Growing viewership, building new management teams, finding efficiencies, delivering content on next-generation platforms. Viacom President and CEO Bob Bakish sat down with Michael B. Nathanson at last week’s MoffettNathanson Media & Communications Summit in New York City, where they discussed these and other ways that Viacom is strategically positioning itself to thrive in a rapidly evolving media landscape.
“I fundamentally believe we’ve made a lot of progress at Viacom in the last year or so,” Bakish said. “That starts with having a plan and laying it out for our teams, our employees, and quite frankly, the rest of the industry and the financial community. … For the last couple of quarters, we’ve seen consistent share growth, including in the last quarter. And in fact, we’re seeing improvement relative to last quarter and the current quarter we’re in. So that’s clear progress.”
Additional highlights from the conversation are below. Listen to the full exchange here.
Next-generation platforms and solutions are driving a huge potential growth market for Viacom
Viacom Digital Studios, announced late last year and launched in earnest at the recent Newfronts in New York, is just getting going, but has already stoked strong digital consumption, with video views up 110 percent year-over-year last month. This is just one part of a broad suite of digital initiatives – from vMVPD (virtual multichannel video programming distributor) distribution over Sling and DIRECTV NOW to deals with Telfonica (across Latin America), Telkomsel (Indonesia) and other mobile providers – that is positioning Viacom to evolve with its increasingly digital-first fanbase.
“So when we talk about next generation, we’re talking about vMVPDs. We’re talking about OTT (over the top). We’re talking about sort of AVOD (audio/visual on demand), in front of the wall, social, et cetera. And we have initiatives going in all of those spaces. And the reason we’re in all of those spaces is we believe that’s a very powerful complement to what we’re doing in the traditional space and is critical to driving growth.”
New management is driving ratings growth across the core television business
MTV is riding an unscripted boom to 10 straight months of ratings growth under network President Chris McCarthy, while ratings are up at BET behind a scripted programming push and at Comedy Central as Trevor Noah solidifies himself as a major voice in late-night.
“So, I feel good about our trajectory there, and in fact, again, when you met with advertisers and we did dinners with each of the agency holding companies over the last three weeks or so … what we typically heard … was, ‘wow, you guys made a lot of sort of promises and commitments when we saw you last year … And we were somewhat skeptical but it’s really incredible how far you’ve come and seeing these brands and we’re very excited about your upcoming slates,’ as are we, by the way,” Bakish said.
Paramount Pictures’ new management team is turning the studio around…
Under Chairman and CEO Jim Gianopulos, the iconic movie studio has installed a new management team and reoriented its slate so that half of its films are co-branded with Viacom’s media networks. With A Quiet Place – the first film produced, marketed and distributed under the new team – rolling out to more than $300 million in worldwide box office receipts (so far), on a $20 million budget, the studio has plenty of momentum moving into the summer.
“And if you look at Paramount, we have a plan that management is totally bought into that is about, that addresses some of our historical problems and our historical problems were a slate construction that didn’t make sense, was not balanced, didn’t leverage the assets Viacom had and then frankly poor execution,” said Bakish “… look at the branded films, the first one in this kind of era is going to be a BET film shot by Tyler Perry [starring Tiffany Haddish] … That’s a film that we made at a very attractive price point, and it’s going to benefit from the BET brand, and that’s why Tyler came and left a perfectly good existence at Discovery and Lionsgate to unify his content output with Viacom … So we are going to rapidly take share, it’s going to be profitable share and we’re going to combine that with our television business and that’s going to take us back very quickly to a very nice business.”
…while the Paramount TV production studio evolves into a premium content force
With 19 network projects in the pipeline and hits such as Netflix’s 13 Reasons Why and TNT’s The Alienist stamping the studio’s premium content credentials, Paramount Television is expected to deliver $400 million in fiscal 2018 revenue.
“When suddenly Viacom split with CBS, the TV production went with CBS and therefore we had a kind of naked film-only studio, which is not a good place for a studio to be because very lumpy,” Bakish said. “Television tends to kind of flatten out the volatility year-to-year, as well as, of course add value. … Paramount is rapidly being appreciated as a place that makes hits in television too.”
The international market is growing, with huge potential ahead
With pay television penetration below 40 percent outside of the U.S., the growth potential for Viacom International Media Networks (VIMN) is significant. The division has already moved aggressively into the mobile space, striking deals with telecom carriers in multiple regions and launching Paramount+, a first-window film and television product that is emblematic of the company’s larger efforts to reach fans beyond customary linear channels. VIMN also announced a larger move into original content this week with a significant expansion of its Viacom International Studios.
“… we really created a significant – a company that matters in the international television space,” said Bakish. “ … That business is firing really on all cylinders. You see the combination of a set of really global paid brands and MTV, Comedy, Nickelodeon and Paramount combined with local cornerstones, notably in the UK with Channel 5 and in Latin America with Telefe, both of those local cornerstones, and we have also Colors in India, but that’s not a consolidated asset, that’s a bit of a different financial story. But those local cornerstones are not only about our strength in those particular markets, but they’re also content engines more broadly…”
By acting as one Viacom, the company continues to cut significant costs
“And that first round of $500 million, we took that money and reinvested it in the business to drive growth,” said Bakish. “So things like VDS [Viacom Digital Studios] and others. This second round, this $100 million this year and the $300 million-plus going forward will drop into the bottom line, so that’s all margins. And the way we’re getting that is through very disciplined approach. We’re focused on it culturally. … And part of that’s by acting as one Viacom.”