~Stations), Cable Networks ~~(Showtime Networks,~~(premium and basic cable networks, including Showtime, BET, Nickelodeon, MTV, ~~BET,~~ Comedy Central, Paramount Network, ~~Nick Jr., VH1,~~and Smithsonian channel; streaming services, including Pluto TV ~~Land, CMT, Pop TV, Smithsonian Networks,~~and Showtime Networks’ premium subscription streaming service (“Showtime OTT”); and ViacomCBS Networks International, ~~Network 10,~~including Channel 5, Telefe and ~~Pluto TV),~~Network 10) and Filmed Entertainment (Paramount Pictures, Paramount Players, Paramount Animation, Paramount Television Studios and Miramax) ~~and~~ ~~Publishing~~ ~~(Simon & Schuster)~~. References to ~~“ViacomCBS”,~~“ViacomCBS,” the ~~“Company”, “we”,~~“Company,” “we,” “us” and “our” refer to ViacomCBS Inc. and its consolidated subsidiaries, unless the context otherwise requires.

Basis of ~~Presentation~~Presentation—-On December 4, 2019, Viacom Inc. (“Viacom”) merged with and into CBS Corporation (“CBS”), with CBS continuing as the surviving company (the “Merger”). At the effective time of the Merger, the combined company changed its name to ViacomCBS Inc. (“ViacomCBS”). The Merger has been accounted for as a transaction between entities under common control as National Amusements, Inc. (“NAI”) was the controlling stockholder of each of CBS and Viacom (and remains the controlling stockholder of ViacomCBS). Upon the closing of the Merger, the net assets of Viacom were combined with those of CBS at their historical carrying amounts and the companies have been presented on a combined basis for all periods presented.

The accompanying unaudited consolidated financial statements have been prepared on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation.

Discontinued Operations—On November 25, 2020, we entered into an agreement to sell our publishing business, Simon & Schuster, which was previously reported as the Publishing segment, to Penguin Random House LLC, a wholly owned subsidiary of Bertelsmann SE & Co. KGaA, for $2.175 billion in cash. As a result, Simon & Schuster has been presented as a discontinued operation in our consolidated financial statements for all periods presented (see Note 2).

Use of ~~Estimates~~Estimates—~~-The~~The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.

The coronavirus disease (“COVID-19”) pandemic has negatively impacted, and is expected to continue to impact, the macroeconomic environment in the United States and globally, as well our business, financial condition and results of operations. Due to the evolving and uncertain nature of COVID-19, it is reasonably possible that it could materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near to medium term. These estimates relate to certain accounts including, but not limited to, receivables, programming and other inventory, deferred income tax assets, finite and indefinite lived intangible assets, including goodwill and FCC licenses, and other long-lived assets. The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~the pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19.~~

Net Earnings per Common ~~Share~~Share—~~-Basic~~Basic net earnings per share (“EPS”) is based upon net earnings available to common stockholders divided by the weighted average number of common shares outstanding during the period. ~~Diluted~~Net earnings available to common stockholders is calculated as net earnings from continuing operations or net earnings, as applicable, adjusted to include preferred stock dividends accumulated during the period. During the three months ended March 31, 2021, we accumulated dividends of $1 million on the 5.75% Series A Mandatory Convertible Preferred Stock (“Mandatory Convertible Preferred Stock”) that was issued during the first quarter of 2021 (see Note 9).

Weighted average shares for diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) or performance stock units (“PSUs”) only in the periods in which such effect would have been dilutive. ~~Excluded from~~Diluted EPS also reflects the ~~calculation~~effect of ~~diluted EPS because their inclusion would have been anti-dilutive, were~~the assumed conversion of preferred stock, ~~options and RSUs~~if dilutive, which includes the issuance of ~~25 million and 26 million for~~common shares in the ~~three and six months ended June 30, 2020, respectively, and 17 million and 20 million for the three and six months ended June 30, 2019, respectively.~~

~~The table below presents a reconciliation of~~ weighted average number of shares ~~used in~~and excludes the ~~calculation of basic and diluted EPS.~~above-

Three Months Ended Six Months Ended
June 30, June 30,
(in millions) 2020 2019 2020 2019
Weighted average shares for basic EPS 615
615
615
615
Dilutive effect of shares issuable under stock-based
compensation plans
2
2
2
2
Weighted average shares for diluted EPS 617
617
617
617

-8-

~~Recently Adopted Accounting Pronouncements~~

~~Improvements to Accounting for Costs of Films and License Agreements for Program Materials~~

On January 1, 2020, we adopted Financial Accounting Standards Board (“FASB”) guidance on the accounting for costs of films and episodic television series, which aligns the accounting for capitalizing production costs of episodic television series with the guidance for films. As a result of the adoption of this guidance, the capitalization of costs incurred to produce episodic television series is no longer limited to the amount of revenue contracted in the initial market until persuasive evidence of a secondary market exists. In addition, under this guidance our film and television programming is tested for impairment individually on a title-by-title basis, or together with other films and television programming as part of a group, based on the predominant monetization strategy of the film or television programming. Further, for programming monetized in a film group, this guidance requires any changes to the estimated use of the film or television series to be accounted for prospectively. This guidance also eliminates existing balance sheet classification guidance and adds new disclosure requirements relating to costs for acquired and internally-produced programming. As a result of this guidance, beginning in the first quarter of 2020, all of our programming inventory, other than prepayments for the rights to air sporting and other live events, is now classified as noncurrent on the Consolidated Balance Sheet. Therefore, $1.17 billion of programming inventory that was classified in current assets at December 31, 2019 was reclassified to noncurrent assets on January 1, 2020. This guidance did not have a material impact on the Consolidated Statement of Operations. See Note 3 for additional disclosures relating to the adoption of this guidance.

~~Collaborative Arrangements: Clarifying the Interaction with the New Revenue Standard~~

On January 1, 2020, we adopted FASB guidance on the accounting for collaborative arrangements, which clarifies that certain transactions between parties to collaborative arrangements should be accounted for in accordance with FASB revenue guidance when the counterparty is a customer. The adoption of this guidance did not have a material impact on our consolidated financial statements.

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

mentioned accumulated preferred stock dividend adjustment to net earnings available to common stockholders. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were stock options of 3 million for the three months ended March 31, 2021 and stock options and RSUs of 26 million for the three months ended March 31, 2020.

~~Customer’s~~

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.


	Three Months Ended
	March 31,
(in millions)		2021	2020
Weighted average shares for basic EPS		622	614
Dilutive effect of shares issuable under stock-based compensation plans		8	2
Dilutive effect of Mandatory Convertible Preferred Stock		1	0
Weighted average shares for diluted EPS		631	616

Recently Adopted Accounting Pronouncements

Simplifying the Accounting for ~~Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~Income Taxes

On January 1, ~~2020,~~2021, we adopted ~~FASB~~Financial Accounting Standards Board (“FASB”) guidance on the accounting for ~~implementation costs~~income taxes that, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of ~~a cloud computing arrangement that is considered to be a service contract.~~deferred tax liabilities for outside basis differences. This guidance also requires ~~companies~~an entity to ~~follow~~reflect the ~~guidance for capitalizing costs associated with internal-use software to determine which costs to capitalize~~effect of an enacted change in ~~a cloud computing arrangement~~tax laws or rates in its effective income tax rate in the interim period that ~~is a service contract. Under this guidance, such implementation costs will be capitalized in “Other assets” on~~includes the Consolidated Balance Sheet, with the related amortization presented in “Selling, general and administrative expenses” on the Consolidated Statement of Operations. This guidance was applied prospectively to implementation costs incurred after January 1, 2020.enactment date. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~Financial Instruments~~

On January 1, 2020, we adopted FASB guidance on the accounting for credit losses on financial instruments. Among other provisions, this guidance introduces a new impairment model for most financial assets and certain other instruments. The guidance applies primarily to our trade and other receivables, and requires the use of a forward-looking “expected loss” model instead of the “incurred loss” model that was used under previous FASB guidance for determining an allowance for credit losses. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The guidance is effective immediately upon issuance and an entity may elect to apply it to contract modifications or hedging relationships entered into on or before December 31, 2022, with a few exceptions for ~~all entities~~certain hedging relationships existing as of ~~March 12, 2020 through~~ December 31, 2022. We ~~are currently evaluating the impact of the changes in reference rates and the exemptions and exceptions in~~intend to apply this guidance ~~on our consolidated financial statements.~~

~~Simplifying the Accounting for Income Taxes~~

~~In December 2019, the FASB issued guidance on the accounting for income taxes~~when modifications of contracts that among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. This guidance is effective for interim and annual periods beginning after December 15, 2020 with early adoption permitted. The adoption of this guidanceinclude LIBOR occur, which is not expected to have a material impact on our consolidated financial statements.

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

On August 5, 2020, the FASB issued amended guidance to reduce complexity associated with the accounting for convertible instruments with characteristics of liabilities and equity. Under this guidance, embedded conversion features associated with convertible instruments no longer need to be separated from the host contracts unless they are required to be accounted for as derivatives or have been issued at a substantial premium. For contracts in an entity’s own equity, this guidance removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions. This guidance also amends certain EPS guidance for convertible instruments and expands disclosure requirements. This guidance is effective for fiscal years beginning after

-9-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

~~Changes to the Disclosure Requirements for Defined Benefit Plans~~

~~In August 2018, the FASB issued amended guidance that eliminates, adds~~December 15, 2021, with early adoption permitted, and clarifies certain disclosure requirements for defined benefit pension or other postretirement plans. The amendments affect annual disclosures only and are effective for our fiscal year ending on December 31, 2020. The amendments are required to be applied retrospectively. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

2) ~~ACQUISITION~~DISCONTINUED OPERATIONS

~~On April 3,~~During the fourth quarter of 2020, we acquired a 49% interest in Miramax, a global film and television studio, for $375 million, which included a cash payment at closing of approximately $150 million along with a commitment to invest $45 million annually over the next five years, or $225 million, to be used for new film and television productions and working capital. In conjunction with this acquisition, we entered into ~~commercial agreements with Miramax under which we have exclusive, long-term distribution rights~~an agreement to ~~Miramax’s catalog, adding more than 700 titles~~sell our publishing business, Simon & Schuster, for $2.175 billion in cash. The transaction is subject to ~~our existing library. We also have certain rights~~customary closing conditions, including regulatory approvals, and is expected to ~~co-produce, co-finance and/or distribute new film and television projects. The investment is accounted for~~close in 2021. Simon & Schuster has been presented as a discontinued operation in our consolidated variable interest entity (“VIE”). We are the primary beneficiary of the VIE due to our power to direct the distribution of Miramax’s films and television series, which is considered the most significant activity of the VIE.financial statements for all periods presented.

The following table ~~summarizes~~sets forth details of net earnings from discontinued operations for the three months ended March 31, 2021 and 2020, which primarily reflects the results of Simon & Schuster.


	Three Months Ended
	March 31,
	2021		2020
Revenues	$	185	$	170
Costs and expenses:
Operating	120		99
Selling, general and administrative	38		43
Depreciation and amortization	0		1
Restructuring charges	0		2
Total costs and expenses (a)	158		145
Operating income	27		25
Other items, net	(2)		(5)
Earnings from discontinued operations	25		20
Income tax provision (b)	(13)		(5)
Net earnings from discontinued operations, net of tax	$	12	$	15

(a) The three months ended March 31, 2020 includes $10 million for the release of indemnification obligations for leases relating to a previously disposed business.

(b) The three months ended March 31, 2021 and 2020 include tax provisions of $7 million and $2 million, respectively, related to previously disposed businesses.

The following table presents the major classes of assets and liabilities of our ~~estimated allocation of the purchase price as of the acquisition date.~~discontinued operations.


		At			At
	March 31, 2021			December 31, 2020
Receivables, net		$	322		$	447
Other current assets		192			183
Goodwill		435			435
Property and equipment, net		42			42
Operating lease assets		191			191
Other assets		143			141
Total Assets		$	1,325		$	1,439
Royalties payable		$	112		$	131
Other current liabilities		311			349
Operating lease liabilities		191			194
Other liabilities		21			26
Total Liabilities		$	635		$	700

Assets
Cash $ 32

Accounts receivable and other current assets 19

Programming inventory 536

Goodwill 99

Intangible assets 12

Other assets (noncurrent) 7

Assets acquired $ 705

Liabilities
Accounts payable and accrued expenses $ 13

Participants’ share and royalties payable (current) 16

Deferred revenues 10

Participants’ share and royalties payable (noncurrent) 20

Debt 105

Other liabilities (noncurrent) 28

Liabilities assumed 192

Noncontrolling interests 363

Total purchase price $ 150

-10-

~~The goodwill, which is not deductible for tax purposes, reflects the expected Company-specific synergies arising from the acquisition and is included in the~~ ~~Filmed Entertainment~~ ~~segment. Intangible assets consist of a trade name with a useful life of 10 years.~~

~~The operating results of Miramax from the date of acquisition through June 30, 2020 were not material.~~

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

3) PROGRAMMING AND OTHER INVENTORY

~~We acquire rights to programming and produce programming to exhibit on~~The following table presents our broadcast and cable networks, on our broadcast television stations, direct to consumers through our digital streaming services, and in theaters. We also produce programming for third parties. Programming inventory costs for both acquired and internally-produced content are recorded within the noncurrent portion of “Programming and other inventory” on the Consolidated Balance Sheet. Prepayments for the rights to air sporting and other live events that are expected to be expensed over the next 12 months are classified within the current portion of “Programming and other inventory” on the Consolidated Balance Sheet.

~~Internally-Produced Programming~~

Costs incurred to produce television programs and feature films (which include direct production costs, production overhead, acquisition costs and development costs) are capitalized when incurred. For television programs that are predominantly monetized as part of a film group, capitalized production costs are amortized based on an estimate of the timing of our usage of and benefit from such programming. For television programs and feature films that are predominantly monetized on an individual basis, we use an individual-film-forecast computation method to amortize capitalized production costs and to accrue estimated liabilities for participations and residuals over the applicable title’s life cycle based upon the ratio of current period revenues to estimated remaining total gross revenues to be earned (“Ultimate Revenues”) for each title.

~~Acquired Programming Rights~~

~~Our acquired programming rights are predominantly monetized in film groups together with certain internally-produced~~ programming and other ~~acquired~~inventory at March 31, 2021 and December 31, 2020, grouped by type and predominant monetization strategy.


	At			At
	March 31, 2021			December 31, 2020
Film Group Monetization:
Acquired program rights, including prepaid sports rights		$	2,688		$	3,413
Internally-produced television programming:
Released		2,526			2,558
In process and other		1,976			1,682

Individual Monetization:
Acquired libraries		475			483
Film inventory:
Released		417			374
Completed, not yet released		414			543
In process and other		991			816
Internally-produced television programming
Released		1,338			1,206
In process and other		1,033			1,013

Home entertainment		34			32
Total programming and other inventory		11,892			12,120
Less current portion		1,137			1,757
Total noncurrent programming and other inventory		$	10,755		$	10,363

The following table presents amortization of television and film programming ~~rights. Costs incurred~~and production costs.


	Three Months Ended
	March 31,
		2021		2020
Programming costs, acquired programming		$	1,502	$	973

Production costs, internally-produced television and film programming:
Individual monetization		$	760	$	770
Film group monetization		$	650	$	689

4) RESTRUCTURING AND OTHER CORPORATE MATTERS

Restructuring Charges

During the three months ended March 31, 2020, we recorded restructuring charges of $200 million associated with cost-transformation initiatives in ~~acquiring program rights,~~connection with the merger of Viacom Inc. with and into CBS Corporation (the “Merger”) in an effort to reduce redundancies across our businesses. These charges consisted of $174 million of severance costs, including ~~advances, are capitalized when~~ the ~~license period has begun~~accelerated vesting of stock-based compensation, and $26 million of exit costs resulting from the ~~program is accepted and available for airing. These costs are amortized over the shorter~~termination of ~~the license period or the period in which an economic benefit is expected to be derived based on the timing of our usage of and benefit from such programming.~~contractual obligations.

We test a film group or individual television program or feature film for impairment when events or circumstances indicate that its fair value may be less than its unamortized cost. An impairment charge will then be recorded for any difference between the carrying value and estimated fair value of the film group or individual television program or feature film. In addition, unamortized costs for internally-produced or acquired programming that have been substantively abandoned are written off.

-11-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following tables present our programming and other inventory by type at June 30, 2020 and December 31, 2019. Programming inventory at June 30, 2020 has been grouped according to the predominant monetization strategy in accordance with new FASB guidance adopted in the first quarter of 2020 (see Note 1).

At
June 30, 2020
Film Group Monetization:
Acquired television program rights, including prepaid sports rights $ 3,345

Internally produced television programming:
Released 3,104

In process and other 832

Individual Monetization:
Acquired libraries 501

Film inventory:
Released 429

Completed, not yet released 81

In process and other 1,258

Internally produced television programming:
Released 1,202

In process and other 718

Home entertainment and Publishing, primarily finished goods 95

Total programming and other inventory 11,565

Less current portion 1,837

Total noncurrent programming and other inventory $ 9,728

At
December 31, 2019
Acquired television program rights, including prepaid sports rights $ 3,477

Acquired libraries 99

Internally produced television programming:
Released 3,627

In process and other 2,626

Film inventory:
Released 502

Completed, not yet released 55

In process and other 1,037

Home entertainment and Publishing, primarily finished goods 105

Total programming and other inventory 11,528

Less current portion 2,876

Total noncurrent programming and other inventory $ 8,652

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~The following table presents amortization of programming and production costs, which are included within “Operating expenses” in the Consolidated Statements of Operations.~~

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
Programming costs, acquired programming $ 713
$ 1,686

Production costs, internally produced television and film programming:
Individual monetization $ 753
$ 1,523

Film group monetization $ 731
$ 1,420

Included in the table above for the three and six months ended June 30, 2020, are programming charges of $121 million primarily related to the abandonment of certain incomplete programs resulting from COVID-19 related production shutdowns. The programming charges are included within “Operating expenses” in the Consolidated Statement of Operations with $66 million, $50 million and $5 million included within the ~~TV Entertainment,Cable Networks~~ ~~and~~ ~~Filmed Entertainment~~ ~~segments,respectively.~~

~~4) RESTRUCTURING, IMPAIRMENT AND OTHER CORPORATE MATTERS~~

~~During the three and six months ended June 30, 2020 and 2019, we recorded the following on the Consolidated Statements of Operations:~~

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020
2019
Severance $ 128

$ —
$ 304
$ 98
Exit costs 6

—
32
30
Restructuring charges 134
—
336
128
Merger-related costs 10

—
41
—
Other corporate matters 14

7
14
57
Restructuring and other corporate matters $ 158
$ 7
$ 391
$ 185

Impairment charges $ 25

$ —

$ 25

$ —

Depreciation of abandoned technology $ —
$ —
$ 12
$ —

~~Restructuring Charges~~

~~During the three and six months ended June 30, 2020, we recorded restructuring charges of $134 million~~and $336 million, respectively, associated with cost-transformation initiatives in connection with the Merger in an effort to reduce redundancies across our businesses. These charges primarily include severance costs and the acceleration of stock-based compensation. During the six months ended June 30, 2019, we recorded restructuring charges of $128 million primarily for severance costs associated with a restructuring plan initiated in the first quarter of 2019 under which severance payments were provided to certain eligible employees who voluntarily elected to participate. Restructuring charges for the three and six months ended June 30, 2020 and the six months ended~~June 30, 2019 also included exit costs resulting from the termination of contractual obligations.~~

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

The following table presents a rollforward of our restructuring liability, which is recorded in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheets. The ~~remaining~~majority of the restructuring liability at ~~June 30, 2020,~~March 31, 2021, which primarily relates to severance payments, is expected to be ~~substantially~~ paid by the end of 2021.

Balance at 2020 Activity Balance at
December 31, 2019
Charges ^(a)
Payments Other June 30, 2020
TV Entertainment $ 99
$ 75

$ (41 )
$ —
$ 133

Cable Networks 137
135

(85 )
(6 ) 181

Filmed Entertainment 17
11

(5 )
2
25

Publishing 4
2

(2 )
(1 ) 3

Corporate 143
67

(80 )
(9 ) 121

Total $ 400
$ 290
$ (213 )
$ (14 ) $ 463

~~(a) Excludes stock-based compensation expense of $46 million.~~


	Balance at			2021 Activity					Balance at
	December 31, 2020			Payments			Other		March 31, 2021
TV Entertainment		$	112		$	(13)	$	(2)		$	97
Cable Networks		144			(33)		(2)			109
Filmed Entertainment		30			(5)		(4)			21
Corporate		86			(33)		(2)			51
Total		$	372		$	(84)	$	(10)		$	278

Merger-related Costs and Other Corporate Matters

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, in addition to the above-mentioned restructuring charges, we incurred $31 million of merger-related costs, ~~of $10 million and $41 million, respectively,~~ consisting of transaction-related bonuses and professional fees mainly associated with integration activities.

In addition, we recorded a charge of $14 million to write down property and equipment that has been classified as held for sale to its fair value less costs to sell at June 30, 2020. During the three and six months ended June 30, 2019, we incurred costs of $7 million and $57 million, respectively, consisting of costs associated with legal proceedings involving the Company and for the six-month period, the settlement of a commercial dispute.

~~Impairment Charges~~

We perform a fair value-based impairment test of goodwill and intangible assets with indefinite lives, comprised primarily of television FCC licenses, on an annual basis, and also between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an indefinite-lived intangible asset below its carrying value. During the second quarter of 2020, we assessed the relevant factors that could impact the fair value of our reporting units and indefinite-lived intangible assets, including the effects of COVID-19, and determined that an interim impairment test was necessary for 3 markets in which we hold FCC licenses. The impairment test indicated that the estimated fair values of FCC licenses in 2 markets were lower than their respective carrying values, which resulted from recent declines in industry projections in the markets where these FCC licenses are held, that were further accelerated by COVID-19. Accordingly, during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 we recorded an impairment charge of $25 million to write down the carrying values of these FCC licenses to their aggregate estimated fair value of $216 million. This charge is included within “Depreciation and amortization” in the Consolidated Statement of Operations and was recorded within the ~~TV Entertainment~~ ~~segment. Additionally, the estimated fair value of the FCC license in the third market exceeded its carrying value of $53 million at June 30, 2020 by 7%.~~

The impairment tests were performed using the Greenfield Discounted Cash Flow Method, which estimates the fair value of FCC licenses by valuing a hypothetical start-up station using industry projections in the relevant market and assuming the station builds up to average market share over a five-year period. Discounted cash flows for this period are added to a residual value, which is calculated using a long-term growth rate based on projected long-range inflation and industry projections.The estimated fair values of FCC licenses are highly dependent on the assumptions of future economic conditions in the individual geographic markets in which we own and operate television stations. A decline in revenue projections, or an increase in the cost of capital, could result in a downward revision to the fair values of our FCC licenses.

