Data and Measurement
“This Continues to Be an Extremely Undervalued Company” – Six Highlights from Bob Bakish’s UBS Global Media & Communications Q&A
Viacom CEO Bob Bakish appeared onstage at the UBS Global Media and Communications Conference yesterday in New York City, where he spoke to media and telecommunications analyst John C. Hodulik.
Bakish discussed the financial improvements surfaced in Viacom’s recent earnings report, the strength of Paramount’s film and television studios, flagship network highlights, and his optimism about the growth opportunities available through multi-platform distribution, live events, and other streams.
In his remarks, Bakish crystalized several key points about Viacom’s operations. Six of the most important are pulled out below. Click here to listen to the full conversation.
1) Viacom is a global cross-platform content engine
“And as we pivot and look to 2018, what we’re really focused on – and people think about Viacom and they say, ‘you’re a pay-TV company.’ And it’s true that we have a substantial business base in pay television. But what Viacom really is, it’s a global content engine across television, across feature film and increasingly across digital-native.”
2) Partnerships are key to growth
“The interesting thing is outside the U.S., in most markets, still today, Viacom is a relatively small player. And so, how do we get the benefits of being a bigger player? And the route to that was through partnership, whether that was partnering with our distributors, on the advertising side. We participated in a whole set of ad sales houses through that time, some of them we run, some of them other people run, some of them were joint ventures but that was all about getting the benefits of scale.”
3) Viacom’s flagship brands remain the priority
“Well, flagships [Nickelodeon, Nick Jr., MTV, Comedy Central, BET and the soon-to-launch Paramount Network] are certainly Viacom’s priority because again we think there’s significant opportunity particularly to grow share there on the network side, as well as broader awareness. As we begin to implement that strategy we certainly remixed our programming investment and moved it towards the flagships, point one. And point two is within the flagships, a brand like MTV, which I’m continuing to be tremendously excited about, there was a place where we put a new team in place, we put a new strategy in place, that strategy was about shifting the programming mix. MTV had gone to a place where it was very invested in scripted programming, which is quite frankly something you can get from a variety of places and it was not really a core association of the brand, so we’ve moved it to a more of an unscripted place, more of a live place.”
4) Viacom is the market leader in advanced advertising
“And by the way, on the advanced advertising space, Viacom is clearly the market leader. We partnered with Fox and Turner to set up OpenAP and we did that so the category can continue to scale, which is a very important thing for us. But we were the leader and we, as far as I know, are the only people doing these type of multi-faceted distribution deals and you’ll see the benefit of those start to come online as we get into 2018 too, and we’re able to unlock some more of this addressable inventory. So I think that is a very exciting road ahead. And again, sets the stage for a much more productive partnership with the MVPDs here in the U.S. and frankly around the world.”
5) 2017 was about stabilization, 2018 is about acceleration
“But as we accomplished really the stabilization of the company and I think that’s the best word, 2017 was about stabilization, 2018 is about acceleration particularly in these newer areas.”
6) Viacom is an undervalued cash machine
“Well, Viacom if you look at 2017, $1.5 billion to $1.7 billion in cash flow, durable cash flow, it’s about a 15 percent yield. So, this thing is a significant cash machine. You look at 2017 and we eliminated the big overhang on the business, quite frankly, which was the uncertainty around distribution. We have distribution deals with mid-single digit annual escalators locked in through well past 2020. So we have a secured distribution base and we have these incremental opportunities that are not only ideas on the next-generation platforms and solutions, on incremental revenues beyond the core, they’re not only ideas, they’re businesses we are already in, in 2017 that we are, therefore, know how to operate and can accelerate. So there is a tremendous opportunity ahead. This continues to be an extremely undervalued company.”
Bakish also appeared on CNBC last week. Watch his conversation with Julia Boorstin here.
Riding broad ratings increases, significant improvement in domestic ad sales, and continued growth of its international business, Viacom reported fourth-quarter and full-year earnings this morning headlined by year-over-year gains in revenue and other key financial metrics.
The report serves as an affirmation that the strategy outlined by Viacom President and CEO Bob Bakish in his first earnings call in February is working to stabilize and revitalize the business, reversing previous declines in revenue, operating income and operating cash flow.
