By Kenneth Li and Akanksha Rana

(Reuters) - ViacomCBS Inc on Thursday said its earnings fell short of revenue and profit expectations in its first quarterly earnings results since closing its merger, sending shares down 14% in morning trading.

The company's revenue and free cash flow guidance for 2020 was "a bit shocking" and lower than Wall Street expected, said Daniel Kurnos, analyst at Benchmark Company.

ViacomCBS said it expects revenue to improve by mid-single digit percentages during 2020 or about $29.2 billion if revenue were to rise by 5%. Wall Street analysts expected 2020 revenue to reach $29.74 billion.

Viacom and CBS completed their merger in December in their third attempt since 2016, aiming to gird against competition in a rapidly consolidating media universe while partnering with and battling the likes of Netflix Inc and Walt Disney Co.

The merger reunited media mogul Sumner Redstone's entertainment empire and brought Showtime networks and CBS News under the same roof as Nickelodeon, Comedy Central and Paramount movie studios.

ViacomCBS also revealed plans to create a new streaming video service built off of its existing CBS All Access service that will offer free, paid and a premium tier subscription service.

"In 2020, our priorities are maximizing the power of our content, unlocking more value from our biggest revenue lines and accelerating our momentum in streaming," ViacomCBS Chief Executive Bob Bakish said in a prepared statement.

Ahead of the launch of the service expected later this year, the company said domestic streaming and digital video business was already generating about $1.6 billion in annual revenue, up 60% compared to 2018. Unlike rivals, executives said they did not expect to boost spending on original programming for the service.

Streaming revenue is expected to rise 35% to 40% this year and the company expects to serve about 16 million U.S. streaming subscribers in 2020, up from 11 million in 2019.

Fourth quarter revenue fell to $6.87 billion from $7.09 billion a year ago in the fourth quarter ended Dec. 31, missing analyst expectations of $7.36 billion, according to IBES data from Refinitiv.

Excluding items, ViacomCBS's earnings per share of 97 cents also missed expectations of $1.44, according to IBES.

Advertising revenue fell 2% to $3.03 billion during the quarter as domestic ad revenue was hit by a decline in political ads.

ViacomCBS also said annual adjusted earnings per share were expected to be $5.15 to $5.50, up from $5.01 in 2019. Free cash flow, a key measure of a media company's health, is expected to rise to between $1.8 billion and $2 billion, up from $1.2 billion in 2019. Executives said they expected an additional $500 million in free cash flow benefit in 2021.

ViacomCBS said it plans to save $750 million in cost savings from the merger, up from the previous target of $500 million.

(Reporting by Supantha Mukherjee in Bengaluru and Kenneth Li in New York; Editing by Saumyadeb Chakrabarty, Chizu Nomiyama and Tom Brown)