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Accelerated Depreciation~~

~~Also, during the six months ended June 30, 2020,~~, we recorded accelerated depreciation expense of $12 million resulting from the abandonment of technology in connection with synergy plans related to the Merger, which is recorded in “Depreciation and amortization” in the Consolidated Statement of Operations.

5) RELATED PARTIES

National Amusements, Inc. ~~NAI~~

National Amusements, Inc. (“NAI”) is the controlling stockholder of ViacomCBS. Sumner M. Redstone is the controlling stockholder, Chairman of the Board of Directors and Chief Executive Officer of NAI. Shari E. Redstone, Mr. Redstone’s daughter, is the President and a director of NAI and the non-executive Chair of our Board of Directors. At ~~June 30, 2020,~~March 31, 2021, NAI directly or indirectly owned approximately ~~79.4%~~77.4% of our voting Class A Common Stock and ~~10.2%~~9.7% of our Class A Common Stock and non-voting Class B Common Stock on a combined basis. NAI is controlled by ~~Mr. Redstone through~~ the Sumner M. Redstone National Amusements Part B General Trust (the ~~“SMR~~“General Trust”), which owns 80% of the voting interest of NAI and ~~such~~acts by majority vote of 7 voting trustees (subject to certain exceptions), including with respect to the NAI shares held by the General Trust. The 80% voting interest of NAI held by the ~~SMR~~General Trust ~~is voted solely~~was previously held by ~~Mr. Redstone until his incapacity or death. The SMR Trust provides that~~it and another trust; each trust held 40% of the voting interest and shared the same 7 voting trustees who were required to cause each of the 2 trusts to vote the NAI shares in the ~~event~~same manner. Shari E. Redstone, Chairperson, CEO and President of ~~Mr. Redstone’s death or incapacity, voting control~~NAI and non-executive Chair of our Board of Directors, is one of the ~~NAI~~7 voting ~~interest held by~~trustees for the ~~SMR~~General Trust ~~will pass to 7~~and is one of 2 voting trustees who ~~will include Ms. Redstone.~~are beneficiaries of the General Trust. No member of our management or other member of our Board of Directors is a trustee of the ~~SMR~~General Trust.

Other Related ~~Parties.~~Parties

In the ordinary course of business, we are involved in transactions with our equity-method investees, primarily for the licensing of television and film programming. The following tables present the amounts recorded in our consolidated financial statements related to these transactions.


	Three Months Ended
	March 31,
		2021		2020
Revenues		$	65	$	52
Operating expenses		$	4	$	2

-12-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Revenues $ 24
$ 54
$ 76
$ 109
Operating expenses $ 3
$ 3
$ 5
$ 4

At At
June 30, 2020 December 31, 2019
Amounts due to/from other related parties
Accounts receivable $ 33
$ 45

Accounts payable $ 2
$ 3


	At			At
	March 31, 2021			December 31, 2020

Accounts receivable		$	49		$	69

Through the normal course of business, we are involved in transactions with other related parties that have not been material in any of the periods presented.

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

6) REVENUES

The ~~following~~ table below presents our revenues disaggregated into categories based on the nature of such revenues. Beginning in the first quarter of 2021, and for all comparable prior-year periods, these categories include streaming revenues, which aligns with management’s increased focus on this revenue stream. Streaming revenues are comprised of streaming advertising and streaming subscription revenues. Streaming advertising revenues are earned from advertisements on our pay and free streaming services, including Paramount+ and Pluto TV, and from digital video advertisements on our websites and in our video content on third-party platforms (“other digital video platforms”). Streaming subscription revenues include fees for our pay streaming services, including Paramount+, Showtime OTT, BET+ and Noggin, as well as premium subscriptions to access certain video content on our websites. Accordingly, our advertising and affiliate revenue categories exclude revenues earned by our streaming services and on other digital video platforms.


	Three Months Ended
	March 31,
		2021		2020
Revenues by Type:
Advertising (a)		$	2,681	$	2,219
Affiliate (b)		2,075		1,968
Streaming		816		494
Theatrical		1		167
Licensing and other		1,839		1,651
Total Revenues		$	7,412	$	6,499

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Revenues by Type:
Advertising $ 1,934
$ 2,645
$ 4,418
$ 5,711
Affiliate 2,194
2,155
4,391
4,320
Content licensing 1,902
1,909
3,496
3,374
Theatrical 3
152
170
324
Publishing 200
218
370
382
Other 42
64
99
132
Total Revenues $ 6,275
$ 7,143
$ 12,944
$ 14,243
(a) Excludes streaming advertising revenues.

(b) Excludes streaming subscription revenues.

Receivables

Reserves for accounts receivable reflect our expected credit losses based on historical experience as well as current and expected economic conditions. Our allowance for credit losses was ~~$88~~$83 million and ~~$86~~$85 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Included in “Other assets” on the Consolidated Balance Sheets are noncurrent receivables of ~~$2.33~~$1.97 billion and ~~$2.15~~$2.02 billion at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Noncurrent receivables primarily relate to revenues recognized under long-term television licensing arrangements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition, while the related cash is collected over the term of the license period. ~~The year of origination for these receivables at June 30, 2020 was $889 million~~

-13-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in ~~2020, $855 million in 2019, $413 million in 2018, $138 million in 2017, $18 million in 2016 and $19 million prior to 2016.~~millions, except per share amounts)

Contract Liabilities

Contract liabilities are included within “Deferred revenues” and “Other liabilities” on the Consolidated Balance Sheets and were ~~$885 million~~$1.17 billion and ~~$910 million~~$1.12 billion at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. ~~The change in contract liabilities for~~For the ~~six~~three months ended ~~June 30, 2020 primarily reflects $407 million of revenues recognized that were included in deferred revenues at December~~March 31, ~~2019 offset by cash payments received during the period for which the performance obligation was not satisfied prior to the end of the period. For the six months ended June 30, 2019,~~2021, we recognized revenues of ~~$411~~$465 million that were included in deferred revenues at December 31, ~~2018.~~2020. For the three months ended March 31, 2020, we recognized revenues of $276 million that were included in deferred revenues at December 31, 2019.

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Unrecognized Revenues Under Contract

~~As of June 30, 2020,~~At March 31, 2021, unrecognized revenues attributable to unsatisfied performance obligations under our long-term contracts was ~~$6.79~~$6.48 billion, of which ~~$1.95~~$2.91 billion is expected to be recognized for the remainder of ~~2020, $2.55 billion in~~ 2021, ~~$1.63~~$2.39 billion in 2022, $778 million in 2023, and ~~$661~~$399 million thereafter. These amounts only include contracts subject to a guaranteed fixed amount or the guaranteed minimum under variable contracts, primarily consisting of television and film licensing contracts and affiliate agreements that are subject to a fixed or guaranteed minimum fee. Such amounts change on a regular basis as we renew existing agreements or enter into new agreements. Unrecognized revenues under ~~contract~~contracts disclosed above do not include (i) contracts with an original expected term of one year or less, mainly consisting of advertising contracts, (ii) contracts for which variable consideration is determined based on the customer’s subsequent sale or usage, mainly consisting of affiliate agreements and (iii) long-term licensing agreements for multiple programs for which variable consideration is determined based on the value of the programs delivered to the customer and our right to invoice corresponds with the value ~~of the programs provided to the customer.~~delivered.

Performance Obligations Satisfied in Previous Periods

Under certain licensing arrangements, the amount and timing of our revenue recognition is determined based on our licensees’ subsequent sale to its end customers. As a result, under such arrangements, which primarily include licensing of our content to distributors of transactional video-on-demand and electronic sell-through services, we often satisfy our performance obligation of delivery of our content in advance of revenue recognition. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, we recognized revenues of ~~$119 million and $141 million, respectively, in our~~ ~~Filmed Entertainment~~ ~~segment for performance obligations satisfied, or partially satisfied, in a prior period. During the three and six months ended June 30, 2019, we recognized revenues of $65~~$80 million and ~~$155~~$74 million, respectively, in our Filmed Entertainment segment for performance obligations satisfied, or partially satisfied, in a prior period.

-14-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

7) DEBT

Our debt consists of the following:

At At

June 30, 2020 December 31, 2019
Commercial paper
$ —
$ 699

4.30% Senior Notes due 2021 —
300

4.50% Senior Notes due 2021 —
499

3.875% Senior Notes due 2021 339
597

2.250% Senior Notes due 2022 35
49

3.375% Senior Notes due 2022 415
698

3.125% Senior Notes due 2022 117
194

2.50% Senior Notes due 2023 196
398

3.25% Senior Notes due 2023 141
181

2.90% Senior Notes due 2023 242
396

4.25% Senior Notes due 2023 836
1,242

7.875% Debentures due 2023 139
187

7.125% Senior Notes due 2023 35
46

3.875% Senior Notes due 2024 490
489

3.70% Senior Notes due 2024 598
598

3.50% Senior Notes due 2025 593
592

4.75% Senior Notes due 2025 1,238
—

4.00% Senior Notes due 2026 790
789

3.45% Senior Notes due 2026 123
123

2.90% Senior Notes due 2027 689
688

3.375% Senior Notes due 2028 494
494

3.70% Senior Notes due 2028 491
491

4.20% Senior Notes due 2029 493
493

7.875% Senior Debentures due 2030 831
831

4.95% Senior Notes due 2031 1,218
—

4.20% Senior Notes due 2032 968
—

5.50% Senior Debentures due 2033 426
426

4.85% Senior Debentures due 2034 87
87

6.875% Senior Debentures due 2036 1,069
1,068

6.75% Senior Debentures due 2037 75
75

5.90% Senior Notes due 2040 298
297

4.50% Senior Debentures due 2042 45
45

4.85% Senior Notes due 2042 487
486

4.375% Senior Debentures due 2043 1,112
1,109

4.875% Senior Debentures due 2043 18
18

5.850% Senior Debentures due 2043 1,231
1,231

5.25% Senior Debentures due 2044 345
345

4.90% Senior Notes due 2044 539
539

4.60% Senior Notes due 2045 589
589

4.95% Senior Notes due 2050 941
—

5.875% Junior Subordinated Debentures due 2057 514
643

6.25% Junior Subordinated Debentures due 2057 643
643

Other bank borrowings 101
—

Obligations under finance leases
37

44

Total debt ^(a)

20,068

18,719

Less commercial paper and other short-term borrowings
6

699

Less current portion of long-term debt
358

18

Total long-term debt, net of current portion
$ 19,704

$ 18,002


	At			At
	March 31, 2021			December 31, 2020

2.250% Senior Notes due 2022		$	0		$	35
3.375% Senior Notes due 2022		0			415
3.125% Senior Notes due 2022		0			117
2.50% Senior Notes due 2023		0			196
3.25% Senior Notes due 2023		0			141
2.90% Senior Notes due 2023		0			242
4.25% Senior Notes due 2023		0			837
7.875% Debentures due 2023		139			139
7.125% Senior Notes due 2023		35			35
3.875% Senior Notes due 2024		490			490
3.70% Senior Notes due 2024		598			598
3.50% Senior Notes due 2025		597			596
4.75% Senior Notes due 2025		1,240			1,239
4.0% Senior Notes due 2026		791			791
3.45% Senior Notes due 2026		123			123
2.90% Senior Notes due 2027		691			691
3.375% Senior Notes due 2028		495			495
3.70% Senior Notes due 2028		492			492
4.20% Senior Notes due 2029		494			493
7.875% Senior Debentures due 2030		831			831
4.95% Senior Notes due 2031		1,221			1,220
4.20% Senior Notes due 2032		970			969
5.50% Senior Debentures due 2033		427			427
4.85% Senior Debentures due 2034		87			87
6.875% Senior Debentures due 2036		1,069			1,069
6.75% Senior Debentures due 2037		75			75
5.90% Senior Notes due 2040		298			298
4.50% Senior Debentures due 2042		45			45
4.85% Senior Notes due 2042		487			487
4.375% Senior Debentures due 2043		1,117			1,116
4.875% Senior Debentures due 2043		18			18
5.85% Senior Debentures due 2043		1,232			1,232
5.25% Senior Debentures due 2044		345			345
4.90% Senior Notes due 2044		540			540
4.60% Senior Notes due 2045		589			589
4.95% Senior Notes due 2050		943			942
5.875% Junior Subordinated Debentures due 2057		514			514
6.25% Junior Subordinated Debentures due 2057		643			643
Other bank borrowings		115			95
Obligations under finance leases		36			26
Total debt (a)		17,787			19,733

Less current portion of long-term debt		19			16
Total long-term debt, net of current portion		$	17,768		$	19,717

(a) At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the ~~long-term~~senior and junior subordinated debt balances included (i) a net unamortized discount of ~~$503~~$481 million and ~~$412~~$491 million, respectively, and (ii) unamortized deferred financing costs of ~~$112~~$102 million and ~~$92 million, respectively, and (iii) a decrease in the carrying value of the debt relating to previously settled fair value hedges of $5 million and $6~~$107 million, respectively. The face value of our total debt was ~~$20.69~~$18.37 billion and ~~$19.23~~$20.33 billion at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

-15-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

During the second quarter of 2020, we issued $4.50 billion of senior notes with interest rates ranging from 4.20% to 4.95% and due dates from 2025 to 2050. The net proceeds from these issuances are being used for the redemption of our long-term debt as well as for general corporate purposes. During the second quarter of 2020,three months ended March 31, 2021, we redeemed senior notes ~~debentures, and junior subordinated debentures of $2.43~~totaling $1.99 billion, prior to maturity, for aan aggregate redemption price of ~~$2.52 billion. As a result, we recognized~~$2.11 billion resulting in a pre-tax loss on extinguishment of debt of ~~$103 million, net of $15 million of unamortized debt issuance costs and fees. On July 10, 2020, we fully redeemed the remaining $340 million of our outstanding 3.875% senior notes due December 2021.~~

$128 million.

Our 5.875% junior subordinated debentures due February 2057 and 6.25% junior subordinated debentures due February 2057 accrue interest at the stated fixed rates until February 28, 2022 and February 28, 2027,, respectively, on which dates the rates will switch to floating rates based on three-month LIBOR plus 3.895% and 3.899%, respectively, reset quarterly. These debentures can be called by us at any time after the expiration of the fixed-rate period.

Commercial Paper

~~In January 2020, our commercial paper program was increased to $3.50 billion from $2.50 billion in conjunction with the new $3.50 billion revolving credit facility described below.~~ At ~~June 30,~~both March 31, 2021 and December 31, 2020, we had 0 outstanding commercial paper borrowings under our commercial paper program. ~~At December 31, 2019, we had $699 million of outstanding commercial paper borrowings with maturities of less than 90 days and a weighted average interest rate of 2.07%.~~

Credit Facility

~~In January 2020, the $2.50 billion revolving credit facility held by CBS prior to the Merger (the “CBS Credit Facility”), with a maturity in June~~At March 31, 2021, ~~was terminated and the $2.50 billion revolving credit facility held by Viacom prior to the Merger (the “Viacom Credit Facility”), with a maturity in February 2024, was amended and restated to~~we had a $3.50 billion revolving credit facility with a maturity in January 2025 (the “Credit Facility”). The Credit Facility is used for general corporate purposes and to support commercial paper ~~outstanding,~~borrowings, if any. We may, at our option, also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the time of each borrowing and are generally based on either the prime rate in the U.S. or LIBOR plus a margin based on our senior unsecured debt rating, depending on the type and tenor of the loans entered. The Credit Facility has one principal financial covenant that requires our Consolidated Total Leverage Ratio to be less than 4.5x (which we may elect to increase to 5.0x for up to four consecutive quarters following a qualified acquisition) at the end of each quarter. The Consolidated Total Leverage Ratio reflects the ratio of our Consolidated Indebtedness at the end of a quarter, to our Consolidated EBITDA (each as defined in the amended credit agreement) for the trailing twelve-month period. We met the covenant as of ~~June 30, 2020.~~March 31, 2021.

At ~~June 30, 2020,~~March 31, 2021, we had 0 borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $3.50 billion.

Other Bank Borrowings

At ~~June 30,~~March 31, 2021 and December 31, 2020, we had ~~$101 million of~~ bank borrowings ~~with a weighted average interest rate of 3.59%. These borrowings consisted primarily of amounts outstanding~~ under Miramax’s $300 million credit facility, which matures in April ~~2023.~~2023, of $115 million and $95 million, respectively, with a weighted average interest rate of 3.50%.

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

8) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying value of our financial instruments approximates fair value, except for notes and ~~debentures, which are not recorded at fair value. The~~debentures. At March 31, 2021 and December 31, 2020, the carrying value of our notes and debentures was ~~$19.93~~$17.64 billion and ~~$17.98~~$19.61 billion, ~~at June 30, 2020 and December 31, 2019,~~ respectively, and the fair value, which is determined based on quoted prices in active markets (Level 1 in the fair value hierarchy) was ~~$23.2~~$21.2 billion and ~~$20.6~~$24.5 billion, ~~at June 30, 2020 and December 31, 2019,~~ respectively.

Investments

The fair value of our marketable securities was $20 million at March 31, 2021 which is included within “Other assets” on the Consolidated Balance Sheet.

-16-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The carrying value of our investments without a readily determinable fair value for which we have no significant influence was ~~$104 million and $113~~$65 million at ~~June 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively.~~2020. These investments are included in “Other assets” on the Consolidated Balance Sheets. During the three and six months ended June 30, 2020, in connection with the merger of an investee company with a publicly traded company, we recorded an unrealized gain of $32 million based on the market price of the company’s publicly traded equity instruments, which are deemed similar to our investment. The gain is reflected in “Other items, net” in the Consolidated Statement of Operations.

Foreign Exchange Contracts

We use derivative financial instruments primarily to modify our exposure to market risks from fluctuations in foreign currency exchange rates. We do not use derivative instruments unless there is an underlying exposure and therefore we do not hold or enter into derivative financial instruments for speculative trading purposes. Foreign exchange forward contracts have principally been used to hedge projected cash flows, in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, generally for periods up to 24 months. We designate foreign exchange forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income (loss) and reclassified to the statement of operations when the hedged item is recognized. Additionally, we enter into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows.

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the notional amount of all foreign exchange contracts was ~~$881 million~~$1.48 billion and ~~$1.44~~$1.27 billion, respectively. At ~~June 30, 2020, $421~~March 31, 2021, $948 million related to future production costs and ~~$460~~$535 million related to our foreign currency balances and other expected foreign currency cash flows. At December 31, ~~2019, $833~~2020, $740 million related to future production costs and ~~$606~~$529 million related to our foreign currency balances and other expected foreign currency cash flows.

Gains ~~(losses)~~ recognized on derivative financial instruments were as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019 Financial Statement Account
Non-designated foreign exchange contracts $ (11 ) $ 3
$ 18
$ —
Other items, net


	Three Months Ended
	March 31,
		2021		2020		Financial Statement Account
Non-designated foreign exchange contracts		$	1	$	29	Other items, net

The fair value of our derivative instruments was not material to the Consolidated Balance Sheets for any of the periods presented.

Fair Value Measurements

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

The following tables set forth our assets and liabilities measured at fair value on a recurring basis at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~.2020. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting our own assumptions about the assumptions that market participants would use in pricing the asset or liability. We do not have any assets or liabilities that are measured at fair value on a recurring basis using level 3 inputs.


At March 31, 2021	Level 1		Level 2		Total
Assets:
Marketable securities	$	20	$	0	$	20
Foreign currency hedges	0		15		15
Total Assets	$	20	$	15	$	35
Liabilities:
Deferred compensation	$	0	$	413	$	413
Foreign currency hedges	0		25		25
Total Liabilities	$	0	$	438	$	438

At June 30, 2020 Level 1 Level 2 Level 3 Total
Assets:
Equity securities $ —
$ 32
$ —
$ 32
Foreign currency hedges —
13
—
13
Total Assets $ —
$ 45
$ —
$ 45
Liabilities:
Deferred compensation $ —
$ 452
$ —
$ 452
Foreign currency hedges —
18
—
18
Total Liabilities $ —
$ 470
$ —
$ 470

-17-

At December 31, 2019 Level 1 Level 2 Level 3 Total
Assets:
Marketable securities $ 146
$ —
$ —
$ 146
Foreign currency hedges —
13
—
13
Total Assets $ 146
$ 13
$ —
$ 159
Liabilities:
Deferred compensation $ —
$ 490
$ —
$ 490
Foreign currency hedges —
14
—
14
Total Liabilities $ —
$ 504
$ —
$ 504

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


At December 31, 2020	Level 1		Level 2		Total
Assets:
Foreign currency hedges	$	0	$	20	$	20
Total Assets	$	0	$	20	$	20
Liabilities:
Deferred compensation	$	0	$	529	$	529
Foreign currency hedges	0		39		39
Total Liabilities	$	0	$	568	$	568

The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based on the fair value of the investments elected by employees. The fair value of marketable securities at ~~December~~March 31, ~~2019~~2021 was determined based on quoted market prices in active markets. ~~During~~

9) STOCKHOLDERS’ EQUITY

Stock Offerings

On March 26, 2021, we completed offerings of 20 million shares of our Class B Common Stock at a price to the ~~six months ended June 30, 2020, we sold marketable securities for~~public of $85 per share and 10 million shares of 5.75% Series A Mandatory Convertible Preferred Stock at a price to the public and liquidation preference of $100 per share. The net proceeds ~~of $146 million. During~~from the ~~three~~Class B Common Stock offering and ~~six months ended June 30, 2019, we recorded an unrealized gain of $28 million~~the Mandatory Convertible Preferred Stock offering were approximately $1.67 billion and~~$66~~ $983 million, respectively, ~~resulting from changes~~ in each case after deducting underwriting discounts, commissions and estimated offering expenses. We intend to use these net proceeds for general corporate purposes, including investments in streaming.