“In the fourth quarter and full year, we made strong progress against our plan to fundamentally stabilize and revitalize Viacom, with top line gains in both Media Networks and Filmed Entertainment segments driven by continued execution on our strategic priorities,” Bakish said. “We saw significant ratings increases across the portfolio, which drove sequential improvement in domestic advertising; our international business continues to expand, delivering double-digit revenue increases; and Paramount is demonstrating growth across multiple revenue streams as it rebuilds the theatrical slate and continues to grow its TV production business. Additionally, we have completed several multi-year renewals of major distribution contracts – including our recent agreement with Charter – which secure broad, long-term carriage of Viacom’s networks for subscribers and expand our relationships with distributors through new, forward-looking advanced advertising and content production partnerships. We realized these achievements and established a stable base while reducing debt, improving free cash flow and strengthening our balance sheet.
“Viacom is stronger and our momentum continues to build. To accelerate our transition to long-term, sustainable growth, we are ramping up the evolution of Viacom’s media business to better serve next generation platforms and solutions while continuing to diversify our business and strengthen our global portfolio of flagship brands. In the coming year, we will continue to focus on unleashing the full creativity and energy of Viacom to create greater value for our shareholders and audiences.”
Here’s a closer look at what Viacom achieved this quarter, and what lies ahead:
Improved financial performance
The company’s operational and organizational changes have begun yielding financial results. Viacom ended the quarter with increased revenue (+3%, $3.3 billion), adjusted operating income (+7%, $578 million), and adjusted earnings per share (+12%, $0.77). Revenue grew six percent for the full year, to $13.3 billion, while adjusted earnings per share grew two percent to $3.77.
As revenue increased, operating free cash flow also grew 26 percent, to $1.5 billion, while the company reduced gross debt by approximately $2 billion since February, a 15 percent reduction in the company’s debt load and an important step in retaining its investment-grade metrics. The company expects to further reduce its total debt load in 2018.
The most viewers in cable, and growing
Viacom continues its longstanding position as the most-watched cable family in the United States. Behind a varied collection of channels tucked alongside the flagship six of MTV, BET, Comedy Central, Nickelodeon, Nick Jr. and Spike (soon to be Paramount Network), the company has earned a larger share of several coveted audiences than any competitor, including Millennials, African-Americans, and key child and adult demographics:
This position is likely to strengthen, as strong programming helped drive quarterly ratings up three percent across the domestic portfolio and six percent across the flagship brands, with especially sharp rises at several networks:
Strong partnerships lock in subscribers, stabilize ad sales
Viacom has put renewed focus on building stronger partnerships, with positive results in the distribution and ad sales worlds.
After signing an advanced advertising and content distribution agreement with Altice USA earlier this year, Viacom yesterday finalized a renewal of its deal with Charter Communications. Both of these deals transcend traditional carriage arrangements to include data, advertising and co-production components, underscoring Viacom’s focus on finding opportunity in a rapidly changing industry.
Viacom has now locked in agreements with nearly half its subscribers in the past year, with no major renewals looming until well into 2019.
Additionally, the company announced earlier this week that 11 of its networks would headline the new Philo streaming product, a low-cost entertainment package that will also include programming from A+E, AMC, Discovery and Scripps.
Strong partnerships – combined with the aforementioned ratings growth and industry-leading innovation – also helped stabilize ad sales after a decline in the same period last year. International ad revenues were especially strong, jumping 36 percent.
Top talent and intellectual property drives so much more ahead
Viacom’s fiscal 2018 is already well underway, and the company’s reinvention continues to accelerate behind a portfolio of diverse and iconic brands. On the immediate horizon, Viacom looks forward to further growth into next generation platforms with the launch of Viacom Digital Studios behind former Awesomeness TV Chief Digital Officer Kelly Day, an increase in live events led by SpongeBob on Broadway, the launch of Paramount Network in January, the upcoming content partnership with Tyler Perry – who is already scripting a film for BET – and so much more.
To see what Viacom will debut in the months ahead, scroll through the timeline below, or click here to view the full-screen version.
To listen to the earnings call or read the press release or other materials, visit Viacom Investor Relations.
Viacom18 is the home of Viacom’s brands in India and is one of the country’s fastest-growing entertainment networks, reaching more than 600 million viewers in 80 countries across its channels.
Hear from Group CEO Sudhanshu Vats as he talks about the business, its programming and how they’re celebrating Viacom18’s 10th anniversary this month.