Mandatory Convertible Preferred Stock

Unless earlier converted, each share of Mandatory Convertible Preferred Stock will automatically and mandatorily convert on the ~~fair value~~mandatory conversion date, expected to be April 1, 2024, into between 1.0013 and 1.1765 shares of our ~~marketable securities.~~

~~During the three and six months ended June 30, 2020, we recorded an impairment charge~~Class B Common Stock, subject to customary anti-dilution adjustments. The number of ~~$25 million to write down the carrying values~~shares of ~~FCC licenses in 2 markets to their fair values, which were~~Class B Common Stock issuable upon conversion will be determined based on the ~~Greenfield Discounted Cash Flow Method (Level 3). See Note 4.~~

9) ~~STOCKHOLDERS’ EQUITY~~

~~During~~average of the ~~second quarter of 2020, we declared a quarterly cash dividend of $.24~~volume-weighted average price per share onof our ~~Class A and~~ Class B Common Stock ~~resulting in total dividends~~over the 20 consecutive trading day period commencing on, and including, the 21st scheduled trading day immediately preceding April 1, 2024. Holders of ~~$150 million, which were paid on July 1, 2020.~~

~~During~~ the ~~six months ended June 30, 2020, we repurchased 1.3 million~~Mandatory Convertible Preferred Stock (“Holders”) have the right to convert all or any portion of their shares of ~~ViacomCBS~~Mandatory Convertible Preferred Stock at any time prior to April 1, 2024 at the minimum conversion rate of 1.0013 shares of our Class B Common ~~Stock under our share repurchase program~~Stock. In addition, the conversion rate applicable to such an early conversion may, in certain circumstances, be increased to compensate Holders for ~~$50 million,~~certain unpaid accumulated dividends. However, if a fundamental change (as defined in the Certificate of Designations governing the Mandatory Convertible Preferred Stock) occurs on or prior to April 1, 2024, then Holders will, in certain circumstances, be entitled to convert all or a portion of their shares of Mandatory Convertible Preferred Stock at an ~~average cost~~increased conversion rate for a specified period of ~~$38.63 per share. At June 30, 2020, $2.36 billion~~time and receive an amount to compensate them for unpaid accumulated dividends and any remaining future scheduled dividend payments.

The Mandatory Convertible Preferred Stock is not redeemable. However, at our option, we may purchase or otherwise acquire (including in an exchange transaction) the Mandatory Convertible Preferred Stock from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, ~~authorization remained under the share repurchase program.~~or notice to, Holders. Holders have no voting rights, with certain exceptions.

-18-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Dividends on Mandatory Convertible Preferred Stock accumulate from the most recent dividend payment date, or if no dividends have been paid, the original issue date, and will be payable on a cumulative basis when, as and if declared by our Board of Directors, or an authorized committee thereof, at an annual rate of 5.75% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of Class B Common Stock or through any combination of cash and shares of Class B Common Stock, at our election. If declared, dividends on the Mandatory Convertible Preferred Stock are payable quarterly commencing on July 1, 2021, and continuing to, and including, April 1, 2024. If we have not declared all or any portion of the accumulated and unpaid dividends by April 1, 2024, the conversion rate will be adjusted so that Holders receive an additional number of shares of our Class B Common Stock, with certain limitations. The dividend payable on the first dividend payment date is expected to be $1.5493 per share of Mandatory Convertible Preferred Stock, and each subsequent quarterly dividend is expected to be $1.4375 per share. We accumulated dividends on the Mandatory Convertible Preferred Stock of $1 million during the three months ended March 31, 2021.

Common Stock Dividends

We declared cash dividends of $.24 per share on our Class A and Class B Common Stock, during the three months ended March 31, 2021 and 2020, resulting in total dividends of $152 million and $150 million, respectively.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the components of accumulated other comprehensive loss.


	Continuing Operations							Discontinued Operations
	Cumulative Translation Adjustments			Net Actuarial Loss and Prior Service Cost				Other Comprehensive Income (Loss) (a)			Accumulated Other Comprehensive Loss
At December 31, 2020		$	(303)		$	(1,509)			$	(20)		$	(1,832)
Other comprehensive income (loss) before reclassifications		(65)			0				2			(63)
Reclassifications to net earnings		0			13		(b)		0			13
Other comprehensive income (loss)		(65)			13				2			(50)
At March 31, 2021		$	(368)		$	(1,496)			$	(18)		$	(1,882)


															Continuing Operations							Discontinued Operations
	Cumulative Translation Adjustments				Net Actuarial Loss and Prior Service Cost					Accumulated Other Comprehensive Loss					Cumulative Translation Adjustments			Net Actuarial Loss and Prior Service Cost				Other Comprehensive Income (Loss) (a)			Accumulated Other Comprehensive Loss
At December 31, 2019		$	(463	)		$	(1,507	)			$	(1,970	)	At December 31, 2019		$	(438)		$	(1,507)			$	(25)		$	(1,970)
Other comprehensive loss before reclassifications		(64		)		—					(64		)	Other comprehensive loss before reclassifications		(87)			0				(14)			(101)
Reclassifications to net earnings		—				35			^(a)		35			Reclassifications to net earnings		0			17		(b)		0			17
Other comprehensive income (loss)		(64		)		35					(29		)	Other comprehensive income (loss)		(87)			17				(14)			(84)
At June 30, 2020		$	(527	)		$	(1,472	)			$	(1,999	)
At March 31, 2020														At March 31, 2020		$	(525)		$	(1,490)			$	(39)		$	(2,054)

(a)Reflects cumulative translation adjustments.

Cumulative
Translation
Adjustments

Net Actuarial
Loss and Prior
Service Cost

Accumulated
Other
Comprehensive Loss
At December 31, 2018 $ (476 ) $ (1,132 ) $ (1,608 )
Other comprehensive income before reclassifications 6
—
6

Reclassifications to net earnings —
29
^(a)
29

Other comprehensive income 6
29
35

Tax effects reclassified to retained earnings —
(230 )
^(b)
(230 )
At June 30, 2019 $ (470 ) $ (1,333 ) $ (1,803 )

~~10) STOCK-BASED COMPENSATION~~

~~The following table summarizes our stock-based compensation expense~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019.~~are each net of a tax benefit of $5 million.

Three Months Ended Six Months Ended
June 30, June 30,
2020
2019 2020 2019
RSUs and PSUs $ 40
$ 42
$ 88
$ 85
Stock options 5
8
11
16
Compensation cost included in operating and SG&A expense 45
50
99
101
Compensation cost included in restructuring and other
corporate matters ^(a)
12
—
46
5
Stock-based compensation expense, before income taxes 57
50
145
106
Related tax benefit (11 ) (12 ) (27 ) (24 )
Stock-based compensation expense, net of tax benefit $ 46
$ 38
$ 118
$ 82

-19-

~~(a) Reflects accelerations as a result of restructuring activities.~~

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

~~11)~~ ~~INCOME TAXES~~10) STOCK-BASED COMPENSATION

The ~~(provision) benefit~~following table summarizes our stock-based compensation expense for the three months ended March 31, 2021 and 2020.


	Three Months Ended
	March 31,
		2021		2020
RSUs and PSUs		$	49	$	47
Stock options		3		6
Compensation cost included in operating and SG&A expense		52		53
Compensation cost included in restructuring and other corporate matters (a)		0		34
Stock-based compensation expense, before income taxes		52		87
Related tax benefit		(11)		(15)
Stock-based compensation expense, net of tax benefit		$	41	$	72

(a) Reflects accelerations as a result of restructuring activities.

Included in net earnings from discontinued operations was stock-based compensation expense of $1 million for each of the three-month periods ended March 31, 2021 and 2020.

11) INCOME TAXES

The provision for income taxes represents federal, state and local, and foreign taxes on earnings from continuing operations before income taxes and equity in loss of investee companies. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021, we recorded a provision for income taxes of $226 million, reflecting an effective income tax rate of 19.6%. Included in the provision for income taxes is a discrete tax benefit of $21 million, primarily consisting of tax benefits from the resolution of certain state income tax matters and excess tax benefits from the vesting or exercise of stock-based compensation awards. These items, together with a net tax benefit of $25 million for the tax impact of the loss on extinguishment of debt and gain on marketable securities, impacted the effective income tax rate by 1.9 percentage points for the three months ended March 31, 2021.

For the three months ended March 31, 2020, we recorded a provision for income taxes of ~~$202~~$134 million, ~~and $339 million,~~ reflecting an effective income tax ~~rates~~rate of ~~21.6% and 21.3%, respectively.~~

For the three and six months ended June 30, 2019, we recorded a provision for income taxes of $241 million and a benefit of $135 million, reflecting effective income tax rates of 19.5% and (4.8)%, respectively.20.7%. Included in the provision for income taxes ~~for the second quarter of 2019~~ is a net tax benefit of ~~$32~~$54 million ~~principally related to~~for the ~~bankruptcy~~tax impact of ~~an investee. This item, taken together with a provision of $5 million for~~ restructuring and other corporate matters, ~~and gain~~depreciation on equity securities, reduced our effective income tax rate by 2.7 percentage points. The tax benefit for the six months ended June 30, 2019 included a deferred tax benefit of $768 million resulting from the transfer of intangible assets between our subsidiaries in connection with a reorganization of our international operations, the aforementioned tax benefit of $32 million principally related to the bankruptcy of an investee, and a tax provision of $163 million on the gain from the sale of the CBS Television City property and sound stage operation (“CBS Television City”). These items, taken together with a net tax benefit of $29 million for restructuringabandoned technology, and other ~~corporate matters and gain~~discrete tax items, which had a minimal effect on ~~equity securities, reduced~~ the effective income tax rate ~~by 27.0 percentage points for the six months ended June 30, 2019.~~

In March 2020, the U.S. government enacted tax legislation containing provisions to support businesses during the COVID-19 pandemic (the “CARES Act”), including deferment of the employer portion of certain payroll taxes, refundable payroll tax credits, and technical amendments to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on our consolidated financial statements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020. ~~We do not expect the future impact of the CARES Act provisions to be material.~~

In March 2020, the UK government passed a resolution increasing the UK corporate income tax rate from 17% to 19% beginning April 1, 2020. The resolution received Royal Assent on July 22, 2020. Accordingly, the impact of the rate increase will be recorded in our consolidated financial statements in the third quarter of 2020. We currently estimate the impact of the rate increase to result in a net tax benefit of approximately $100 million, primarily attributable to the adjustment of our UK deferred income tax balances.

ViacomCBS and its subsidiaries file income tax returns with the Internal Revenue Service (“IRS”) and various state and international jurisdictions. For periods prior to the Merger, Viacom and CBS filed separate tax returns. For CBS, the IRS commenced its examination of the 2017 tax year during the fourth quarter of 2019 and commenced its examination of the 2018 tax year in February 2020. For Viacom, the IRS began its examination of the 2014 and 2015 tax years in April 2017. Various tax years are also currently under examination by state and local and foreign tax authorities. With respect to open tax years in all jurisdictions, we currently believe that it is reasonably possible that the reserve for uncertain tax positions may decrease by ~~$125~~approximately $50 million within the next 12 months primarily related to potential resolutions of matters involving multiple tax periods and jurisdictions; however, as it is difficult to predict the final outcome or timing of resolution of any particular tax matter, ~~and~~ events could cause our current expectation to change in the future.

-20-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

12) PENSION AND OTHER POSTRETIREMENT BENEFITS

The following ~~tables present~~table presents the components of net periodic cost for our pension and postretirement benefit plans.

Pension Benefits Postretirement Benefits
Three Months Ended June 30, 2020 2019 2020 2019
Components of net periodic cost ^(a):

Service cost $ 8
$ 7
$ —
$ 1
Interest cost 41
48
3
4
Expected return on plan assets (49 ) (46 ) —
—
Amortization of actuarial loss (gain) ^(b)
26
24
(4 ) (5 )
Net periodic cost $ 26
$ 33
$ (1 ) $ —

Pension Benefits Postretirement Benefits
Six Months Ended June 30, 2020
2019
2020
2019
Components of net periodic cost ^(a):

Service cost $ 15
$ 14
$ 1
$ 1
Interest cost 82
96
6
8
Expected return on plan assets (97 ) (92 ) —
—
Amortization of actuarial loss (gain) ^(b)
52
48
(8 ) (9 )
Net periodic cost $ 52
$ 66
$ (1 ) $ —


	Pension Benefits				Postretirement Benefits
Three Months Ended March 31,	2021		2020		2021		2020
Components of net periodic cost (a):
Service cost	$	0	$	7	$	0	$	1
Interest cost	36		41		2		3
Expected return on plan assets	(47)		(48)		0		0
Amortization of actuarial loss (gain) (b)	24		26		(3)		(4)

Net periodic cost	$	13	$	26	$	(1)	$	0

(a) Amounts reflect our domestic plans only.

(b) Reflects amounts reclassified from accumulated other comprehensive loss to net earnings.

The service cost component of net periodic cost is presented in the Consolidated Statements of Operations within operating income and all other components of net periodic cost are presented within “Other items, net.”

13) REDEEMABLE NONCONTROLLING INTERESTS

We are subject to a redeemable put option, payable in a foreign currency, with respect to an international subsidiary. The put option expires in December 2022 and is classified as “Redeemable noncontrolling interest” on the Consolidated Balance Sheets. The activity reflected within redeemable noncontrolling interest for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ is presented below.


	Three Months Ended
	March 31,
	2021		2020
Beginning balance	$	197	$	254
Net earnings	2		1
Distributions	(1)		(4)
Translation adjustment	2		(14)
Redemption value adjustment	(11)		33
Ending balance	$	189	$	270

Six Months Ended
June 30,
2020 2019
Beginning balance $ 254
$ 239
Net earnings 3
5
Distributions (7 ) (8 )
Translation adjustment (17 ) —
Redemption value adjustment 41
14
Ending balance $ 274
$ 250

-21-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

14) REPORTABLE SEGMENTS

The following tables set forth our financial information by reportable segment. Our operating segments, which are the same as our reportable segments, have been determined in accordance with our internal management structure, which is organized based upon products and services.

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019
2020 2019
Revenues:

Advertising $ 951
$ 1,309
$ 2,332
$ 3,276
Affiliate 751
616
1,485
1,227
Content licensing 544
966
1,341
1,747
Other 41
47
76
94
TV Entertainment 2,287
2,938
5,234
6,344
Advertising 992
1,347
2,109
2,462
Affiliate 1,443
1,539
2,906
3,093
Content licensing 797
290
1,075
523
Cable Networks 3,232
3,176
6,090
6,078
Theatrical 3
152
170
324
Home entertainment 209
161
383
315
Licensing 434
540
876
915
Other 1
24
29
53
Filmed Entertainment 647
877
1,458
1,607
Publishing 200
218
370
382
Corporate/Eliminations (91 )
(66 )
(208 )
(168 )
Total Revenues $ 6,275

$ 7,143

$ 12,944

$ 14,243

In the first quarter of 2021, we began separately presenting streaming revenues in the categories we use to disaggregate our revenues (see Note 6).


	Three Months Ended
	March 31,
		2021		2020
Revenues:
Advertising		$	1,807	$	1,288
Affiliate		693		623
Streaming		322		204
Licensing and other		689		832
TV Entertainment		3,511		2,947
Advertising		878		945
Affiliate		1,382		1,345
Streaming		494		290
Licensing and other		505		278
Cable Networks		3,259		2,858
Theatrical		1		167
Licensing and other		996		644
Filmed Entertainment		997		811
Corporate/Eliminations		(355)		(117)
Total Revenues		$	7,412	$	6,499

Revenues generated between segments ~~primarily reflect advertising~~are principally from the licensing of Filmed Entertainment and Cable Networkscontent to Paramount+ and licensing ~~revenues.~~of Filmed Entertainment and TV Entertainment content to our cable networks. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation. Revenues earned from the licensing of content within segments, including licensing to Paramount+ within the TV Entertainment segment, are eliminated within the segment. Intercompany revenues associated with the licensing of programming to Paramount+ after the initial exhibition on our broadcast or cable networks are recorded on a straight-line basis over the term of the agreement and eliminated in consolidation.


	Three Months Ended
	March 31,
		2021		2020
Intercompany Revenues:
TV Entertainment		$	72	$	75
Cable Networks		78		16
Filmed Entertainment		205		26
Total Intercompany Revenues		$	355	$	117

Three Months Ended Six Months Ended
June 30, June 30,
2020
2019 2020
2019
Intercompany Revenues:
TV Entertainment $ 43
$ 38
$ 118
$ 94
Cable Networks 2
9
18
27
Filmed Entertainment 46
26
72
61
Total Intercompany Revenues $ 91
$ 73
$ 208
$ 182

-22-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Adjusted OIBDA:
TV Entertainment $ 392
$ 613
$ 965
$ 1,355
Cable Networks 1,285
989
2,079
1,882
Filmed Entertainment 116
95
143
133
Publishing 38
35
57
54
Corporate/Eliminations (97 ) (120 ) (193 ) (222 )
Stock-based compensation (45 ) (50 ) (99 ) (101 )
Depreciation and amortization (124 ) (109 ) (237 ) (215 )
Restructuring and other corporate matters (158 ) (7 ) (391 ) (185 )
Programming charges (121 ) —
(121 ) —
Gain on sale of assets —
—
—
549
Operating income 1,286

1,446

2,203

3,250
Interest expense (263 ) (237 ) (504 ) (477 )
Interest income 11
15
25
34
Loss on extinguishment of debt (103 ) —
(103 ) —
Other items, net 6
15
(27 ) 25
Earnings from continuing operations before income taxes and
equity in loss of investee companies
937
1,239
1,594
2,832
(Provision) benefit for income taxes (202 ) (241 ) (339 ) 135
Equity in loss of investee companies, net of tax (12 ) (21 ) (21 ) (39 )
Net earnings from continuing operations 723
977
1,234
2,928
Net earnings from discontinued operations, net of tax 3
6
11
19
Net earnings (ViacomCBS and noncontrolling interests) 726
983
1,245
2,947
Net earnings attributable to noncontrolling interests (245 ) (6 ) (248 ) (11 )
Net earnings attributable to ViacomCBS $ 481
$ 977
$ 997
$ 2,936


	Three Months Ended
	March 31,
		2021		2020
Adjusted OIBDA:
TV Entertainment		$	449	$	573
Cable Networks		1,184		794
Filmed Entertainment		204		27
Corporate/Eliminations		(158)		(96)
Stock-based compensation		(52)		(53)
Depreciation and amortization		(99)		(112)
Restructuring and other corporate matters		0		(231)


Operating income		1,528		902
Interest expense		(259)		(241)
Interest income		13		14
Loss on extinguishment of debt		(128)		0
Other items, net		1		(28)
Earnings from continuing operations before income taxes and equity in loss of investee companies		1,155		647
Provision for income taxes		(226)		(134)
Equity in loss of investee companies, net of tax		(18)		(9)
Net earnings from continuing operations		911		504
Net earnings from discontinued operations, net of tax		12		15
Net earnings (ViacomCBS and noncontrolling interests)		923		519
Net earnings attributable to noncontrolling interests		(12)		(3)
Net earnings attributable to ViacomCBS		$	911	$	516


	At			At
	March 31, 2021			December 31, 2020
Assets:
TV Entertainment		$	19,014		$	19,443
Cable Networks		23,149			23,139
Filmed Entertainment		6,298			6,440
Corporate/Eliminations		4,987			2,202
Discontinued Operations		1,325			1,439
Total Assets		$	54,773		$	52,663

At At
June 30, 2020 December 31, 2019
Assets:
TV Entertainment $ 19,289
$ 19,689

Cable Networks 22,539
22,109

Filmed Entertainment
6,454
5,477

Publishing 1,246
1,262

Corporate/Eliminations 1,649
967

Discontinued Operations 11
15

Total Assets $ 51,188
$ 49,519

-23-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

15) COMMITMENTS AND CONTINGENCIES

Guarantees

Letters of Credit and Surety ~~Bonds.~~ Bonds

We have indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. At ~~June 30, 2020,~~March 31, 2021, the outstanding letters of credit and surety bonds approximated ~~$135~~$142 million and were not recorded on the Consolidated Balance Sheet.

CBS Television ~~City.~~ City

In connection with the sale of the CBS Television City property and sound stage operation (“CBS Television City”) in 2019, we guaranteed a specified level of cash flows to be generated by the business during the first five years following the completion of the sale. Included in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheet at ~~June 30, 2020~~March 31, 2021 is a liability of ~~$99~~$75 million, reflecting the present value of the estimated amount payable under the guarantee obligation.

Lease Guarantees.

We have certain indemnification obligations with respect to leases primarily associated with the previously discontinued operations of Famous Players Inc. ~~(“Famous Players”).~~ These lease commitments ~~amount to $72~~were $67 million as of ~~June 30, 2020~~March 31, 2021 and are presented within “Other liabilities” on the Consolidated Balance ~~Sheet within “Other liabilities.”~~Sheet. The amount of lease commitments varies over time depending on the expiration or termination of individual underlying leases, or the related indemnification obligation, and foreign exchange rates, among other things. We may also have exposure for certain other expenses related to the leases, such as property taxes and common area maintenance. We believe our accrual is sufficient to meet any future obligations based on our consideration of available financial information, the lessees’ historical performance in meeting their lease obligations and the underlying economic factors impacting the lessees’ business models.

In the course of our business, we both provide and receive indemnities which are intended to allocate certain risks associated with business transactions. Similarly, we may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its obligations under an indemnification obligation. We record a liability for our indemnification obligations and other contingent liabilities when probable and reasonably estimable.

Legal Matters

General

On an ongoing basis, we vigorously defend ourselves in numerous lawsuits and proceedings and respond to various investigations and inquiries from federal, state, local and international authorities (collectively, ~~“litigation’’~~“litigation”). Litigation may be brought against us without merit, is inherently uncertain and always difficult to predict. However, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the following matters are not likely, in the aggregate, to result in a material adverse effect on our business, financial condition and results of operations.

Litigation Relating to the Merger

-24-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

3 lawsuits and appointed Bucks County Employees’ Retirement Fund and International Union of Operating Engineers of Eastern Pennsylvania and Delaware as co-lead plaintiffs for the consolidated action. On April 14, 2020, the lead plaintiffs filed a Verified Consolidated Class Action and Derivative Complaint (as used in this paragraph, the “Complaint”) against Shari E. Redstone, NAI, Sumner M. Redstone National Amusements Trust,

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

members of the CBS Board of Directors (comprised of Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Robert N. Klieger, Martha L. Minow, Susan Schuman, Frederick O. Terrell and Strauss Zelnick), former CBS President and Acting Chief Executive Officer Joseph Ianniello and nominal defendant ViacomCBS Inc. The Complaint alleges breaches of fiduciary duties to CBS stockholders in connection with the negotiation and approval of the Agreement and Plan of Merger dated as of August 13, 2019, as amended on October 16, 2019 (the “Merger Agreement”). The Complaint also alleges waste and unjust enrichment in connection with Mr. Ianniello’s compensation. The Complaint seeks unspecified damages, costs and expenses, as well as other relief. On June 5, 2020, the defendants filed motions to dismiss. On January 27, 2021, the Court dismissed 1 disclosure claim, while allowing all other claims against the defendants to proceed. Discovery on the surviving claims is proceeding. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Beginning on November 25, 2019, four purported Viacom stockholders filed separate putative class action lawsuits in the Court of Chancery of the State of Delaware. On January 23, 2020, the Court consolidated the 4 lawsuits. On February 6, 2020, the Court appointed California Public Employees’ Retirement System (“CalPERS”) as lead plaintiff for the consolidated action. On February 28, 2020, CalPERS, together with Park Employees’ and Retirement Board Employees’ Annuity and Benefit Fund of Chicago and Louis M. Wilen, filed a First Amended Verified Class Action Complaint (as used in this paragraph, the “Complaint”) against NAI, NAI Entertainment Holdings LLC, Shari E. Redstone, the members of the Viacom special transaction committee of the Viacom Board of Directors (comprised of Thomas J. May, Judith A. McHale, Ronald L. Nelson and Nicole Seligman) and our President and Chief Executive Officer and director, Robert M. Bakish. The Complaint alleges breaches of fiduciary duties to Viacom stockholders in connection with the negotiation and approval of the Merger Agreement. The Complaint seeks unspecified damages, costs and expenses, as well as other relief. On May 22, 2020, the defendants filed motions to dismiss. On December 29, 2020, the Court dismissed the claims against Mr. Bakish, while allowing the claims against the remaining defendants to proceed. Discovery on the surviving claims is proceeding. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Investigation-Related Matters

As announced on August 1, 2018, the CBS Board of Directors retained ~~two~~2 law firms to conduct a full investigation of the allegations in press reports about CBS’ former Chairman of the Board, President and Chief Executive Officer, Leslie Moonves, CBS News and cultural issues at CBS. On December 17, 2018, the CBS Board of Directors announced the completion of its investigation, certain findings of the investigation and the CBS Board of Directors’ determination, discussed below, with respect to the termination of Mr. Moonves’ employment. We have received subpoenas or requests for information from the New York County District Attorney’s Office, ~~and~~ the New York City Commission on Human Rights, ~~regarding~~ the ~~subject matter of this investigation and related matters. The~~ New York State Attorney General’s Office and the United States Securities and Exchange Commission ~~have also requested information about these~~regarding the subject matter of this investigation and related matters, including with respect to CBS’ related public disclosures. We may continue to receive additional related regulatory and investigative inquiries from these and other entities in the future. We are cooperating with these inquiries.

-25-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

others similarly situated, for claims that are similar to those alleged in the amended complaint described below. On November 6, 2018, the Court entered an order consolidating the two actions. On November 30, 2018, the Court appointed Construction Laborers Pension Trust for Southern California as the lead plaintiff of the consolidated action. On February 11, 2019, the lead plaintiff filed a consolidated amended putative class action complaint against CBS, certain current and former senior executives and members of the CBS Board of Directors. The consolidated action is stated to be on behalf of purchasers of CBS Class A Common Stock and Class B Common

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Stock between September 26, 2016 and December 4, 2018. This action seeks to recover damages arising during this time period allegedly caused by the defendants’ purported violations of the federal securities laws, including by allegedly making materially false and misleading statements or failing to disclose material information, and seeks costs and expenses as well as remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On April 12, 2019, the defendants filed motions to dismiss this action, which the Court granted in part and denied in part on January 15, 2020. With the exception of one statement made by Mr. Moonves at an industry event in November 2017, in which he allegedly was acting as the agent of CBS, all claims as to all other allegedly false and misleading statements were dismissed. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Separation Agreement

On September 9, 2018, CBS entered into a separation and settlement agreement and releases (the “Separation Agreement”) with Mr. Moonves, pursuant to which Mr. Moonves resigned as a director and as Chairman of the Board, President and Chief Executive Officer of CBS. In October 2018, we contributed $120 million to a grantor trust pursuant to the Separation Agreement. On December 17, 2018, the CBS Board of Directors announced that, following its consideration of the findings of the investigation referred to above, it had determined that there were grounds to terminate Mr. Moonves’ employment for cause under his employment agreement with CBS. Any dispute related to the CBS Board of Directors’ determination is subject to binding arbitration as set forth in the Separation Agreement. On January 16, 2019, Mr. Moonves commenced a binding arbitration proceeding with respect to this matter and the related CBS Board of Directors investigation, which proceeding is ongoing. The assets of the grantor trust will remain in the trust until a final determination in the arbitration. We are currently unable to determine the outcome of the arbitration and the amount, if any, that may be awarded thereunder. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Litigation Related to Television Station Owners

On September 9, 2019, the Company was added as a defendant in a multi-district putative class action lawsuit filed in the United States District Court for the Northern District of Illinois. The lawsuit was filed by parties that claim to have purchased broadcast television spot advertising beginning on or about January 1, 2014 on television stations owned by one or more of the defendant television station owners and alleges the sharing of allegedly competitively sensitive information among such television stations in alleged violation of the Sherman Antitrust Act. The action, which names the Company among 14 total defendants, seeks monetary damages, attorneys’ fees, costs and interest as well as injunctions against the allegedly unlawful conduct. On October 8, 2019, the Company and other defendants filed a motion to dismiss the matter, which was denied by the court on November 6, 2020. We believe that the claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

-26-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Claims Related to Former Businesses: Asbestos

We are a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. We are typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of our products is the basis of a claim. Claims against us in which a product has been identified most commonly relate to allegations of exposure to asbestos-containing insulating material used in conjunction with turbines and electrical equipment.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. We do not report as pending those claims on inactive, stayed, deferred or similar dockets that some jurisdictions have established for claimants who allege minimal or no impairment. As of ~~June 30, 2020,~~March 31, 2021, we had pending approximately ~~31,190~~30,480 asbestos claims, as compared with approximately ~~30,950~~30,710 as of December 31, ~~2019.~~2020. During the ~~second~~first quarter of ~~2020,~~2021, we received approximately ~~590~~780 new claims and closed or moved to an inactive docket approximately ~~480~~1,010 claims. We report claims as closed when we become aware that a dismissal order has been entered by a court or when we have reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. Our total costs for the years ~~2019~~2020 and ~~2018~~2019 for settlement and defense of asbestos claims after insurance recoveries and net of tax were approximately ~~$58~~$35 million and ~~$45~~$58 million, respectively. Our costs for settlement

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of pending claims against us are non-cancer claims. It is difficult to predict future asbestos liabilities, as events and circumstances may impact the estimate of our asbestos liabilities, including, among others, the number and types of claims and average cost to resolve such claims. We record an accrual for a loss contingency when it is both probable that a liability has been incurred and when the amount of the loss can be reasonably estimated. We believe that our accrual and insurance are ~~adequate~~sufficient to cover our asbestos liabilities. Our liability estimate is based upon many factors, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims, as well as consultation with a third party firm on trends that may impact our future asbestos liability.

Other

From time to time we receive claims from federal and state environmental regulatory agencies and other entities asserting that we are or may be liable for environmental cleanup costs and related damages principally relating to our historical and predecessor operations. In addition, from time to time we receive personal injury claims including toxic tort and product liability claims (other than asbestos) arising from our historical operations and predecessors.

-27-

VIACOMCBS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

16) SUPPLEMENTAL FINANCIAL INFORMATION

Supplemental Cash Flow Information

Six Months Ended
June 30,
2020 2019
Cash paid for interest $ 470
$ 463

Cash paid for income taxes $ 100
$ 498

Noncash additions to operating lease assets $ 89
$ 213


	Three Months Ended
	March 31,
	2021		2020
Cash paid for interest	$	316	$	322

Cash paid (received) for income taxes:
Continuing operations	$	(23)	$	54
Discontinued operations	$	0	$	1

Noncash additions to operating lease assets	$	5	$	55

Variable Interest Entities

In the normal course of business, we enter into joint ventures or make investments with business partners that support our underlying business strategy and provide us the ability to enter new markets to expand the reach of our brands, develop new programming and/or distribute our existing content. In certain instances, an entity in which we make an investment may qualify as a ~~VIE.~~variable interest entity (“VIE”). In determining whether we are the primary beneficiary of a VIE, we assess whether we have the power to direct matters that most significantly impact the activities of the VIE and have the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

~~VIACOMCBS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars~~ The following tables present the amounts recorded in ~~millions, except per share amounts)~~

The Consolidated Balance Sheets include assets and liabilities related to consolidated VIEs totaling $1.31 billion and $219 million, respectively, at June 30, 2020, and $141 million and $22 million, respectively, at December 31, 2019. Revenues and operating income from our consolidated VIEs were $538 million and $500 million, respectively, for the three months ended June 30, 2020, and $556 million and $498 million, respectively, for the six months ended June 30, 2020. Revenues and operating income from our consolidated VIEs were not significant for the three and six months ended June 30, 2019. The increase in amountsfinancial statements related to our consolidated ~~VIEs reflects the acquisition of Miramax (see Note 2) and the licensing of the streaming rights to~~ VIEs.

~~South Park~~ ~~by a consolidated 51%-owned VIE in the second quarter of 2020.~~


		At			At
	March 31, 2021			December 31, 2020
Total assets		$	1,435		$	1,385

Total liabilities		$	233		$	197

~~Gain on Sale of Assets~~

During the first quarter of 2019, we completed the sale of CBS Television City for $750 million. We guaranteed a specified level of cash flows to be generated by the business during the first five years following the completion of the sale. This transaction resulted in a gain of $549 million ($386 million, net of tax), which included a reduction for the estimated amount payable under the guarantee obligation.


	Three Months Ended
	March 31,
		2021		2020
Revenues		$	71	$	18

Operating income (loss)		$	5	$	(2)

Lease Income

We enter into operating leases for the use of our owned production facilities and office buildings. Lease payments received under these agreements consist of fixed payments for the rental of space and certain building operating costs, as well as variable payments based on usage of production facilities and services, and escalating costs of building operations. We recorded total lease income, including both fixed and variable amounts, of ~~$19~~$36 million and ~~$53~~$34 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, ~~respectively, and $38 million and $78 million for three and six months ended June 30, 2019,~~ respectively.

-28-



Item 2.			Management’s Discussion and Analysis of Results of Operations and Financial Condition.
			(Tabular dollars in millions, except per share amounts)

Management’s discussion and analysis of the results of operations and financial condition of ViacomCBS Inc. should be read in conjunction with the consolidated financial statements and related notes in ViacomCBS Inc.’s Annual Report filed on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2019.~~2020. References in this document to “ViacomCBS,” the “Company,” “we,” “us” and “our” refer to ViacomCBS Inc.

Significant components of management’s discussion and analysis of results of operations and financial condition include:

•

•Overview—Summary of ViacomCBS and our business and operational highlights.

•Consolidated Results of Operations—Analysis of our results on a consolidated basis for the three months ended March 31, 2021 compared with the three months ended March 31, 2020.

•Segment Results of Operations—Analysis of our results on a reportable segment basis for the three months ended March 31, 2021 compared with the three months ended March 31, 2020.

•Liquidity and Capital Resources—Discussion of our sources and uses of cash; cash flows for the three months ended March 31, 2021 and March 31, 2020; and of our outstanding debt, commitments and contingencies as of March 31, 2021.

•Legal Matters—Discussion of legal matters in which we are involved.

~~—Summary of ViacomCBS and our business and operational highlights.~~


•	~~Consolidated Results of Operations—Analysis of our results on a consolidated basis for the three and six months ended June 30, 2020 compared with the three and six months ended June 30, 2019.~~


•	~~Segment Results of Operations—Analysis of our results on a reportable segment basis for the three and six months ended June 30, 2020 compared with the three and six months ended June 30, 2019.~~


•	~~Liquidity and Capital Resources~~—Discussion of our cash flows for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 and of our outstanding debt, commitments and contingencies existing as of June 30, 2020.


•	~~Legal Matters—Discussion of legal matters to which we are involved.~~

Overview

ViacomCBS is a leading global media and entertainment company that creates content and experiences for audiences worldwide.

~~Merger with Viacom Inc.~~

Stock Offerings

On ~~December 4, 2019, Viacom Inc.~~March 26, 2021, we completed offerings of 20 million shares of our Class B Common Stock at a price to the public of $85 per share and 10 million shares of 5.75% Series A Mandatory Convertible Preferred Stock (“~~Viacom”~~Mandatory Convertible Preferred Stock”) ~~merged with~~at a price to the public and ~~into CBS Corporation (“CBS”), with CBS continuing as~~liquidation preference of $100 per share. The net proceeds from the surviving company (the “Merger”). At the effective time of the Merger, the combined company changed its name to ViacomCBS Inc. The Merger has been accounted for as a transaction between entities under common control as National Amusements, Inc. (“NAI”) was the controlling stockholder of each of CBS and Viacom (and remains the controlling stockholder of ViacomCBS). Upon the closing of the Merger, the net assets of Viacom were combined with those of CBS at their historical carrying amountsClass B Common Stock offering and the ~~companies have been presented on a combined basis~~Mandatory Convertible Preferred Stock offering were approximately $1.67 billion and $983 million, respectively, in each case after deducting underwriting discounts, commissions and estimated offering expenses. We intend to use these net proceeds for ~~all periods presented.~~

~~Impact of COVID-19~~general corporate purposes, including investments in streaming.

~~The coronavirus disease (“COVID-19”) pandemic has negatively impacted, and is expected to continue to impact, the macroeconomic environment~~

Streaming Revenues

Beginning in the ~~United States~~first quarter of 2021, we changed the categories we use to disaggregate revenues to include streaming revenues, in order to align with management’s increased focus on this revenue stream. Streaming revenues are comprised of streaming advertising and ~~globally,~~streaming subscription revenues. Streaming advertising revenues are earned from advertisements on our pay and free streaming services, including Paramount+ and Pluto TV, and from digital video advertisements on our websites and in our video content on third party platforms (“other digital video platforms”). Streaming subscription revenues include fees for our pay streaming services, including Paramount+, Showtime Networks’ premium subscription streaming service (“Showtime OTT”), BET+ and Noggin, as well as ~~our business, financial condition and results of operations.~~ ~~As a result of COVID-19, we have experienced a material negative impact~~premium subscriptions to access certain video content on our websites. Accordingly, our advertising and affiliate revenue categories exclude revenues ~~because of weakness in the advertising market as advertisers have sought~~earned by our streaming services and on other digital video platforms. The prior year has been reclassified to ~~reduce their own costs in response~~conform to ~~the pandemic’s impact on their businesses, and because of the cancellation or postponement of sporting events for which we have broadcast rights, such as the~~ ~~NCAA Division I Men’s Basketball Championship~~ ~~(the “NCAA Tournament”)~~ and professional golf tournaments. We are not able to predict whether future sporting events will be canceled or postponed, or whether advertising revenues from these broadcasts, or advertising budgets and the advertising market generally, will return or be comparable to historical levels. While we expect this ~~negative impact to continue in the second half of the year, we expect the rate of decline in advertising revenues will improve from the second quarter.~~presentation.

COVID-19 has also led to a temporary shutdown of production of our television and film programming, which resulted in the abandonment of certain program materials that were not complete, delays in deliveries of

-29-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

programming to third parties, and fewer original programs and live events airing on our broadcast and cable networks. While production has begun on a limited basis, we are not able to predict when production will fully resume, or the impact of incremental costs required to adhere to new health and safety protocols. We may also experience lower demand for the licensing of our programming in the near term as licensees implement financial austerity measures and aim to reduce costs. As a result, content licensing and advertising revenues have been and may continue to be negatively impacted in the near to medium term.

In addition, our theatrical revenues have been negatively impacted by the closure or reduction in capacity of movie theaters that show our films, either voluntarily or as a result of government orders or restrictions on public gatherings in response to COVID-19, which has impacted our theatrical release strategy for several films in 2020. As a result, we did not release any films in the second quarter of 2020 and postponed two significant theatrical releases from 2020 to 2021. We are not able to predict when movie theaters will reopen at scale, whether consumers will return to movie theaters (even upon their reopening) at the same levels they previously did, or whether revenues from theatrical releases will be comparable to historical levels.

COVID-19 could also have a negative impact on our affiliate revenues, as consumers may seek to reduce discretionary spending by cutting back or foregoing subscriptions to cable television or other multichannel video programming distributors (“MVPDs”) and virtual MVPDs.

The continuing impact of COVID-19 could be material to our business, financial condition and results of operations. The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19. Even after COVID-19 has subsided, we may experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future. ~~Due to the evolving and uncertain nature of the pandemic, we are not able to estimate the full extent of the impact on our~~ ~~business, financial condition and results of operations, particularly over the near to medium term.~~

While COVID-19 has negatively impacted parts of our business, we have seen increased viewership across our broadcast, cable and digital properties and are utilizing our deep library of content to mitigate its impact. We are also working proactively to offset a portion of the revenue losses through cost-savings initiatives. In addition, results for the second half of the year are expected to benefit from increased political advertising revenues associated with the U.S. Presidential election. We have taken steps to strengthen our financial position during this period of market uncertainty, such as the issuance of long-term debt and redemption of near-term debt discussed under “Liquidity and Capital Resources,” and we will continue to actively monitor the potential impact of COVID-19 and related events on the commercial paper and credit markets.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Operational Highlights - Three Months Ended ~~June 30, 2020~~March 31, 2021 versus Three Months Ended ~~June 30, 2019~~March 31, 2020

Consolidated results of operations Increase/(Decrease)
Three Months Ended June 30, 2020 2019 $ %
GAAP:
Revenues $ 6,275
$ 7,143
$ (868 ) (12 )%
Operating income $ 1,286
$ 1,446
$ (160 ) (11 )%
Net earnings from continuing operations
attributable to ViacomCBS
$ 478
$ 971
$ (493 ) (51 )%
Diluted EPS from continuing operations
attributable to ViacomCBS
$ .77
$ 1.57
$ (.80 ) (51 )%
Net cash flow provided by operating activities $ 795
$ 260
$ 535
206 %

Non-GAAP:^(a)

Adjusted OIBDA $ 1,689
$ 1,562
$ 127
8 %
Adjusted net earnings from continuing operations
attributable to ViacomCBS
$ 769
$ 912
$ (143 ) (16 )%
Adjusted diluted EPS from continuing operations
attributable to ViacomCBS
$ 1.25
$ 1.48
$ (.23 ) (16 )%
Free cash flow $ 714
$ 185
$ 529
286 %

~~(a) See “Reconciliation of Non-GAAP Measures” and “Free Cash Flow” for reconciliations of non-GAAP results to the most directly comparable financial measures in accordance with accounting principles generally accepted in the United States (“GAAP”).~~

For the three months ended June 30, 2020, revenues decreased 12% to $6.28 billion, driven by the adverse effects of COVID-19 on our business, including weak demand in the advertising market, the closure of movie theaters throughout the second quarter, and ~~the cancellation and postponement of professional golf tournaments~~. The decline in revenues also reflected the comparison against the broadcast of the national semifinals and championship games of the NCAA Tournament on CBS in the second quarter of 2019. These NCAA Tournament games are broadcast on CBS every other year through 2032 under agreements with the NCAA and Turner Broadcasting System, Inc. (“Turner”). These decreases were partially offset by growth from our streaming services, including CBS All Access, Pluto TV and the Showtime streaming subscription offering (“Showtime OTT”), as well as BET+, which launched in September 2019. Revenues from our domestic streaming and digital video business grew 25% to $489 million for the three months ended June 30, 2020. Content licensing revenues for the three months ended June 30, 2020 were relatively flat compared with the same prior-year period, as the licensing of the domestic streaming rights to ~~South Park~~ was offset by a lower volume of licensing in the second quarter of 2020 as a result of the benefit to the prior-year period from several significant licensing agreements for library programming, the timing of the delivery of programming produced for third parties, and production shutdowns because of COVID-19.

Operating income for the three months ended June 30, 2020 decreased 11% from the same prior-year period. This comparison was impacted by items identified as affecting comparability, including programming, restructuring and impairment charges and costs associated with other corporate matters. See “~~Reconciliation of Non-GAAP Measures.~~” Adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) increased 8% as the revenue decline was more than offset by lower programming and distribution costs mainly as a result of production shutdowns and the absence of theatrical releases during the quarter, lower advertising and promotion costs from the broadcast of fewer original programs and lower employee expenses reflecting the benefit from restructuring activities.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

For the three months ended June 30, 2020, net earnings from continuing operations attributable to ViacomCBS and diluted earnings per share (“EPS”) from continuing operations each decreased 51% from the same prior-year period. These comparisons were impacted by the aforementioned items affecting comparability, including a loss on extinguishment of debt of $103 million in 2020 and gains relating to investments in the 2020 and 2019 periods. Adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS each decreased 16%, as the growth in Adjusted OIBDA was more than offset by the noncontrolling interest’s share of profit from the licensing of ~~South Park~~ ~~in 2020. Adjusted OIBDA, adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS from continuing operations are non-GAAP financial measures. See “Reconciliation of Non-GAAP Measures” for details of the items excluded from financial results, and reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.~~

~~Operational Highlights~~ - ~~Six Months Ended June 30, 2020 versusSix Months Ended June 30, 2019~~


Consolidated results of operations					Increase/(Decrease)					Consolidated results of operations					Increase/(Decrease)
Six Months Ended June 30,	2020		2019		$			%
Three Months Ended March 31,										Three Months Ended March 31,	2021		2020		$		%
GAAP:										GAAP:
Revenues	$	12,944	$	14,243	$	(1,299	)	(9	)%	Revenues	$	7,412	$	6,499	$	913	14	%
Operating income	$	2,203	$	3,250	$	(1,047	)	(32	)%	Operating income	$	1,528	$	902	$	626	69	%
Net earnings from continuing operations attributable to ViacomCBS	$	986	$	2,917	$	(1,931	)	(66	)%	Net earnings from continuing operations attributable to ViacomCBS	$	899	$	501	$	398	79	%
Diluted EPS from continuing operations attributable to ViacomCBS	$	1.60	$	4.73	$	(3.13	)	(66	)%	Diluted EPS from continuing operations attributable to ViacomCBS	$	1.42	$	.81	$	.61	75	%
Net cash flow provided by operating activities	$	1,151	$	1,189	$	(38	)	(3	)%
Net cash flow provided by operating activities from continuing operations										Net cash flow provided by operating activities from continuing operations	$	1,651	$	357	$	1,294	362	%


Non-GAAP:^(a)										Non-GAAP: (a)
Adjusted OIBDA	$	2,952	$	3,101	$	(149	)	(5	)%	Adjusted OIBDA	$	1,627	$	1,245	$	382	31	%
Adjusted net earnings from continuing operations attributable to ViacomCBS	$	1,468	$	1,810	$	(342	)	(19	)%	Adjusted net earnings from continuing operations attributable to ViacomCBS	$	961	$	690	$	271	39	%
Adjusted diluted EPS from continuing operations attributable to ViacomCBS	$	2.38	$	2.93	$	(.55	)	(19	)%	Adjusted diluted EPS from continuing operations attributable to ViacomCBS	$	1.52	$	1.12	$	.40	36	%
Free cash flow	$	1,019	$	1,047	$	(28	)	(3	)%	Free cash flow	$	1,589	$	306	$	1,283	419	%

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, revenues ~~decreased 9%~~increased 14% to ~~$12.94~~$7.41 billion, driven by ~~the adverse effects of COVID-19 on our business as well as the comparison against~~ CBS’ broadcasts of Super Bowl ~~LIII~~LV and NCAA Division I Men’s Basketball Championship and the NCAA Tournament in the first half of 2019. The Super Bowl is broadcast on the CBS Television Network on a rotating basis with other networks through the 2022 season under the current contract with the National Football League (“NFL”(the “NCAA Tournament”) ~~and the 2020 NCAA Tournament, which was scheduled to be broadcast~~games. There were no comparable broadcasts on CBS in the first quarter of 2020 as we have the rights to broadcast the Super Bowl on a rotational basis with other networks, and the 2020 NCAA Tournament was ~~canceled~~cancelled as a result of ~~concerns about COVID-19.~~the coronavirus disease (“COVID-19”) pandemic. Taken together, these sporting events contributed 11 percentage points of the revenue increase. The revenue comparison also benefited from 65% growth in streaming revenues, reflecting growth across our streaming services, and higher licensing revenues primarily from the licensing of film content. These ~~decreases~~increases were partially offset by ~~growth~~the continued impact on theatrical revenues from ~~our streaming services, including CBS All Access, Pluto TV, Showtime OTT, and BET+. Revenues from our domestic streaming and digital video business grew 37%~~the closure or reduced capacity of movie theaters in response to ~~$960 million for the six months ended June 30, 2020.~~COVID-19.