Video by Viacom Catalyst.
An NYU graduate student gazed at the dazzling digital wallpaper in The White Box event space at Viacom’s Times Square Headquarters, sipping a mimosa and munching a croissant. Other students milled about, intrigued by animation-splashed LED panels splashed with famous Viacom characters, such as Broad City’s Abbi and Ilana.
Viacom’s MBA Media Trek invited 150 grad students from some of the most prestigious business schools in the U.S. – such as Columbia, NYU and Harvard – to sit in on a panel featuring company executives and mingle with them afterward.
Viacom was one of several stops for these students on their tour of media hubs. Our talent acquisition department organized the event, curating an accomplished panel of speakers that included MTV President Chris McCarthy, Viacom Vantage Senior Vice President Gabe Bevilacqua, Paramount Digital Content Senior Vice President Anu Bhatia, and Viacom International COO Jose Tolosa.
— Viacom Internships (@ViacomInterns) November 4, 2017
The goal: to define Viacom’s eclectic, innovative culture, so the students could understand the workings of a fast-paced modern media company and determine whether it was a potential match for their ambitions.
What is Viacom?
Daisy Auger-Dominguez, our senior vice president of talent acquisition, welcomed students by sharing what makes her most proud to work at this company: “Viacom creates entertainment that drives culture and conversation.” She emphasized the massive breadth of this entertainment, with 4 billion subscribers in more than 180 countries.
“We are truly a global company,” said Auger-Dominguez. “This work extends to all areas of our business – from content production to advertising, distribution to data strategy and beyond.”
Viacom’s Girls Who Code Summer Immersion Program Grad Ceremony Inspires Teen Coders, Employees and Company Executives
Each year since 2015, Viacom Headquarters has opened its doors to a group of teenagers, letting them loose on the floors of our tech department and off-site broadcasting control rooms.
Sound hectic? Well, it’s part of Girls Who Code, a nationally-renowned nonprofit initiative which aims to increase the number of women in computer science. It teaches young girls computer programming skills, which they can use towards a future career in tech, or any number of jobs where this knowledge is essential.
Viacom provides expert mentors from various fields in the company to teach the girls what it takes to become a force in any industry they pursue. We host field trips to off-site locations such as The Daily Show production studio, where the teens can see how many ways tech can be applied in the media industry.
And yes, the result is a bustling summer of adventure and learning, with crowded elevators at company headquarters and wide-eyed teens gazing at the walls of our building as if it were a majestic castle. It’s also a valuable learning experience for current employees.
In many ways, our GWC program reminds me of how lucky I am to work at Viacom—a place where we’re encouraged to learn new skills, connect with colleagues in other departments, and walk through hallways covered with exquisite art.
At the end of August, the company held a graduation ceremony for these students at our Times Square Headquarters.
Viacom President and CEO Bob Bakish spoke at the event, telling the audience how Viacom’s involvement with GWC personally resonated.
“Speaking as an engineering grad – but more importantly, as a dad of two teenage girls, it’s especially gratifying that Viacom is part of this incredibly important work to build a strong community of female leaders in computer science,” said Bakish.
“[Viacom] brands create great content that drives culture and conversation in more than 180 countries. Coding enables us to do what we do – from production to distribution, operations to advertising, broadcasting and beyond.
It is the glue that holds our digital infrastructure together…and it’s the foundation for the new and innovative experiences that allow our fans to connect even more closely with their favorite Viacom brands and content.”
Nickelodeon President Cyma Zarghami also spoke, telling the audience of graduates, employees and family members how crucial coding is for women. “There are so many places where females are underrepresented and its inspiring to know there are movements like Girls Who Code who are trying to change that,” said Zarghami.
The Nickelodeon executive followed up with an pertinent example of how the network broke gender tropes with an iconic 90s show, Clarissa Explains It All.
“It was an important show because it broke a lot of rules. We were told that boys wouldn’t watch shows about a girl. And that more girls would watch a show about a boy than about a girl,” said Zarghami. However, the show defied stereotypes: “It was a giant hit.”
There is so much more to be done, Zarghami stressed. “There aren’t enough women directors, or screenwriters, or producers. Or female leads in super-hero movies,” said Zarghami.
“But there is a movement now to change all of that, not just in TV and tech, but in every field. And you, and your generation, and organizations like Girls Who Code, are a big part of this change.”