Operating income for the ~~six~~three months ended ~~June 30, 2020 decreased 32%~~March 31, 2021 increased 69% from the same prior-year period. This comparison was impacted by costs for restructuring and other corporate matters, which were items identified as affecting comparability ~~including programming, restructuring and impairment charges and costs for other corporate matters, as well as a gain on the sale of assets~~ in the first quarter of ~~2019.~~2020. See “Reconciliation of Non-GAAP Measures.” Adjusted ~~OIBDA decreased 5%~~operating income before depreciation and amortization (“Adjusted OIBDA”) increased 31%, primarily ~~reflecting~~driven by the ~~decline in revenues,~~revenue growth, partially offset by ~~lower operating expenses, as a result of production shutdowns,~~higher sports programming costs associated with the ~~absence~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~in the 2020 period of certain major~~above-mentioned sporting events and ~~theatrical film releases, and the benefit from restructuring activities.~~increased investment in our streaming services.

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, net earnings from continuing operations attributable to ViacomCBS and diluted EPS from continuing operations ~~each decreased 66%~~increased 79% and 75%, respectively, from the same prior-year period. These comparisons were impacted by items identified as affecting comparability, including the aforementioned items impacting operating income, and for the 2021 period, a loss on extinguishment of debt ~~of $103 million, as well as discrete tax items of $800 million in 2019, principally related to tax benefits from the transfer of intangible assets between our subsidiaries in connection with~~and a ~~reorganization of our international operations and the bankruptcy of an investee.~~gain on marketable securities. Adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS ~~from continuing operations each decreased 19%~~increased 39% and 36%, respectively, reflecting the ~~lower~~higher Adjusted ~~OIBDA and the noncontrolling interest’s share of profit from the licensing of~~ ~~South Park~~ ~~during the second quarter of 2020.~~OIBDA. Adjusted OIBDA, adjusted net earnings from continuing operations attributable to ViacomCBS and adjusted diluted EPS from continuing operations are non-GAAP financial measures. See “Reconciliation of Non-GAAP Measures” for

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

details of the items excluded from financial results, and reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.

We generated operating cash flow from continuing operations of ~~$1.15~~$1.65 billion for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 compared with ~~$1.19 billion~~$357 million for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. Free cash flow for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$1.02~~$1.59 billion compared with ~~$1.05 billion~~$306 million for the same prior-year period. These ~~decreases~~increases primarily reflect ~~lower revenues, including~~the benefit from ~~the impact of COVID-19 and the comparison against~~ the broadcast of ~~the~~ Super Bowl inLV on the ~~first quarter of 2019,~~CBS Television Network, higher collections, and ~~higher~~lower spending, including the benefit from cost savings, lower income tax payments ~~for restructuring and merger-related costs. These decreases were offset by lower programming and production spending resulting from COVID-19 related production shutdowns~~ and lower payments for ~~income taxes in the first half of 2020.~~restructuring, merger-related costs and costs to achieve synergies. Operating cash flow from continuing operations and free cash flow ~~for the six months ended June 30, 2020 and 2019~~ included payments for restructuring, ~~and~~ merger-related costs and costs to achieve synergies of ~~$351~~$104 million and ~~$101~~$172 million for the three months ended March 31, 2021 and 2020, respectively. Also included in free cash flow for 2021 are capital expenditures of $13 million associated with costs to achieve synergies. Free cash flow is a non-GAAP financial measure. See “Free Cash Flow” for a reconciliation of net cash flow provided by operating activities from continuing operations, the most directly comparable GAAP financial measure, to free cash flow.

The COVID-19 pandemic continues to impact the macroeconomic environment in the United States and globally, as well as certain parts of our business. Movie theaters have remained closed or have been operating at reduced capacity and as a result, we rescheduled the theatrical release of certain films, and licensed others to our owned or third-party streaming services. We are not able to predict when or whether movie theaters will reopen at scale, the level at which consumers will return, and when or whether revenues from theatrical releases will be comparable to historical levels. Additionally, while production of our television and film content has resumed, the delays caused by COVID-19 continue to impact the level of content available for airing on our broadcast and cable networks, streaming services, and for our licensing customers. Because of the uncertain nature of the pandemic, including its impact on the current and future global macroeconomic environment, we are unable to predict the magnitude of the future effects on our business, financial condition and results of operations.

Results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ included certain items identified as affecting comparability. Adjusted OIBDA, adjusted earnings from continuing operations before income taxes, adjusted provision for income taxes, adjusted net earnings from continuing operations attributable to ViacomCBS, and adjusted diluted EPS from continuing operations (together, the “adjusted measures”) exclude the impact of these items and are measures of performance not calculated in accordance with GAAP. We use these measures to, among other things, evaluate our operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of our operational strength and business performance. In addition, we use Adjusted OIBDA to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by our management; provide a clearer perspective on our underlying performance; and make it easier for investors, analysts and peers to compare our operating performance to other companies in our industry and to compare our year-over-year results.

Because the adjusted measures are measures of performance not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, earnings from continuing operations before income taxes, ~~(provision) benefit~~provision for income taxes, net earnings from continuing operations attributable to ViacomCBS or diluted EPS from continuing operations, as applicable, as indicators of operating performance.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.

The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.

Depreciation and amortization ^(a)

Restructuring and other corporate matters ^(b)

Programming charges ^(b)

Gain on sale of assets ^(b)

Three Months Ended June 30, 2020
Earnings from Continuing Operations Before Income Taxes Provision for Income Taxes Net Earnings from Continuing Operations Attributable to ViacomCBS Diluted EPS from Continuing Operations
Reported (GAAP) $ 937

$ (202 )

$ 478

$ .77

Items affecting comparability:
Restructuring and other corporate matters ^(a)

158

(34 )

124
.20

Impairment charge ^(b)

25

(6 )

19
.03

Programming charges ^(c)

121

(29 )

92

.15

Gains from investments ^(d)

(32 )

8

(24 ) (.03 )
Loss on extinguishment of debt
103

(24 )

79
.13

Discrete tax items
—

1

1
—

Adjusted (Non-GAAP) $ 1,312
$ (286 ) $ 769
$ 1.25


	Three Months Ended March 31, 2021
	Earnings from Continuing Operations Before Income Taxes			Provision for Income Taxes			Net Earnings from Continuing Operations Attributable to ViacomCBS			Diluted EPS from Continuing Operations
Reported (GAAP)		$	1,155		$	(226)		$	899		$	1.42
Items affecting comparability:
Loss on extinguishment of debt		128			(30)			98			.16
Gain on marketable securities		(20)			5			(15)			(.03)
Discrete tax items (a)		—			(21)			(21)			(.03)
Adjusted (Non-GAAP)		$	1,263		$	(272)		$	961		$	1.52

(a) ~~Reflects~~Primarily reflects tax benefits from the resolution of certain state income tax matters and excess tax benefits from the vesting or exercise of stock-based compensation awards.


	Three Months Ended March 31, 2020
	Earnings from Continuing Operations Before Income Taxes			Provision for Income Taxes			Net Earnings from Continuing Operations Attributable to ViacomCBS			Diluted EPS from Continuing Operations
Reported (GAAP)		$	647		$	(134)		$	501		$	.81
Items affecting comparability:
Restructuring and other corporate matters (a)		231			(47)			184			.30
Depreciation of abandoned technology (b)		12			(3)			9			.02
Discrete tax items		—			(4)			(4)			(.01)
Adjusted (Non-GAAP)		$	890		$	(188)		$	690		$	1.12

(a) Primarily reflects severance and exit costs ~~and~~as well as other costs related to the ~~Merger and a charge to write down property and equipment classified as held for sale.~~Merger.

(b) Reflects ~~a charge to reduce the carrying values of FCC licenses~~accelerated depreciation for technology that was abandoned in ~~two markets to their fair values.~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Three Months Ended June 30, 2019
Earnings from Continuing Operations Before Income Taxes Provision for Income Taxes Net Earnings from Continuing Operations Attributable to ViacomCBS Diluted EPS from Continuing Operations
Reported (GAAP) $ 1,239

$ (241 )

$ 971

$ 1.57

Items affecting comparability:
Restructuring and other corporate matters ^(a)
7

(2 )

5
.01

Gains from investments ^(b)
(39 )

7

(32 ) (.05 )
Discrete tax items^(c)
—

(32 )

(32 ) (.05 )
Adjusted (Non-GAAP) $ 1,207
$ (268 ) $ 912
$ 1.48

Six Months Ended June 30, 2020

Earnings from Continuing Operations Before Income Taxes
Provision for Income Taxes
Net Earnings from Continuing Operations Attributable to ViacomCBS
Diluted EPS from Continuing Operations
Reported (GAAP)
$ 1,594

$ (339 )

$ 986

$ 1.60

Items affecting comparability:

Restructuring and other corporate matters ^(a)

391

(81 )

310

.50

Impairment charge ^(b)
25

(6 )

19
.03

Depreciation of abandoned technology ^(c)
12

(3 )

9

.01

Programming charges ^(d)
121

(29 )

92
.15

Gains from investments ^(e)
(32 )

8

(24 ) (.04 )
Loss on extinguishment of debt 103

(24 )

79
.13

Discrete tax items —

(3 )

(3 )

—

Adjusted (Non-GAAP)
$ 2,214

$ (477 )

$ 1,468

$ 2.38

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Restructuring and other corporate matters ^(a)

Gain on sale of assets ^(b)

Gains from investments ^(c)

Discrete tax items ^(d)

Consolidated Results of Operations

Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021 versus Three ~~and Six~~ Months Ended ~~June 30, 2019~~March 31, 2020


	Three Months Ended March 31,
			% of Total Revenues				% of Total Revenues		Increase/(Decrease)
Revenues by Type	2021				2020				$		%
Advertising (a)	$	2,681	36	%	$	2,219	34	%	$	462	21	%
Affiliate (b)	2,075		28		1,968		30		107		5
Streaming	816		11		494		8		322		65
Theatrical	1		—		167		3		(166)		(99)
Licensing and other	1,839		25		1,651		25		188		11
Total Revenues	$	7,412	100	%	$	6,499	100	%	$	913	14	%

For the three months ended March 31, 2021, the increase in advertising revenues of 21% was driven by CBS’ broadcasts of Super Bowl LV andNCAA Tournament games. There were no comparable broadcasts on CBS in the first quarter of 2020 as we have the rights to broadcast the Super Bowl on a rotational basis with other networks, and the 2020 NCAA Tournament was cancelled as a result of COVID-19. This increase was partially offset by lower linear impressions for our cable and broadcast networks, and lower political advertising, reflecting the benefit to 2020 from the U.S. Presidential election.

Advertising revenues for the second quarter of 2021 will benefit from CBS’ broadcast of the semi-finals and finals of the NCAA Tournament. Under agreements with the NCAA and Turner Broadcasting System, Inc. (“Turner”), CBS has the rights to broadcast these games every other year through 2032, and in each year the games in the preceding rounds of the tournament are shared between CBS and Turner. We also expect to see a continued negative impact from lower political advertising during the remainder of 2021, particularly in the second half of the year.

In March 2021, we reached an agreement with the National Football League (“NFL”) to extend our rights to broadcast American Football Conference (AFC) regular season and post-season games, which include wildcard, divisional playoff and championship games, on the CBS Television Network and to stream these games live on Paramount+. The contract begins with the 2023 season and extends through the 2033 season, and includes the rights to the Super Bowl in 2024, 2028 and 2032, as well as certain expanded rights across ViacomCBS networks and platforms. The NFL has a one-time right to terminate the agreement after the 2029 season.

For the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, affiliate revenues increased 5%, reflecting higher fees received from television stations affiliated with the ~~decreases~~CBS Television Network (“reverse compensation”) and retransmission fee revenues, and the launch of our basic cable networks on a virtual multichannel video programming distributor (“vMVPD”) in ~~advertising~~mid-2020, partially offset by lower affiliate fees for our cable networks from MVPDs. The increase in reverse compensation and retransmission fee revenues ~~of 27% and 23%, respectively, were~~was driven by annual contractual increases and contract renewals with television stations affiliated with the ~~adverse effects of COVID-19, including lower demand~~CBS Television Network, MVPDs and vMVPDs. The decline in ~~the advertising market~~cable affiliate fees from MVPDs reflects subscriber declines, partially offset by rate increases.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~and the cancellation and postponement of sporting events. Canceled or postponed sporting events include professional golf tournaments in~~For the three months ended ~~June 30, 2020 and~~March 31, 2021, the ~~2020 NCAA Tournament~~62% growth in ~~the six-month period. In addition, our~~streaming advertising revenues was driven by higher advertising on our streaming services, Pluto TV and Paramount+, and growth on other digital video platforms, including the benefit from advertising during the Super Bowl LV live stream. Global monthly active users (MAUs) for Pluto TV were ~~negatively affected by the comparison against CBS’ broadcast~~49.5 million at March 31, 2021, an increase of ~~the national semifinals~~90% from 26.0 million at March 31, 2020. The 69% growth in streaming subscription revenues reflects a 63% increase in global streaming subscribers to 35.9 million at March 31, 2021 from 22.0 million at March 31, 2020. Global streaming subscribers include customers who access our domestic or international streaming services, either directly through our owned and ~~championship games of the NCAA Tournament in the second quarter of 2019. These games are broadcast on CBS every other year~~operated apps and websites, or through ~~2032 under agreements with the NCAA and Turner.~~ third-party distributors.

~~Domestic advertising revenues for the second quarter of 2020 decreased 24% to $1.73 billion from $2.29 billion for the same prior-year period, and for the six months ended June 30, 2020~~decreased 22% to $3.96 billion from $5.07 billion for the same prior-year period. These decreases were the result of the aforementioned factors for the applicable period. Advertising revenues benefited from growth from our domestic streaming and digital video business, including Pluto TV.

~~International advertising~~theatrical revenues for the three months ended ~~June 30, 2020 decreased 43%~~March 31, 2021 reflects the impact from the closure or reduction in capacity of movie theaters in response to ~~$204 million~~COVID-19 throughout the first quarter of 2021.

For the three months ended March 31, 2021, licensing and other revenues increased 11%, primarily reflecting growth from ~~$355 million~~domestic licensing arrangements, including for the ~~same prior-year period,~~films Coming 2 America and Tom Clancy’s Without Remorse, and for library programming. The increase was partially offset by a lower volume of licensing of current series internationally as a result of production delays, which were principally caused by COVID-19.

For the ~~six~~three months ended ~~June 30, 2020 decreased 29% to $459 million from $646 million for~~March 31, 2021, the ~~same prior-year period. These decreases~~increase in production and programming expenses of 19% primarily ~~reflect~~reflects costs associated with CBS’ broadcasts of the ~~effects of COVID-19~~above-mentioned noncomparable sporting events, as well as ~~the unfavorable impact of foreign exchange rate changes of 4 percentage points on the three-month comparison and 6 percentage points on the six-month comparison.~~

~~For each of the three and six months ended June 30, 2020, affiliate revenues~~ increased 2%, reflecting growth from station affiliation fees and retransmission fees, driven by annual contractual increases and contract renewals with television stations affiliated with the CBS Television Network, MVPDs and virtual MVPDs, as well as growth frominvestment in programming for our streaming ~~services, including CBS All Access and Showtime OTT, driven by subscriber growth, as well as BET+, which we launched in September 2019.~~services. These increases were partially offset by lower costs for network and cable affiliate fees, mainly resulting from subscriber declines. For the three months ended June 30, 2020, domestic affiliate revenues increased 2% to $2.03 billion from $1.99 billion for the same prior-year period, while international affiliate revenues decreased 5% to $160 million from $169 million for the second quarterseries as a result of ~~2019, driven by the unfavorable impact~~fewer hours of foreign exchange rate changes of 3 percentage points. For the six months ended June 30, 2020, domestic affiliate revenues increased 3% to $4.08 billion from $3.98 billion for the same prior-year period, while international affiliate revenues decreased 9% to $311 million from $341 million for the first six months of 2019, including the unfavorable impact of foreign exchange rate changes of 6 percentage points.

~~Content Licensing~~

~~Content licensing revenues for the three months ended June 30, 2020 remained relatively flat and for the six months ended June 30, 2020 increased 4%, as the licensing~~original programming because of the ~~domestic streaming rights to~~ ~~South Park~~ ~~to an SVOD providerwas~~offset by a lower volume of licensing in each of the current-year periods. The lower volume was primarily the result of the benefit to the prior-year periods from several significant licensing agreements for library programming, the timing of deliveries, andabove-mentioned production ~~shutdowns that began in March 2020 and continued throughout the second quarter because of COVID-19.~~delays.

~~Theatrical~~

~~Theatrical revenues for the three and six months ended June 30, 2020 were impacted by the closure of movie theaters throughout the second quarter in response to COVID-19.~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~Publishing~~

~~For the three~~Participations and six months ended June 30, 2020, publishing revenues decreased 8% and 3%, respectively, driven by lower print book sales mainly reflecting the impacts of COVID-19, including fewer new releases in the second quarter of 2020 due to their postponement to later in the year and weakness in the retail market. The decline was partially offset by growth in sales of electronic and digital audio books.

~~Other~~

For the three and six months ended June 30, 2020, other revenues decreased 34% and 25%, respectively, primarily reflecting lower revenues from the rental of our production facilities as a result of the shutdown of production studios due to COVID-19.

~~Operating Expenses~~

Three Months Ended June 30,
% of Operating Expenses % of Operating Expenses Increase/(Decrease)
Operating Expenses by Type 2020 2019 $ %
Production $ 1,491
43 % $ 1,815
43 % $ (324 ) (18 )%
Programming 713
20
925
22
(212 ) (23 )
Participation, distribution and royalty 618
18
923
22
(305 ) (33 )
Programming charges 121
3
—
—
121
n/m

Other 542
16
547
13
(5 ) (1 )
Total Operating Expenses $ 3,485
100 % $ 4,210
100 % $ (725 ) (17 )%

Six Months Ended June 30,
% of Operating Expenses % of Operating Expenses Increase/(Decrease)
Operating Expenses by Type 2020 2019 $ %
Production $ 3,145
42 % $ 3,311
39 % $ (166 ) (5 )%
Programming 1,686
22
2,375
28
(689 ) (29 )
Participation, distribution and royalty 1,496
20
1,712
20
(216 ) (13 )
Programming charges 121
2
—
—
121
n/m

Other 1,102
14
1,060
13
42
4

Total Operating Expenses $ 7,550
100 % $ 8,458
100 % $ (908 ) (11 )%

~~n/m - not meaningful~~

~~Production~~

For the three and six months ended June 30, 2020, the decreases in production expenses of 18% and 5%, respectively, reflect lower costs associated with the mix of titles licensed under television licensing arrangements, as well as the impact of COVID-19, which resulted in the absence of theatrical releases in the second quarter of 2020, the cancellation and postponement of live events, and the broadcast of fewer episodes of original programming on our broadcast networks.

~~Programming~~Residuals

For the three months ended ~~June 30, 2020, the 23% decrease in programming expenses was~~March 31, 2021, participation and residual costs increased 24%, primarily driven by ~~lower sports programming~~participations relating to the higher licensing revenues.

Distribution and Other

Distribution and other operating expenses primarily include costs ~~resulting from~~relating to the ~~comparison against CBS’ broadcast~~distribution of ~~the national semifinals~~our content, including print and ~~championship games of the NCAA Tournament in the second quarter of 2019,~~advertising for theatrical releases and ~~the postponement~~costs paid to third-party distributors; compensation; revenue-sharing costs; and ~~cancellation of professional golf tournaments as a result of concerns around COVID-19. These NCAA Tournament games are broadcast on CBS every~~ other ~~year through 2032 under agreements~~ancillary and overhead costs associated with ~~the NCAA and Turner. The~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~decline also reflects the broadcast of fewer original programs on~~ our ~~broadcast networks, as a result of COVID-19 related production shutdowns, and the mix of programming.~~

operations. For the ~~six~~three months ended ~~June 30, 2020, the 29% decrease in programming~~March 31, 2021, distribution and other expenses ~~was driven by lower sports programming~~decreased 25%, primarily reflecting costs ~~reflecting CBS’ broadcasts of the Super Bowl and the NCAA Tournament~~ in the first quarter of 2019 and the above-mentioned noncomparable sporting events. The Super Bowl is broadcast on CBS on a rotating basis with other networks through the 2022 season under the current contract with the NFL. The 2020 NCAA Tournament was canceled as a result of concerns about COVID-19. The decline also reflects the broadcast of fewer original programs on our broadcast networks, as a result of COVID-19 related production shutdowns, and the mix of programming.

~~Participation, Distribution and Royalty~~

~~For the three and six months ended June 30, 2020, participation, distribution and royalty costs decreased 33%and13%, respectively, reflecting higher distribution costs in the prior-year periods~~ to support theatrical releases, including ~~Rocketman~~Sonic the Hedgehog, while the current-year periods were impacted by the postponement of films from theatrical release due to COVID-19. Participation and residuals costs associated with television licensing revenues were also lower for the three and six months ended June 30, 2020 compared with the same prior-year periods, reflecting the mix of titles licensed in each period.

~~Programming Charges~~

During the three and six months ended June 30, 2020, we recorded programming charges of $121 million primarily related to the abandonment of certain incomplete programs resulting from COVID-19 related production shutdowns.

~~Other~~

Other operating expenses primarily include overhead costs associated with operating departments, including compensation expense, revenue-sharing costs and costs associated with book sales, including printing and warehousing. For the three months ended June 30, 2020,as well as other ~~operating expenses decreased 1%~~anticipated releases. ~~For~~Distribution costs in the ~~six months endedJune 30, 2020, the increase in other operating expenses of 4% was driven by higher revenue-sharing costs associated with the growth in retransmission and digital revenues and higher costs at CBS News~~2021 period were lower as a result of ~~unscheduled news broadcasts and political coverage.~~the closure or reduced capacity of movie theaters due to COVID-19.

Selling, General and Administrative Expenses


	Three Months Ended March 31,
		2021	2020		Increase/(Decrease)
Selling, general and administrative expenses			$	1,422	$	1,298	10	%

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 Increase/(Decrease) 2020 2019 Increase/(Decrease)
Selling, general and administrative
expenses
$ 1,222
$ 1,371
(11 )% $ 2,563
$ 2,684
(5 )%

Selling, general and administrative (“SG&A”) expenses include expenses incurred for selling and marketing costs, occupancy, professional service fees and back office support, including employee compensation. For the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, SG&A expenses ~~decreased 11%and5%, respectively, reflecting lower~~increased 10% driven by advertising and ~~promotion~~marketing costs ~~from~~to support the ~~broadcast~~growth and expansion of ~~fewer original programs during~~our streaming services, including the second quarter and lower employee expenses reflecting lower incentive compensation and the benefit from restructuring activities. For the six-month period, these decreases were partially offset by costs associated with Pluto TV, which was acquired during the first quarterlaunch of ~~2019.~~Paramount+.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Depreciation and Amortization


	Three Months Ended March 31,
		2021	2020		Increase/(Decrease)
Depreciation and amortization			$	99	$	112	(12)	%

Three Months Ended June 30, Six Months Ended June 30,
2020
2019 Increase/(Decrease) 2020
2019 Increase/(Decrease)
Depreciation and amortization $ 124
$ 109
14 % $ 237
$ 215
10 %

Depreciation ~~and amortization expense~~expenses for the three ~~and six months endedJune 30, 2020included an impairment charge of $25 million in the~~ ~~TV Entertainment~~ ~~segment to write down the carrying values of FCC licenses in two markets to their fair values (see Note 4). Also included in the six~~ months ended ~~June 30,~~March 31, 2020 ~~was~~included accelerated depreciation of $12 million resulting from the abandonment of technology in connection with synergy plans related to the Merger. ~~Partially offsetting these increases was lower depreciation as a result of assets that became fully depreciated during 2019.~~

Restructuring and Other Corporate Matters

During the three ~~and six~~ months ended ~~June 30, 2020 and 2019, we recorded costs for restructuring and other corporate matters as follows:~~

Three Months Ended Six Months Ended
June 30, June 30,
2020
2019 2020 2019
Severance $ 128
$ —
$ 304
$ 98
Exit costs 6
—
32
30
Restructuring charges 134
—
336
128
Merger-related costs 10
—
41
—
Other corporate matters 14
7
14
57
Restructuring and other corporate matters $ 158
$ 7
$ 391
$ 185

~~During the three and six months ended June 30,~~March 31, 2020, we recorded restructuring charges of ~~$134~~$200 million~~and $336 million, respectively,~~ associated with cost-transformation initiatives in connection with the Merger in an effort to reduce redundancies across our businesses. These charges ~~primarily include~~consisted of $174 million of severance costs, ~~and~~including the ~~acceleration~~accelerated vesting of stock-based ~~compensation. During the six months ended June 30, 2019, we recorded restructuring charges~~compensation, and $26 million of $128 million primarily for severance costs associated with a restructuring plan initiated in the first quarter of 2019 under which severance payments were provided to certain eligible employees who voluntarily elected to participate. Restructuring charges for the three and six months ended June 30, 2020 and the six months ended~~June 30, 2019 also included~~ exit costs resulting from the termination of contractual obligations.

~~In addition, for~~ During the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, we also incurred $31 million of merger-related costs, ~~of $10 million and $41 million, respectively,~~ consisting of transaction-related bonuses and professional fees mainly associated with integration activities. In addition, we recorded a charge of $14 million to write down property and equipment that has been classified as held for sale to its fair value less costs to sell at June 30, 2020. During the three and six months ended June 30, 2019, we incurred costs of $7 million and $57 million, respectively, consisting of costs associated with legal proceedings involving the Company and for the six-month period, the settlement of a commercial dispute.

~~Gain on Sale of Assets~~

~~During the first quarter of 2019, we completed the sale of CBS Television City for $750 million, resulting in a gain of $549 million ($386 million, net of tax).~~

-35-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Interest Expense/Income


	Three Months Ended June 30,									Six Months Ended June 30,										Three Months Ended March 31,
	2020			2019			Increase/(Decrease)			2020			2019			Increase/(Decrease)					2021	2020		Increase/(Decrease)
Interest expense	$	(263	)	$	(237	)		11	%	$	(504	)	$	(477	)		6	%	Interest expense			$	(259)	$	(241)	7	%
Interest income	$	11		$	15			(27	)%	$	25		$	34			(26	)%	Interest income			$	13	$	14	(7)	%

The following table presents our outstanding debt balances, excluding finance leases, and the weighted average interest rate as of ~~June 30, 2020~~March 31, 2021 and ~~2019:~~2020.


	At March 31,
			Weighted Average					Weighted Average
	2021		Interest Rate			2020		Interest Rate
Total long-term debt	$	17,636		4.93	%	$	17,982		4.70	%
Other bank borrowings	$	115		3.50	%	$	—		n/a
Commercial paper	$	—		n/a		$	312		2.18	%
Short-term bank borrowings	$	—		n/a		$	200		2.45	%

Loss on Extinguishment of Debt

For the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, the loss on extinguishment of debt of ~~$103~~$128 million reflects a pre-tax ~~loss~~losses associated with the early redemption of ~~$2.43~~$1.99 billion of our long-term debt.

The following table presents the components of Other items, net.

Three Months Ended June 30, Six Months Ended June 30,
2020
2019 2020 2019
Pension and postretirement benefit costs $ (18 ) $ (26 ) $ (36 ) $ (53 )
Foreign exchange (losses) gains (9 ) 2
(25 ) (3 )
Gain from equity securities 32
28
32
66

Gain on sale of investment —
11
—
11

Other 1
—
2
4

Other items, net $ 6
$ 15
$ (27 ) $ 25

~~(Provision) Benefit~~Provision for Income Taxes

The ~~(provision) benefit~~provision for income taxes represents federal, state and local, and foreign taxes on earnings from continuing operations before income taxes and equity in loss of investee companies. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021, we recorded a provision for income taxes of $226 million, reflecting an effective income tax rate of 19.6%. Included in the provision for income taxes is a discrete tax benefit of $21 million, primarily consisting of tax benefits from the resolution of certain state income tax matters and excess tax benefits from the vesting or exercise of stock-based compensation awards. These items, together with a net tax benefit of $25 million for the tax impact of the loss on extinguishment of debt and gain on marketable securities, impacted the effective income tax rate by 1.9 percentage points for the three months ended March 31, 2021.

For the three and six months ended June 30, 2019, we recorded a provision for income taxes of $241 million and a benefit of $135 million, reflecting effective income tax rates of 19.5% and (4.8)%, respectively.20.7%. Included in the provision for income taxes ~~for the second quarter of 2019~~ is a net tax benefit of ~~$32~~$54 million principally related to the bankruptcy of an investee. This item, taken together with a provision of $5 million for restructuring and other corporate matters and gain on equity securities, reduced our effective income tax rate by 2.7 percentage points. The tax benefit for the six months ended June 30, 2019 included a deferred tax benefit of $768 million resulting from the transfer of intangible assets between our subsidiaries in connection with a reorganization of our international operations, the aforementioned tax benefit of $32 million principally related to the bankruptcy of an investee, and a tax provision of $163 million on the gain from the sale of CBS Television City. These items, taken together with a

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~net~~for the tax ~~benefit~~impact of ~~$29 million for~~ restructuring and other corporate matters, depreciation on abandoned technology, and ~~gain~~other discrete tax items, which had a minimal effect on ~~equity securities, reduced~~ the effective income tax rate ~~by 27.0 percentage points for the six months ended June 30, 2019.~~

Equity in Loss of Investee Companies, Net of Tax

The following table presents equity in loss of investee companies for our equity-method investments.

Three Months Ended June 30, Six Months Ended June 30,
2020
2019
Increase/(Decrease) 2020
2019 Increase/(Decrease)
Equity in loss of investee companies $ (16 ) $ (28 ) 43 % $ (32 ) $ (51 ) 37 %
Tax benefit 4
7
(43 ) 11
12
(8 )
Equity in loss of investee companies, net of tax $ (12 ) $ (21 ) (43 )% $ (21 ) $ (39 ) (46 )%

~~Net Earnings Attributable to Noncontrolling Interests~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net earnings attributable to noncontrolling
interests
$ 245
$ 6
$ 248
$ 11

~~For the three and six months endedJune 30, 2020, net earnings attributable to noncontrolling interests primarily reflects our joint venture partners’ share of profit from the licensing of the domestic streaming rights to~~ ~~South Park~~ ~~to an SVOD provider in the second quarter of 2020.~~


	Three Months Ended March 31,
		2021	2020		Increase/(Decrease)
Equity in loss of investee companies			$	(32)	$	(16)	(100)	%
Tax benefit			14		7		100
Equity in loss of investee companies, net of tax			$	(18)	$	(9)	(100)	%

Net Earnings from ~~Continuing~~Discontinued Operations ~~Attributable~~

During the fourth quarter of 2020, we entered into an agreement to ~~ViacomCBS~~sell our publishing business, Simon & Schuster, to Penguin Random House LLC, a wholly owned subsidiary of Bertelsmann SE & Co. KGaA. Simon & Schuster has been presented as a discontinued operation in our consolidated financial statements for all periods presented.

The following table sets forth details of net earnings from discontinued operations for the three months ended March 31, 2021 and ~~Diluted EPS from Continuing Operations Attributable~~2020, which primarily reflects the results of Simon & Schuster.


	Three Months Ended
	March 31,
	2021		2020
Revenues	$	185	$	170
Costs and expenses:
Operating	120		99
Selling, general and administrative	38		43
Depreciation and amortization	—		1
Restructuring charges	—		2
Total costs and expenses (a)	158		145
Operating income	27		25
Other items, net	(2)		(5)
Earnings from discontinued operations	25		20
Income tax provision (b)	(13)		(5)
Net earnings from discontinued operations, net of tax	$	12	$	15

(a) The three months ended March 31, 2020 includes $10 million for the release of indemnification obligations for leases relating to ~~ViacomCBS~~a previously disposed business.

(b) The three months ended March 31, 2021 and 2020 include tax provisions of $7 million and $2 million, respectively, related to previously disposed businesses.

Three Months Ended June 30,
Six Months Ended June 30,
2020
2019
Increase/(Decrease)
2020
2019
Increase/(Decrease)
Net earnings from continuing
operations attributable to
ViacomCBS
$ 478
$ 971
(51 )% $ 986
$ 2,917
(66 )%
Diluted EPS from continuing
operations attributable to
ViacomCBS
$ .77
$ 1.57
(51 )% $ 1.60
$ 4.73
(66 )%

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Net Earnings from Continuing Operations Attributable to ViacomCBS and Diluted EPS from Continuing Operations Attributable to ViacomCBS


	Three Months Ended March 31,
		2021	2020		Increase/(Decrease)
Net earnings from continuing operations attributable to ViacomCBS			$	899	$	501	79	%
Diluted EPS from continuing operations attributable to ViacomCBS			$	1.42	$	.81	75	%

For the three months ended ~~June 30, 2020,~~March 31, 2021, net earnings from continuing operations attributable to ViacomCBS and diluted EPS from continuing operations ~~each decreased 51%, driven by the lower operating income, the noncontrolling interest’s share of profit from the licensing of~~ ~~South Park~~increased 79% and a loss on extinguishment of debt of $103 million in 2020. For the six months ended June 30, 2020, net earnings from continuing operations attributable to ViacomCBS and diluted EPS from continuing operations each decreased 66%75%, respectively, primarily driven by the ~~lower~~increase in operating income, which in 2019 included the above-mentioned gain of $549 million ($386 million, net of tax, or $.63 per diluted share) on the sale of CBS Television City, as well as the aforementioned discrete tax benefits of $800 million, or $1.30 per diluted share.income.

Segment Results of Operations

We present operating income (loss) excluding depreciation and amortization, stock-based compensation and costs for restructuring and other corporate matters, ~~programming charges and gain (loss) on sale of assets,~~ each where applicable (“Adjusted OIBDA”), as the primary measure of profit and loss for our operating segments in accordance with FASB guidance for segment reporting. We believe the presentation of Adjusted OIBDA is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by our management and enhances their ability to understand our operating performance. Stock-based compensation is excluded from our segment measure of profit and loss because it is set and approved by our Board of Directors in consultation with corporate executive management. Stock-based compensation is included as a component of our consolidated Adjusted OIBDA. The reconciliation of Adjusted OIBDA to our consolidated net earnings is presented in Note 14 to the consolidated financial statements.

~~Three Months Ended June 30,~~During the fourth quarter of 2020, ~~and 2019~~we entered into an agreement to sell Simon & Schuster, which was previously reported as the Publishing segment. Simon & Schuster has been presented as a discontinued operation in our consolidated financial statements for all periods presented.


	Three Months Ended June 30,																		Three Months Ended March 31,
				% of Total Revenues						% of Total Revenues			Increase/(Decrease)								% of Total Revenues					% of Total Revenues			Increase/(Decrease)
	2020						2019						$			%			2021					2020					$		%
Revenues:																		Revenues:
TV Entertainment	$	2,287			36	%	$	2,938			41	%	$	(651	)	(22	)%	TV Entertainment	$	3,511		47	%	$	2,947		45	%	$	564	19	%
Cable Networks	3,232				52		3,176				45		56			2		Cable Networks	3,259			44		2,858			44		401		14
Filmed Entertainment	647				10		877				12		(230		)	(26	)	Filmed Entertainment	997			14		811			13		186		23
Publishing	200				3		218				3		(18		)	(8	)
Corporate/Eliminations	(91		)		(1	)	(66		)		(1	)	(25		)	(38	)	Corporate/Eliminations	(355)			(5)		(117)			(2)		(238)		(203)
Total Revenues	$	6,275			100	%	$	7,143			100	%	$	(868	)	(12	)%	Total Revenues	$	7,412		100	%	$	6,499		100	%	$	913	14	%

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)


	Three Months Ended March 31,
					Increase/(Decrease)
TV Entertainment	2021		2020		$		%
Advertising (a)	$	1,807	$	1,288	$	519	40	%
Affiliate (b)	693		623		70		11
Streaming	322		204		118		58
Licensing and other	689		832		(143)		(17)
Revenues	$	3,511	$	2,947	$	564	19	%

Adjusted OIBDA	$	449	$	573	$	(124)	(22)	%

(a) Excludes streaming advertising revenues.

For the three months ended March 31, 2021, the 19% increase in revenues primarily reflects growth in advertising, driven by CBS’ broadcasts of tentpole sporting events, and subscriber growth at Paramount+, partially offset by the timing of licensing.

The 40% increase in advertising revenues was driven by CBS’ broadcasts of Super Bowl LV and NCAA Tournament games in the first quarter of 2021 with no comparable broadcasts on CBS in the first quarter of 2020. The Super Bowl is broadcast on the CBS Television Network on a rotational basis with other networks and the 2020 NCAA Tournament was cancelled as a result of COVID-19. This increase was partially offset by lower linear impressions on the CBS Television Network, and lower political advertising, reflecting the benefit to 2020 from the U.S. Presidential election.

Affiliate revenues grew 11%, reflecting growth in reverse compensation and retransmission fee revenues.

Six Months Ended June 30,

% of Total
Revenues

% of Total
Revenues
Increase/(Decrease)
2020 2019 $ %
Revenues:
TV Entertainment $ 5,234
40 % $ 6,344
44 % $ (1,110 ) (17 )%
Cable Networks 6,090
47
6,078
43
12
—

Filmed Entertainment 1,458
11
1,607
11
(149 ) (9 )
Publishing 370
3
382
3
(12 ) (3 )
Corporate/Eliminations (208 ) (1 ) (168 ) (1 ) (40 ) (24 )
Total Revenues $ 12,944
100 % $ 14,243
100 % $ (1,299 ) (9 )%

Six Months Ended June 30,
Increase/(Decrease)
2020 2019 $ %
Adjusted OIBDA:
TV Entertainment $ 965
$ 1,355
$ (390 ) (29 )%
Cable Networks 2,079
1,882
197
10

Filmed Entertainment 143
133
10
8

Publishing 57
54
3
6

Corporate/Eliminations (193 ) (222 ) 29
13

Stock-based compensation (99 ) (101 ) 2
2

Total Adjusted OIBDA 2,952
3,101
(149 ) (5 )
Depreciation and amortization (237 ) (215 ) (22 ) (10 )
Restructuring and other corporate matters (391 ) (185 ) (206 ) n/m

Programming charges (121 ) —
(121 ) n/m

Gain on sale of assets —
549
(549 ) n/m

Total Operating Income $ 2,203
$ 3,250
$ (1,047 ) (32 )%

~~n/m - not meaningful~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Streaming

~~TV Entertainment~~Streaming revenues increased 58%, primarily reflecting subscriber growth at Paramount+, and revenues from advertising during the Super Bowl LV live stream and associated coverage on CBS Sports’ digital properties.

Licensing and Other

Licensing and other revenues decreased 17%, mainly due to a lower volume of licensing of current series internationally and programming produced for third-parties as a result of production delays, which were principally caused by COVID-19.

Adjusted OIBDA

Adjusted OIBDA decreased22%, reflecting our increased investment in Paramount+, including higher content and marketing costs.

Cable Networks (~~CBS Television~~Premium and basic cable networks, including Showtime, BET, Nickelodeon, MTV, Comedy Central, Paramount Network, ~~CBS Television Studios, CBS Television Distribution, CBS Interactive, CBS Sports Network, CBS Television Stations~~ and ~~CBS-branded~~Smithsonian Channel, among others; streaming services ~~CBS All Access~~including Pluto TV, Showtime OTT, Noggin and ~~CBSN, among others)~~BET+; ViacomCBS Networks International, including Channel 5, Telefe and Network 10)

~~Three Months Ended June 30, 2020 and 2019~~


	Three Months Ended March 31,
					Increase/(Decrease)
Cable Networks	2021		2020		$		%
Advertising (a)	$	878	$	945	$	(67)	(7)	%
Affiliate (b)	1,382		1,345		37		3
Streaming	494		290		204		70
Licensing and other	505		278		227		82
Revenues	$	3,259	$	2,858	$	401	14	%

Adjusted OIBDA	$	1,184	$	794	$	390	49	%

(a) Excludes streaming advertising revenues.

Three Months Ended June 30,
Increase/(Decrease)
Entertainment 2020
2019 $ %
Advertising $ 951
$ 1,309
$ (358 ) (27 )%
Affiliate 751
616
135
22

Content licensing 544
966
(422 ) (44 )
Other 41
47
(6 ) (13 )
Revenues $ 2,287
$ 2,938
$ (651 ) (22 )%

Adjusted OIBDA $ 392
$ 613
$ (221 ) (36 )%
(b) Excludes streaming subscription revenues.

Revenues

For the three months ended ~~June 30, 2020,~~March 31, 2021, the ~~22% decrease~~14% increase in~~TV Entertainment~~ revenues was ~~mainly~~primarily driven by ~~lower~~higher licensing to streaming services, including Paramount+, and growth in streaming advertising and ~~content licensing revenues, including from the impact of COVID-19 on our business, partially offset by growth in affiliate~~streaming subscription revenues.

Advertising

The ~~27%~~7% decrease in advertising revenues was primarily driven by a decline in domestic advertising partially offset by higher international advertising, including a 2 percentage point favorable impact of foreign exchange rate changes on total advertising revenues. The decrease in domestic advertising revenues was driven by lower linear impressions, partially offset by higher pricing.

Affiliate

The 3% growth in affiliate revenues was primarily driven by the adverse effects of COVID-19, including lower demand in the advertising market and the cancellation and postponement of professional golf tournaments scheduled for broadcast by the CBS Television Network. The decrease also reflects the comparison against CBS’ broadcast of the national semifinals and championship games of the NCAA Tournament in the second quarter of 2019. These games are broadcast by the CBS Television Network every other year through 2032 under agreements with the NCAA and Turner.

~~Affiliate~~

~~Affiliate revenues grew 22%, reflecting 19% growth in station affiliation fees and retransmission revenues, as well as subscriber growth at CBS All Access.~~

~~Content Licensing~~

~~Content licensing revenues decreased 44% mainly due to the benefit to the prior-year period from several significant licensing agreements for library programming, as well as fewer deliveries~~launch of our ~~programming during the current-year period as~~basic cable networks on a ~~result of production shutdowns related to COVID-19~~vMVPD in mid-2020 and ~~the timing of deliveries of programs produced for third parties.~~

~~Other~~

~~Other revenues decreased 13%, primarily reflecting lower revenues from the rental of our production facilities as a result of production shutdowns due to COVID-19.~~

contractual rate increases. These increases were partially offset by declines in traditional MVPD subscribers.

-40-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Streaming

The 70% increase in streaming revenues was driven by advertising revenue growth from our free streaming service, Pluto TV, and other digital video platforms, as well as growth in subscribers for our subscription streaming services, including Showtime OTT, BET+ and Noggin.

Licensing and Other

The 82% increase in licensing and other revenues was primarily driven by higher revenues from the licensing to streaming services, including our subscription streaming service, Paramount+.

Adjusted OIBDA

Adjusted OIBDA ~~decreased36%~~increased 49%, ~~mainly as a result of~~primarily driven by the revenue ~~decline, partially~~growth. Cable Networks expenses increased 1% reflecting higher participations associated with the growth in licensing revenues, which were substantially offset by lower ~~production and programming costs resulting from production shutdowns due to COVID-19 and the mix~~advertising expenses because of ~~primetime programming. Advertising and promotion costs were also lower, reflecting~~ the broadcast of fewer original programs, ~~due to COVID-19.~~and savings from restructuring activities.

~~Six Months Ended June 30, 2020~~Filmed Entertainment (Paramount Pictures, Paramount Players, Paramount Animation, Paramount Television Studios, and ~~2019~~Miramax)

Six Months Ended June 30,
Increase/(Decrease)
TV Entertainment 2020 2019 $ %
Advertising $ 2,332
$ 3,276
$ (944 ) (29 )%
Affiliate 1,485
1,227
258
21

Content licensing 1,341
1,747
(406 ) (23 )
Other 76
94
(18 ) (19 )
Revenues $ 5,234
$ 6,344
$ (1,110 ) (17 )%

Adjusted OIBDA $ 965
$ 1,355
$ (390 ) (29 )%


	Three Months Ended March 31,
					Increase/(Decrease)
Filmed Entertainment	2021		2020		$		%
Theatrical	$	1	$	167	$	(166)	(99)	%
Licensing and other	996		644		352		55
Revenues	$	997	$	811	$	186	23	%

Adjusted OIBDA	$	204	$	27	$	177	656	%

Revenues

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, the ~~17% decrease~~23% increase in ~~TV Entertainment~~revenues ~~was mainly driven by the comparison against CBS’ broadcasts of tentpole sporting events~~reflects growth in ~~2019, the impact of COVID-19 on our business during the second quarter of 2020, including weakness in the advertising market, and lower content~~ licensing revenues partially offset by ~~growth~~the impact from the closure or reduction in ~~affiliate revenues.~~capacity of movie theaters in response to COVID-19.

~~Advertising~~Theatrical

The ~~29% decrease~~decline in ~~advertising~~theatrical revenues ~~was driven by~~for the ~~aforementioned~~three months ended March 31, 2021 reflects the impact from the closure or reduction in capacity of ~~COVID-19 during the second quarter of 2020, as well as the comparison against CBS’ broadcasts of~~ movie theaters in~~Super Bowl LIII~~ and the NCAA Tournament in 2019. The Super Bowl is broadcast on the CBS Television Network on a rotating basis with other networks through the 2022 season under the current contract with the NFL. The 2020 NCAA Tournament, which was scheduled to be broadcast by CBS in the first quarter of ~~2020,~~2021, while the prior-year quarter benefited from the theatrical release of Sonic the Hedgehog.

Licensing and Other

The 55% increase in licensing and other revenues was ~~canceled as a result~~primarily driven by the licensing of ~~concerns about COVID-19. In addition,~~Coming 2 America and Tom Clancy’s Without Remorse to third parties, the ~~national semifinals and championship games~~licensing of The SpongeBob Movie: Sponge on the ~~NCAA Tournament, which are broadcast by CBS every other year through 2032 under agreements with the NCAA and Turner, were broadcast on CBS in the second quarter of 2019.~~Run

~~Affiliate~~

~~Affiliate revenues grew 21%~~to Paramount+, ~~reflecting 19% growth in station affiliation fees and retransmission revenues,~~ as well as ~~subscriber growth at CBS All Access.~~

~~Content Licensing~~

~~Content~~higher revenues from the licensing ~~revenues decreased 23%, mainly due to the benefit to the prior-year period from several significant licensing agreements for library~~of television programming ~~as well as fewer deliveries of our programming during the current-year period as a result of production shutdowns related to COVID-19~~ and ~~the timing of deliveries.~~Miramax titles.

-41-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~Other~~

Other revenues decreased 19%, primarily reflecting lower revenues from the rental of our production facilities as a result of production shutdowns during the second quarter of 2020 due to COVID-19 and the sale of CBS Television City in January 2019.

~~Adjusted OIBDA~~

~~Adjusted OIBDA decreased~~29% driven by the impact of COVID-19 on our advertising revenues, the comparison against the broadcast of major sporting events in the first six months of 2019 and lower profits from content licensing. These decreases were partially offset by the increase in affiliate revenues and lower production and programming costs as a result of production shutdowns due to COVID-19 and the mix of programming.

~~Cable Networks~~(Showtime Networks, Nickelodeon, MTV, BET, Comedy Central, Paramount Network, Nick Jr., VH1, TV Land, CMT, Pop TV, Smithsonian Networks, ViacomCBS Networks International, Network 10, Channel 5, Telefe and Pluto TV)

~~Three Months Ended June 30, 2020 and 2019~~

Three Months Ended June 30,
Increase/(Decrease)
Cable Networks 2020
2019 $ %
Advertising $ 992
$ 1,347
$ (355 ) (26 )%
Affiliate 1,443
1,539
(96 ) (6 )
Content licensing 797
290
507
175

Revenues $ 3,232
$ 3,176
$ 56
2 %

Adjusted OIBDA $ 1,285
$ 989
$ 296
30 %

~~Revenues~~

~~For the three months ended June 30, 2020,~~ ~~Cable Networks~~ ~~revenues increased 2% from the same prior-year period, reflecting the licensing of the domestic streaming rights of~~ ~~South Park~~ to an SVOD provider, which was partially offset by weakness in the advertising market as a result of COVID-19 as well as lower affiliate revenues. Domestic revenues increased 8% while international revenues decreased 22%, including a 3-percentage point unfavorable impact of foreign exchange rate changes.

~~Advertising~~

The 26% decrease in advertising revenues was primarily driven by the adverse effects of COVID-19. Domestic advertising revenues decreased 21% reflecting lower linear impressions, including from weakness in the advertising market as a result of COVID-19, partially offset by growth from streaming and digital video advertising and higher pricing. International advertising revenues decreased 43%, primarily reflecting weakness in the advertising market as well as the unfavorable impact of foreign exchange rate changes of 4 percentage points.

~~Affiliate~~

Affiliate revenues decreased 6% from the same prior-quarter period. Domestic affiliate revenues decreased 6%, primarily driven by declines in traditional MVPD subscribers at our cable networks, partially offset by growth from our owned subscription services, including Showtime OTT and BET+, which was launched in September 2019. International affiliate revenues decreased 5%, including a 3-percentage point unfavorable impact of foreign

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~exchange rate changes. As of June 30, 2020, Showtime subscriptions, including Showtime OTT, totaled approximately 27 million.~~

~~Content Licensing~~

~~The increase in content licensing revenues was primarily the result of growth from the licensing of programming to SVOD providers, mainly for the domestic streaming rights to~~ ~~South Park~~.

Adjusted OIBDA

Adjusted OIBDA increased 30%, driven by lower programming costs primarily due to scheduling changes and the cancellation and postponement of live events as a result of COVID-19, lower advertising and promotion costs resulting from the broadcast of fewer original programs during the quarter, lower employee costs reflecting the benefit from restructuring activities and the increase in revenues.

~~Six Months Ended June 30, 2020 and 2019~~

Six Months Ended June 30,
Increase/(Decrease)
Cable Networks 2020 2019 $ %
Advertising $ 2,109
$ 2,462
$ (353 ) (14 )%
Affiliate 2,906
3,093
(187 ) (6 )
Content licensing 1,075
523
552
106

Revenues $ 6,090
$ 6,078
$ 12
— %

Adjusted OIBDA $ 2,079
$ 1,882
$ 197
10 %

~~Revenues~~

~~For the six months ended June 30, 2020,~~ ~~Cable Networks~~ ~~revenues increased slightly from the same prior-year period, as the benefit from the domestic licensing of~~ ~~South Park~~ was mostly offset by weakness in the advertising market as a result of COVID-19 and lower affiliate revenues. Domestic revenues increased 4% while international revenues decreased 15%, including a 5-percentage point unfavorable impact of foreign exchange rate changes.

~~Advertising~~

Advertising revenues decreased 14% primarily driven by the adverse effects of COVID-19 in the second quarter of 2020. Domestic advertising revenues decreased 9%, reflecting lower linear impressions, including the effects of weakness in the advertising market as a result of COVID-19. These decreases were partially offset by growth from streaming and digital video advertising, including revenues from Pluto TV, ~~which was acquired in March 2019 as well as the consolidation of Pop TVbeginningin March 2019, when we acquired the 50% interest we did not own. International advertising revenues decreased 29%,~~$177 million primarily reflecting ~~weakness in the advertising market and the unfavorable impact of foreign exchange rate changes of 6 percentage points.~~

~~Affiliate~~

Affiliate revenues decreased 6%, which included a 1-percentage point unfavorable impact from foreign exchange rate changes. Domestic affiliate revenues decreased 6%, primarily driven by declines in traditional MVPD subscribers at our cable networks. These declines were partially offset by growth from our owned subscription services, including Showtime OTT and BET+, and the inclusion of the results of Pop TV. International affiliate revenues decreased 9%, including a 6-percentage point unfavorable impact of foreign exchange rate changes.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Content Licensing~~

~~The increase in content licensing revenues was primarily the result of growth from~~higher profits associated with the licensing of ~~programming to SVOD providers, mainly from~~ ~~South Park.~~

~~Adjusted OIBDA~~

Adjusted OIBDA increased 10%, driven by lower programming costs primarily due to scheduling changes and the cancellation and postponement of live events as a result of COVID-19, lower advertising and promotion costs due to the broadcast of fewer original programs, and lower employee costs reflecting the benefit from restructuring activities. These cost decreases were partially offset by incremental costs associated with Pluto TV and Pop TV, which were acquired in the first quarter of 2019.

~~Filmed Entertainment~~ ~~(Paramount Pictures, Paramount Players, Paramount Animation, Paramount Television Studios, and Miramax)~~

~~Three Months Ended June 30, 2020 and 2019~~

Three Months Ended June 30,
Increase/(Decrease)
Filmed Entertainment 2020
2019 $ %
Theatrical $ 3
$ 152
$ (149 ) (98 )%
Home entertainment 209
161
48
30

Licensing 434
540
(106 ) (20 )
Other 1
24
(23 ) (96 )
Revenues $ 647
$ 877
$ (230 ) (26 )%

Adjusted OIBDA $ 116
$ 95
$ 21
22 %

~~Revenues~~

~~For the three months ended June 30, 2020,~~ ~~Filmed Entertainment~~ ~~revenues decreased26% as a result of the closure of movie theaters throughout the second quarter of 2020 and the timing of licensing revenues.~~

~~Theatrical~~

~~Theatrical revenues for the three months ended June 30, 2020 were impacted by the closure of movie theaters throughout the second quarter of 2020 in response to COVID-19.~~

~~Home Entertainment~~

~~The 30% increase in home entertainment revenues was driven by the mix of titles in release and higher sales of catalog titles. The current quarter benefited from the strong performance~~ of ~~Sonic the Hedgehog~~ ~~in the home entertainment market~~.

~~Licensing~~

The 20% decrease in licensing revenues was due to lower revenues from the licensing of catalog titles and the timing of deliveries of programs produced for third parties. Foreign exchange rate changes had a 1-percentage point unfavorable impact on the licensing revenue comparison.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Adjusted OIBDA~~

~~Adjusted OIBDA increased 22%, reflecting lower distribution costs resulting from the absence of theatrical releases during the three months ended June 30, 2020 as~~films, compared to the prior-year period, which included higher distribution costs associated with theatrical releases ~~including~~ ~~Rocketman.~~ ~~The increase also reflects~~during the ~~strong performance~~first quarter of ~~Sonic the Hedgehog~~ ~~in the home entertainment market and lower incentive compensation, partially offset by lower licensing revenues.~~2020, as well as other anticipated releases. Fluctuations in results for the Filmed Entertainment segment may occur as a result of the timing of the recognition of distribution costs, including print and advertising, which are generally incurred before and throughout the theatrical release of a film, while the revenues for the respective film are recognized as earned through the film’s theatrical exhibition and subsequent distribution windows.

~~Six Months Ended June 30, 2020 and 2019~~

Six Months Ended June 30,
Increase/(Decrease)
Filmed Entertainment 2020 2019 $ %
Theatrical $ 170
$ 324
$ (154 ) (48 )%
Home entertainment 383
315
68
22

Licensing 876
915
(39 ) (4 )
Other 29
53
(24 ) (45 )
Revenues $ 1,458
$ 1,607
$ (149 ) (9 )%

Adjusted OIBDA $ 143
$ 133
$ 10
8 %

~~Revenues~~

~~For the six months ended June 30, 2020, the 9% decrease in~~ ~~Filmed Entertainment~~ ~~revenues primarily reflects the closure of movie theaters throughout the second quarter of 2020 in response to COVID-19.~~

~~Theatrical~~

Theatrical revenues decreased 48% as a result of the closure of movie theaters throughout the second quarter of 2020 in response to COVID-19. Theatrical revenues during the current year benefited from the theatrical release of ~~Sonic the Hedgehog~~ ~~in the first quarter, while the prior year benefited from the second quarter releases of~~ ~~Rocketman~~ ~~and~~ ~~Pet Sematary~~ ~~and the 2018 release of~~ ~~Bumblebee.~~ ~~Foreign exchange rate changes had a 1-percentage point unfavorable impact on the theatrical revenues comparison.~~

~~Home Entertainment~~

The 22% increase in home entertainment revenues was driven by the mix of titles in release and higher sales of catalog titles. For the six months ended June 30, 2020, revenues benefited from the release of ~~Sonic the Hedgehog~~ ~~and~~ ~~Terminator: Dark Fate,~~ ~~while the prior-year period benefited from~~ ~~Bumblebee~~ ~~and~~ ~~Mission: Impossible-Fallout~~.

~~Licensing~~

The 4% decrease in licensing revenues was primarily due to lower revenues from the licensing of films to SVOD providers, driven by catalog titles partially offset by the benefit from the current year SVOD release of ~~Lovebirds, and lower revenues from the licensing of music rights. These decreases were partially offset by higher revenues from the production of television programming for third parties, mainly~~ ~~Defending Jacob.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Adjusted OIBDA~~

Adjusted OIBDA increased 8% as the revenue decline was more than offset by lower distribution costs resulting from the absence of theatrical releases in the second quarter of 2020 and lower incentive compensation. Fluctuations in results for the ~~Filmed Entertainment~~ segment may occur as a result of the timing of the recognition of distribution costs, including print and advertising, which are generally incurred before and throughout the theatrical release of a film, while the revenues for the respective film are recognized as earned through the film’s theatrical exhibition and subsequent distribution windows.

~~Publishing~~ ~~(Simon & Schuster)~~

~~Three Months Ended June 30, 2020 and 2019~~

Three Months Ended June 30,
Increase/(Decrease)
Publishing 2020 2019 $ %
Revenues $ 200
$ 218
$ (18 ) (8 )%

Adjusted OIBDA $ 38
$ 35
$ 3
9 %

~~Revenues~~

For the three months ended June 30, 2020, the 8% decrease in revenues was primarily driven by lower print book sales mainly reflecting the impacts of COVID-19, including fewer new releases in the second quarter of 2020 due to their postponement to later in the year and weakness in the retail market. These increases were partially offset by higher digital audio and electronic book sales. Bestselling titles for the second quarter of 2020 included ~~The Room Where It Happened~~ ~~by John Bolton and~~ ~~If It Bleeds~~ ~~by Stephen King.~~

~~Adjusted OIBDA~~

~~Adjusted OIBDA increased 9%, as the decrease in revenues was more than offset by lower production and distribution costs associated with the lower print book sales and the mix of titles.~~

~~Six Months Ended June 30, 2020 and 2019~~

Six Months Ended June 30,
Increase/(Decrease)
Publishing 2020 2019 $ %
Revenues $ 370
$ 382
$ (12 ) (3 )%

Adjusted OIBDA $ 57
$ 54
$ 3
6 %

~~Revenues~~

For the six months ended June 30, 2020, the 3% decrease in revenues was primarily driven by lower print book sales mainly reflecting the impacts of COVID-19, including fewer new releases in the second quarter of 2020 due to their postponement to later in the year and weakness in the retail market. These increases were partially offset by higher digital audio and electronic book sales.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Adjusted OIBDA~~

~~Adjusted OIBDA increased 6%, as the decrease in revenues was more than offset by lower production and distribution costs associated with the lower print book sales and the mix of titles.~~

Liquidity and Capital Resources

Sources and Uses of Cash

We project anticipated cash requirements for our operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs. Our operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, leases, interest payments, income tax payments and pension funding obligations. Our investing and financing spending includes capital expenditures, investments and acquisitions, share repurchases, dividends and principal payments on our outstanding indebtedness. We believe that our operating cash ~~flows;~~flows, cash and cash ~~equivalents;~~equivalents, borrowing capacity under our $3.50 billion Credit Facility described below, as well as access to capital markets are sufficient to fund our operating, investing and financing requirements for the next twelve months.

Our funding for short-term and long-term obligations will come primarily from cash flows from operating activities. Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that commercial paper is not available to us, the Credit Facility provides sufficient capacity to satisfy short-term borrowing needs. We routinely assess our capital structure and opportunistically enter into transactions to lower our interest expense, which could result in a charge from the early extinguishment of debt.

Funding for our long-term debt obligations due over the next five years of ~~$5.54~~$4.03 billion as of ~~June 30, 2020~~March 31, 2021 is expected to come from our ability to refinance our debt, ~~and~~ cash generated from operating ~~activities.~~ activities, and proceeds from non-core asset sales.

During ~~the second quarter of~~ 2020, we ~~issued $4.50~~entered into an agreement to sell Simon & Schuster for $2.175 billion in cash, and expect to use proceeds from the sale to invest in our strategic growth priorities, including in streaming, as well as to fund dividends and pay down debt. The sale is expected to close in 2021, subject to customary closing conditions and regulatory approvals.

On March 26, 2021, we completed offerings of ~~senior notes with interest rates ranging from 4.20%~~20 million shares of our Class B Common Stock at a price to ~~4.95%~~the public of $85 per share and ~~due dates from 2025~~10 million shares of 5.75% Series A Mandatory Convertible Preferred Stock at a price to ~~2050.~~the public and liquidation preference of $100 per share. The net proceeds from the Class B Common Stock offering and the Mandatory Convertible Preferred Stock offering were approximately $1.67 billion and $983 million, respectively, in each case after deducting underwriting discounts, commissions and estimated offering expenses. We intend to use these ~~issuances are being used for the redemption of our long-term debt as well as~~net proceeds for general corporate purposes. During the second quarter of 2020, we redeemed senior notes, debentures, and junior subordinated debentures of $2.43 billion, prior to maturity, for a redemption price of $2.52 billion. On July 10, 2020, we fully redeemed the remaining $340 million of our outstanding 3.875% senior notes due December 2021.purposes, including investments in streaming.

The ongoing impact of COVID-19 could have a negative effect on our financial condition or our ability to fund operations or future investment opportunities due to an increase in the cost of, or difficulty in, obtaining debt or equity financing, or our ability to comply with the leverage covenant in our Credit Facility in the future. The magnitude of the impact could be material to our business, financial condition and results of operations and will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19.

-42-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Dividends on Mandatory Convertible Preferred Stock accumulate from the most recent dividend payment date, or if no dividends have been paid, the original issue date, and will be payable on a cumulative basis when, as and if declared by our Board of Directors, or an authorized committee thereof, at an annual rate of 5.75% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of Class B Common Stock or through any combination of cash and shares of Class B Common Stock, at our election. If declared, dividends on the Mandatory Convertible Preferred Stock are payable quarterly commencing on July 1, 2021, and continuing to, and including, April 1, 2024. The dividend payable on the first dividend payment date is expected to be $1.5493 per share of Mandatory Convertible Preferred Stock, and each subsequent quarterly dividend is expected to be $1.4375 per share.

Cash Flows

The changes in cash, cash equivalents and restricted cash were as follows:


												Three Months Ended March 31,
	Six Months Ended June 30,											2021		2020		Increase/(Decrease)
Net cash flow provided by (used for) operating activities from:											Net cash flow provided by (used for) operating activities from:
Continuing operations											Continuing operations	$	1,651	$	357		$	1,294
Discontinued operations											Discontinued operations	72		(1)			73
Cash flow provided by operating activities											Cash flow provided by operating activities	1,723		356			1,367
	2020			2019			Increase/(Decrease)
Cash flow provided by operating activities	$	1,151		$	1,189			$	(38	)
Cash flow (used for) provided by investing activities	(187		)	120				(307		)

Cash flow provided by investing activities											Cash flow provided by investing activities	86		49			37
Cash flow provided by (used for) financing activities	649			(1,227		)		1,876			Cash flow provided by (used for) financing activities	723		(479)			1,202
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(17		)	2				(19		)	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(19)		(29)			10
Net increase in cash, cash equivalents and restricted cash	$	1,596		$	84			$	1,512
Net increase (decrease) in cash, cash equivalents and restricted cash											Net increase (decrease) in cash, cash equivalents and restricted cash	$	2,513	$	(103)		$	2,616

operating activities of Simon & Schuster.

Acquisitions, net of cash acquired ^(b)

Proceeds from dispositions ^(c)

Proceeds from sale of investments (b)

(a) Primarily includes our investment in The CW.

(b) ~~2020 primarily~~2021 reflects proceeds received from the ~~acquisition~~sale of ~~Miramax, a global film and television studio. 2019 reflects~~our investment in fuboTV, Inc. during the ~~acquisition~~fourth quarter of ~~Pluto Inc. and the remaining 50% interest in Pop TV, a general entertainment cable network.~~

~~(c)~~2020. 2020 reflects the sale of marketable securities. ~~2019 reflects the sale of CBS Television City.~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Financing Activities


	Three Months Ended March 31,
	2021			2020
Repayments of short-term debt borrowings, net		$	—		$	(186)

Repayment of long-term debt		(2,117)			—
Dividends paid on common stock		(151)			(152)
Proceeds from issuance of preferred stock		983			—
Proceeds from issuance of common stock		1,672			—
Purchase of Company common stock		—			(58)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation		(35)			(50)
Proceeds from exercise of stock options		408			5
Other financing activities		(37)			(38)
Cash flow provided by (used for) financing activities		$	723		$	(479)

Six Months Ended June 30,
2020 2019
Repayments of short-term debt borrowings, net $ (698 ) $ (674 )
Proceeds from issuance of senior notes 4,370
493

Repayment of notes and debentures (2,535 ) (600 )
Dividends (301 ) (299 )
Repurchase of the Company’s Class B Common Stock (58 ) (14 )
Payment of payroll taxes in lieu of issuing shares for stock-based compensation (59 ) (52 )
Other financing activities (70 ) (81 )
Cash flow provided by (used for) financing activities $ 649
$ (1,227 )

Free cash flow is a non-GAAP financial measure. Free cash flow reflects our net cash flow provided by operating activities from continuing operations less capital expenditures. Our calculation of free cash flow includes capital expenditures because investment in capital expenditures is a use of cash that is directly related to our operations. Our net cash flow provided by operating activities from continuing operations is the most directly comparable GAAP financial measure.

Management believes free cash flow provides investors with an important perspective on the cash available to us to service debt, make strategic acquisitions and investments, maintain our capital assets, satisfy our tax obligations, and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management. Free cash flow is among several components of incentive compensation targets for certain management personnel. In addition, free cash flow is a primary measure used externally by our investors, analysts and industry peers for purposes of valuation and comparison of our operating performance to other companies in our industry.

As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by operating activities from continuing operations as a measure of liquidity or net earnings as a measure of operating performance. Free cash flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.

~~The following table presents a reconciliation of our net cash flow provided by operating activities to free cash flow.~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net cash flow provided by operating activities (GAAP) $ 795
$ 260

$ 1,151

$ 1,189
Capital expenditures (81 ) (75 )
(132 )
(142 )
Free cash flow (Non-GAAP) $ 714
$ 185
$ 1,019
$ 1,047

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

The following table presents a reconciliation of our net cash flow provided by operating activities from continuing operations to free cash flow.


	Three Months Ended
	March 31,
		2021		2020
Net cash flow provided by operating activities from continuing operations (GAAP)		$	1,651	$	357
Capital expenditures		(62)		(51)
Free cash flow (Non-GAAP)		$	1,589	$	306

Common Stock Dividends

~~During the second quarter of 2020, we~~We declared ~~a quarterly~~ cash ~~dividend~~dividends of $.24 per share on our Class A and Class B Common Stock, during the three months endedMarch 31, 2021 and 2020, resulting in total dividends of $152 million and $150 million, ~~which were paid on July 1, 2020.~~respectively.

~~Share Repurchase Program~~

During the six months ended June 30, 2020, we repurchased 1.3 million shares of ViacomCBS Class B Common Stock under our share repurchase program for $50 million, at an average cost of $38.63 per share. At June 30, 2020, $2.36 billion of authorization remained under the share repurchase program.

Capital Structure

The following table sets forth our debt.


								At			At
	At			At				March 31, 2021			December 31, 2020
	June 30, 2020			December 31, 2019
Commercial paper		$	—		$	699
Senior debt (2.250%-7.875% due 2021-2050)		18,773			16,690
Senior debt (2.250%-7.875% due 2022-2050)							Senior debt (2.250%-7.875% due 2022-2050)		$	16,479		$	18,455
Junior debt (5.875%-6.25% due 2057)		1,157			1,286		Junior debt (5.875%-6.25% due 2057)		1,157			1,157
Other bank borrowings		101			—		Other bank borrowings		115			95
Obligations under finance leases		37			44		Obligations under finance leases		36			26
Total debt ^(a)		20,068			18,719		Total debt (a)		17,787			19,733
Less commercial paper and other short-term borrowings		6			699

Less current portion of long-term debt		358			18		Less current portion of long-term debt		19			16
Total long-term debt, net of current portion		$	19,704		$	18,002	Total long-term debt, net of current portion		$	17,768		$	19,717

~~In January 2020, our commercial paper program was increased to $3.50 billion from $2.50 billion in conjunction with the new $3.50 billion revolving credit facility described below.~~ At ~~June 30,~~both March 31, 2021 and December 31, 2020, we had 0no outstanding commercial paper borrowings under our commercial paper program. ~~At December 31, 2019, we had $699 million~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~of outstanding commercial paper borrowings with maturities of less than 90 days and a weighted average interest rate of 2.07%.~~

At ~~June 30, 2020,~~March 31, 2021, we had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $3.50 billion.

Other Bank Borrowings

Letters of Credit and Surety ~~Bonds.~~ Bonds

CBS Television ~~City.~~ City

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~available financial information, the lessees’ historical performance in meeting their lease obligations and the underlying economic factors impacting the lessees’ business models.~~

Litigation Relating to the Merger

Beginning on February 20, 2020, three purported CBS stockholders filed separate derivative and/or putative class action lawsuits in the Court of Chancery of the State of Delaware. On March 31, 2020, the Court consolidated the three lawsuits and appointed Bucks County Employees’ Retirement Fund and International Union of Operating Engineers of Eastern Pennsylvania and Delaware as co-lead plaintiffs for the consolidated action. On April 14, 2020, the lead plaintiffs filed a Verified Consolidated Class Action and Derivative Complaint (as used in this paragraph, the “Complaint”) against Shari E. Redstone, NAI, Sumner M. Redstone National Amusements Trust, members of the CBS Board of Directors (comprised of Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Robert N. Klieger, Martha L. Minow, Susan Schuman, Frederick O. Terrell and Strauss Zelnick), former CBS President and Acting Chief Executive Officer Joseph Ianniello and nominal defendant ViacomCBS Inc. The Complaint alleges breaches of fiduciary duties to CBS stockholders in connection with the negotiation and approval of the Agreement and Plan of Merger dated as of August 13, 2019, as amended on October 16, 2019 (the “Merger Agreement”). The Complaint also alleges waste and unjust enrichment in connection with Mr. Ianniello’s compensation. The Complaint seeks unspecified damages, costs and expenses, as well as other relief. On June 5, 2020, the defendants filed motions to dismiss. On January 27, 2021, the Court dismissed one disclosure claim, while allowing all other claims against the defendants to proceed. Discovery on the surviving claims is proceeding. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

duties to Viacom stockholders in connection with the negotiation and approval of the Merger Agreement. The Complaint seeks unspecified damages, costs and expenses, as well as other relief. On May 22, 2020, the defendants filed motions to dismiss. On December 29, 2020, the Court dismissed the claims against Mr. Bakish, while

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

allowing the claims against the remaining defendants to proceed. Discovery on the surviving claims proceeding. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Investigation-Related Matters

As announced on August 1, 2018, the CBS Board of Directors retained two law firms to conduct a full investigation of the allegations in press reports about CBS’ former Chairman of the Board, President and Chief Executive Officer, Leslie Moonves, CBS News and cultural issues at CBS. On December 17, 2018, the CBS Board of Directors announced the completion of its investigation, certain findings of the investigation and the CBS Board of Directors’ determination, discussed below, with respect to the termination of Mr. Moonves’ employment. We have received subpoenas or requests for information from the New York County District Attorney’s Office, ~~and~~ the New York City Commission on Human Rights, ~~regarding~~ the ~~subject matter of this investigation and related matters. The~~ New York State Attorney General’s Office and the United States Securities and Exchange Commission ~~have also requested information about these~~regarding the subject matter of this investigation and related matters, including with respect to CBS’ related public disclosures. We may continue to receive additional related regulatory and investigative inquiries from these and other entities in the future. We are cooperating with these inquiries.

On August 27, 2018 and on October 1, 2018, Gene Samit and John Lantz, respectively, filed putative class action ~~suits~~lawsuits in the United States District Court for the Southern District of New York, individually and on behalf of others similarly situated, for claims that are similar to those alleged in the amended complaint described below. On November 6, 2018, the Court entered an order consolidating the two actions. On November 30, 2018, the Court appointed Construction Laborers Pension Trust for Southern California as the lead plaintiff of the consolidated action. On February 11, 2019, the lead plaintiff filed a consolidated amended putative class action complaint against CBS, certain current and former senior executives and members of the CBS Board of Directors. The consolidated action is stated to be on behalf of purchasers of CBS Class A Common Stock and Class B Common Stock between September 26, 2016 and December 4, 2018. This action seeks to recover damages arising during this time period allegedly caused by the defendants’ purported violations of the federal securities laws, including by allegedly making materially false and misleading statements or failing to disclose material information, and seeks costs and expenses as well as remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On April 12, 2019, the defendants filed motions to dismiss this action, which the Court granted in part and denied in part on January 15, 2020. With the exception of one statement made by Mr. Moonves at an industry event in November 2017, in which he allegedly was acting as the agent of CBS, all claims as to all other allegedly false and misleading statements were dismissed. We believe that the remaining claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Separation Agreement

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Separation Agreement. On January 16, 2019, Mr. Moonves commenced a binding arbitration proceeding with respect to this matter and the related CBS Board of Directors investigation, which proceeding is ongoing. The

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

assets of the grantor trust will remain in the trust until a final determination in the arbitration. We are currently unable to determine the outcome of the arbitration and the amount, if any, that may be awarded thereunder. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

On September 9, 2019, the Company was added as a defendant in a multi-district putative class action lawsuit filed in the United States District Court for the Northern District of Illinois. The lawsuit was filed by parties that claim to have purchased broadcast television spot advertising beginning on or about January 1, 2014 on television stations owned by one or more of the defendant television station owners and alleges the sharing of allegedly competitively sensitive information among such television stations in alleged violation of the Sherman Antitrust Act. The action, which names the Company among fourteen total defendants, seeks monetary damages, attorneys’ fees, costs and interest as well as injunctions against the allegedly unlawful conduct. On October 8, 2019, the Company and other defendants filed a motion to dismiss the matter, which was denied by the court on November 6, 2020. We believe that the claims are without merit and we intend to defend against them vigorously. We are currently unable to determine a range of potential liability, if any. Accordingly, no accrual for this matter has been made in our consolidated financial statements.

Claims Related to Former Businesses: Asbestos

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

contingency when it is both probable that a liability has been incurred and when the amount of the loss can be reasonably estimated. We believe that our accrual and insurance are ~~adequate~~sufficient to cover our asbestos liabilities. Our liability estimate is based upon many factors, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims, as well as consultation with a third party firm on trends that may impact our future asbestos liability.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

including toxic tort and product liability claims (other than asbestos) arising from our historical operations and predecessors.

See Note 5 to the consolidated financial statements.

Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Adopted

See Note 1 to the consolidated financial statements.

Critical Accounting Policies

See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2019,~~2020, for a discussion of our critical accounting policies.

Cautionary ~~Statement~~Note Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q ~~including “Item 2 - Management’s Discussion and Analysis of Results of Operations and Financial Condition,”~~ contains both historical and forward‑looking ~~statements.~~statements, including statements related to our future results and performance. All statements ~~other than~~that are not statements of historical fact are, or may be deemed to be, ~~forward‑looking~~forward-looking statements within the meaning of ~~section 27A of~~ the Private Securities Litigation Reform Act of ~~1933 and section 21E of the Securities Exchange Act of 1934, as amended.~~1995. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements reflect our current expectations concerning future results and events; generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could,” “estimate” or other similar words or phrases; and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause ~~the~~our actual results, performance or achievements ~~of ViacomCBS~~ to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: ~~the impact of the COVID-19 pandemic (and other widespread health emergencies or pandemics)~~changes in consumer behavior, as well as evolving technologies, distribution platforms and ~~measures taken in response thereto; technological developments, alternative content offerings and their effects in our markets and on consumer behavior;~~packaging; the impact on our advertising revenues of changes in consumers’ content viewership, deficiencies in audience measurement and advertising market conditions; ~~the public acceptance of~~ our ability to maintain attractive brands and our reputation, and to offer popular programming ~~films, published content~~ and other ~~entertainment content on the various platforms on which they are distributed;~~content; increased costs for programming, films and other rights; ~~the loss of key talent;~~ competition for content, audiences, advertising and ~~distribution in consolidating industries;~~distribution; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of our content; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; the risks and costs associated with the integration of the CBS Corporation and Viacom Inc. businesses and investments in new businesses, products, services and ~~technologies;~~technologies, including our streaming initiatives; evolving business continuity, cybersecurity, privacy and data protection and similar risks; content infringement; the ~~failure, destruction~~impact of COVID-19 (and other widespread health emergencies or breach of critical satellites or facilities; content theft; domestic and global political, economic and/or regulatory factors affecting our businesses generally; volatility in capital markets or a decrease in our debt ratings; strikes and other union activity; fluctuations in our results due to the timing, mix, number and availability of our films and other programming; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; liabilities related to discontinued operations and former businesses; and potential conflicts of interest arising from our ownership structure with a controlling stockholder. These risks, uncertainties and other factors are discussed in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 (filed with the SEC on February 20, 2020) and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (filed with the SEC on May 7, 2020). Other risks may be described in our news releases and other filings with the SEC, including but not limited to our Current Reports on Form 8-K. There may be additional risks, uncertaintiespandemics) and

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

measures taken in response thereto; domestic and global political, economic and/or regulatory factors affecting our businesses generally; liabilities related to discontinued operations and former businesses; the loss of key talent and strikes and other union activity; potential conflicts of interest arising from our ownership structure with a controlling stockholder; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our most recent Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not necessarily known. The forward‑looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this ~~document~~report, and we do not undertake any obligation to publicly update any forward‑looking statements to reflect subsequent events or circumstances.

There have been no significant changes to market risk since reported in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.



Item 4.			Controls and Procedures.

No change in our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



	Three Months Ended June 30, 2020
	Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
March 31, 2020	615	$	1		$	29,633	$	(22,958	)		$	8,827			$	(2,054	)		$	13,449			$	72		$	13,521
Stock-based compensation activity and other	1	—			47		—				—				—				47				—			47
Dividends	—	—			—		—				(150		)		—				(150		)		—			(150		)
Noncontrolling interests	—	—			—		—				(8		)		—				(8		)		359		^(a)	351
Net earnings	—	—			—		—				481				—				481				245			726
Other comprehensive income	—	—			—		—				—				55				55				—			55
June 30, 2020	616	$	1		$	29,680	$	(22,958	)		$	9,150			$	(1,999	)		$	13,874			$	676		$	14,550



	Six Months Ended June 30, 2020
	Class A and B Common Stock				Additional Paid-In Capital			Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests					Total Equity
	(Shares)
December 31, 2019	615		$	1		$	29,590	$	(22,908	)		$	8,494			$	(1,970	)		$	13,207			$	82			$	13,289
Stock-based compensation activity and other	2		—			90		—				—				—				90				—				90
Class B Common Stock purchased	(1	)	—			—		(50		)		—				—				(50		)		—				(50		)
Dividends	—		—			—		—				(300		)		—				(300		)		—				(300		)
Noncontrolling interests	—		—			—		—				(41		)		—				(41		)		349			^(a)	308
Net earnings	—		—			—		—				997				—				997				248				1,245
Other comprehensive loss	—		—			—		—				—				(29		)		(29		)		(3		)		(32		)
June 30, 2020	616		$	1		$	29,680	$	(22,958	)		$	9,150			$	(1,999	)		$	13,874			$	676			$	14,550



	Three Months Ended June 30, 2019
	Class A and B Common Stock			Additional Paid-In Capital				Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
March 31, 2019	615	$	1		$	49,927		$	(43,412	)		$	7,594			$	(1,811	)		$	12,299			$	49		$	12,348
Stock-based compensation activity and other	—	—			27			13				—				—				40				—			40
Dividends	—	—			—			—				(149		)		—				(149		)		—			(149		)
Noncontrolling interests	—	—			(10		)	—				(4		)		—				(14		)		(11		)	(25		)
Net earnings	—	—			—			—				977				—				977				6			983
Other comprehensive income (loss)	—	—			—			—				—				8				8				(1		)	7
June 30, 2019	615	$	1		$	49,944		$	(43,399	)		$	8,418			$	(1,803	)		$	13,161			$	43		$	13,204



	Six Months Ended June 30, 2019
	Class A and B Common Stock			Additional Paid-In Capital				Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
December 31, 2018	613	$	1		$	49,907		$	(43,420	)		$	5,569			$	(1,608	)		$	10,449			$	54		$	10,503
Stock-based compensation activity and other	2	—			47			21				(4		)		—				64				—			64
Dividends	—	—			—			—				(299		)		—				(299		)		—			(299		)
Noncontrolling interests	—	—			(10		)	—				(14		)		—				(24		)		(24		)	(48		)
Net earnings	—	—			—			—				2,936				—				2,936				11			2,947
Reclassification of income tax effect of the Tax Reform Act	—	—			—			—				230				(230		)		—				—			—
Other comprehensive income	—	—			—			—				—				35				35				2			37
June 30, 2019	615	$	1		$	49,944		$	(43,399	)		$	8,418			$	(1,803	)		$	13,161			$	43		$	13,204



Assets
Cash	$	32
Accounts receivable and other current assets	19
Programming inventory	536
Goodwill	99
Intangible assets	12
Other assets (noncurrent)	7
Assets acquired	$	705

Liabilities
Accounts payable and accrued expenses	$	13
Participants’ share and royalties payable (current)	16
Deferred revenues	10
Participants’ share and royalties payable (noncurrent)	20
Debt	105
Other liabilities (noncurrent)	28
Liabilities assumed	192
Noncontrolling interests	363
Total purchase price	$	150



	At
	June 30, 2020
Film Group Monetization:
Acquired television program rights, including prepaid sports rights		$	3,345
Internally produced television programming:
Released		3,104
In process and other		832

Individual Monetization:
Acquired libraries		501
Film inventory:
Released		429
Completed, not yet released		81
In process and other		1,258
Internally produced television programming:
Released		1,202
In process and other		718
Home entertainment and Publishing, primarily finished goods		95
Total programming and other inventory		11,565
Less current portion		1,837
Total noncurrent programming and other inventory		$	9,728



	At
	December 31, 2019
Acquired television program rights, including prepaid sports rights		$	3,477
Acquired libraries		99
Internally produced television programming:
Released		3,627
In process and other		2,626
Film inventory:
Released		502
Completed, not yet released		55
In process and other		1,037
Home entertainment and Publishing, primarily finished goods		105
Total programming and other inventory		11,528
Less current portion		2,876
Total noncurrent programming and other inventory		$	8,652



	Balance at			2020 Activity									Balance at
	December 31, 2019			Charges ^(a)		Payments				Other			June 30, 2020
TV Entertainment		$	99	$	75		$	(41	)	$	—			$	133
Cable Networks		137		135			(85		)	(6		)		181
Filmed Entertainment		17		11			(5		)	2				25
Publishing		4		2			(2		)	(1		)		3
Corporate		143		67			(80		)	(9		)		121
Total		$	400	$	290		$	(213	)	$	(14	)		$	463



	At			At
	June 30, 2020			December 31, 2019
Amounts due to/from other related parties
Accounts receivable		$	33		$	45
Accounts payable		$	2		$	3


~~(a)~~	(b)Reflects amortization of net actuarial losses (see Note 12). Amounts ~~are net of tax benefits of $11 million and $10 million for the six months ended June 30, 2020 and 2019, respectively.~~


~~(b)~~	Reflects the reclassification of certain income tax effects of the federal tax legislation enacted in December 2017 on items within accumulated other comprehensive loss to retained earnings upon the adoption of FASB guidance.



	Six Months Ended June 30, 2019
	Earnings from Continuing Operations Before Income Taxes				Benefit (Provision) for Income Taxes				Net Earnings from Continuing Operations Attributable to ViacomCBS				Diluted EPS from Continuing Operations
Reported (GAAP)		$	2,832			$	135			$	2,917			$	4.73
Items affecting comparability:
Restructuring and other corporate matters ^(a)		185				(45		)		140				.23
Gain on sale of assets ^(b)		(549		)		163				(386		)		(.63		)
Gains from investments ^(c)		(77		)		16				(61		)		(.10		)
Discrete tax items ^(d)		—				(800		)		(800		)		(1.30		)
Adjusted (Non-GAAP)		$	2,391			$	(531	)		$	1,810			$	2.93


	Three Months Ended March 31,
					Increase/(Decrease)
Streaming Revenues by Type	2021		2020		$		%
Advertising	$	428	$	265	$	163	62	%
Subscription	388		229		159		69
Total Streaming Revenues	$	816	$	494	$	322	65	%


	Three Months Ended March 31,
			% of Operating Expenses				% of Operating Expenses		Increase/(Decrease)
Operating Expenses by Type	2021				2020				$		%
Production and programming	$	3,136	72	%	$	2,627	66	%	$	509	19	%
Participations and residuals	588		13		474		12		114		24

Distribution and other	639		15		855		22		(216)		(25)
Total Operating Expenses	$	4,363	100	%	$	3,956	100	%	$	407	10	%



	At June 30,
			Weighted Average					Weighted Average
	2020		Interest Rate			2019		Interest Rate
Total long-term debt	$	19,930		4.78	%	$	18,273		4.70	%
Other bank borrowings	$	101		3.59	%	$	—		—	%



	Three Months Ended June 30,
					Increase/(Decrease)
Entertainment	2020		2019		$			%
Advertising	$	951	$	1,309	$	(358	)	(27	)%
Affiliate	751		616		135			22
Content licensing	544		966		(422		)	(44	)
Other	41		47		(6		)	(13	)
Revenues	$	2,287	$	2,938	$	(651	)	(22	)%

Adjusted OIBDA	$	392	$	613	$	(221	)	(36	)%


•	negatively impacting on our financial condition or our ability to fund operations or future investment opportunities due to an increase in the cost or difficulty in obtaining debt or equity financing, or refinancing our debt in the future~~, or our ability to comply with the leverage covenant in our Credit Facility~~;


•	~~impairments of our~~ ~~programming and other inventory, goodwill and other~~ ~~indefinite-lived intangible assets, and other long-lived assets; and~~



Exhibit No.					Description of Document
(4(3)		)			~~Instruments defining the rights~~Articles of ~~security holders, including indentures~~Incorporation and Bylaws
			(a)		~~Form~~Certificate of ~~4.200% Senior Notes due 2032~~Designations of the 5.75% Series A Mandatory Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on March 25, 2021 (incorporated by reference to Exhibit ~~4.1~~3.1 to the Current Report on Form 8-K of ViacomCBS Inc. filed ~~May 19, 2020~~)on March 26, 2021) (File No. 001-09553).
(4)		~~(b)~~			Instruments defining the rights of security holders, including indentures
			(a)		~~Form~~Specimen Certificate of ~~4.950% Senior Notes due 2050~~the Mandatory Convertible Preferred Stock (included in Exhibit 3(a) above) (incorporated by reference toExhibit ~~4.2~~4.1 to the Current Report on Form 8-K of ViacomCBS Inc. filed ~~May 19, 2020)~~on March 26, 2021) (File No. 001-09553).
(31)		~~(c)~~	~~Form of 4.750% Senior Notes due 2025 (incorporated by reference to~~ ~~Exhibit 4.1~~ ~~to the Current Report on Form 8-K of ViacomCBS Inc. filed~~ ~~April 1, 2020) (File No. 001-09553).~~
		~~(d)~~		~~Form of 4.950% Senior Notes due 2031~~ ~~(incorporated by reference toExhibit 4.2~~ ~~to the Current Report on Form 8-K of ViacomCBS Inc. filed April 1, 2020) (File No. 001-09553).~~
~~(10~~	)		~~Material Contracts~~
		~~(a)~~	~~Employment Agreement, dated as of June 30, 2020, between ViacomCBS Inc. and Naveen Chopra (filed herewith~~).
		~~(b)~~	~~Letter Agreement, dated as of June 30, 2020, between ViacomCBS Inc. and Naveen Chopra (filed herewith~~).
		~~(c)~~	~~Letter Agreement, dated as of July 24, 2020, between ViacomCBS Inc. and Christina Spade (filed herewith~~).
~~(31~~	)		Rule 13a-14(a)/15d-14(a) Certifications
			(a)		Certification of the Chief Executive Officer of ViacomCBS Inc. pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
			(b)		Certification of the Chief Financial Officer of ViacomCBS Inc. pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
~~(32~~(32)		)			Section 1350 Certifications
			(a)		Certification of the Chief Executive Officer of ViacomCBS Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (~~furnished~~f urnished herewith).
			(b)		Certification of the Chief Financial Officer of ViacomCBS Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
~~(101~~(101)		)			Interactive Data File
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~~(104~~(104)		)			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



			VIACOMCBS INC. (Registrant)

Date: ~~August~~May 6, ~~2020~~2021			/s/ ~~Christina Spade~~Naveen Chopra
			~~Christina Spade~~Naveen Chopra Executive Vice President, Chief Financial Officer

Date: ~~August~~May 6, ~~2020~~2021			/s/ Katherine Gill-Charest
			Katherine Gill-Charest Executive Vice President, Controller and Chief Accounting Officer