Hear from the grads
Photos by Amy Pinard Photography
Viacom’s Third Annual Girls Who Code Summer Immersion Program Opens Doors and Unlocks Keys to Diversity
Since 2015, Viacom has welcomed 60 high school girls to its Times Square Headquarters as part of the nationally-renowned Girls Who Code summer immersion program. Girls Who Code is a nonprofit organization driven to close the gender gap in tech by giving young girls a foundation in coding.
“Coding is a skill that can open up many doors for someone,” said Viacom Senior Director of Technology, Aurelie Gaudry. “Viacom is the perfect partner for a Girls Who Code Summer Immersion Program because it introduces young women to beginner computer science concepts while also allowing them to see many different paths coding can lead you down.”
At Viacom, these paths include careers in TV production, or creating apps for Nickelodeon and BET. It could be a managerial role, directing a team of engineers to develop new online games, or even one in communications, acting as a liaison between coders and brand representatives.
“One of the wonderful benefits of hosting the GWC program is watching our technology team find inspiration from the passion and caliber of the young women involved,” said Viacom Chief Technology Officer Dave Kline.
Kid Power, Staying Grounded, India’s Pragmatic Youth: Viacom Global Insights Digest, November Edition
Viacom’s latest consumer insights from around the world include global kids’ influence on household decisions, how people remain grounded in stressful times, and the pragmatism of Indian youth. As always, you can read these and all our stories in English, Latin American Spanish and Brazilian Portuguese.
BET’s The Mane Event Really Was the Main Event, Breaking Ratings and Social Media Records For the Year
After seven years, trap royalty finally tied the knot.
Gucci Mane and Keyshia Ka’oir are many things: makeup moguls, Instagram influencers, investors, TV personalities, hip-hop royalty and stars of BET’s latest reality show, Gucci Mane and Keyshia Ka’oir: The Mane Event.
Now, they’re a married couple. The Mane Event kicked off with the live, televised wedding on Oct. 17, so fans could bear witness their extravagant ceremony through BET’s special. And 1.6 million viewers RSVP’d, making the premiere the no. 1 cable series premiere of the 2017-2018 season as of October, according to a press release. It also dominated social media, with 1.2 million social interactions across Twitter and Facebook for that night, with BET’s hashtag #TheWopsters trended at no. 1 worldwide on Twitter during the premiere.
— BET (@BET) October 18, 2017
Now that The Wopsters have said “I do,” BET’s 10-part docu-series will backtrack, detailing the extensive prep-work leading up to the power couple’s lavish labor of love, which The Huffington Post deemed “wedding of the year.”
Behind the dual cultural touchstones of VH1’s RuPaul’s Drag Race and Comedy Central’s The Daily Show with Trevor Noah, Viacom tallied four wins at the Creative Arts Emmys earlier this week. Here’s a video round-up of the victors:
This is RuPaul’s second consecutive year taking the Outstanding Host of a Variety, Nonfiction or Reality Program honor – an outcome that was widely predicted after the show’s move from Viacom’s Logo to VH1 earlier this year.
“Drag Race was already the best reality show on TV, and you’d have been hard-pressed to tell anyone within its community of loyal fans that its reach was niche, but the show’s move from the Logo network to Viacom neighbor VH1 proved that the ceiling on television’s premiere drag competition was even higher,” wrote Decider’s Joe Reid in July. “The show scored record ratings and was a massive hit on social media.”
Take one look at the host commanding the stage, and it’s clear why RuPaul repeated this top honor:
With the added exposure, the program racked up seven Emmy nominations this season, and one category remains undecided: RuPaul’s Drag Race is also nominated in the Best Reality Competition Series category, the winner of which will be announced at the primetime Emmys ceremony this Sunday, Sept. 17.
The Daily Show’s Emmy, for Outstanding Short Form Variety Series, celebrates Noah’s “Between the Scenes” takes, in which he riffs on prominent news stories. Here, the host breaks down the U.S. government’s bizarre tradition of perpetually threatening shutdowns over its own failure to raise the debt ceiling:
The Emmy win came on the same week that Comedy Central extended Noah’s contract through 2022. The move acknowledged the show’s incredible and consistent ratings and social engagement growth as the host nears his two-year anniversary at the helm. Vitally, The Daily Show is positioned to wrap this quarter as the most-watched daily, late-night show among millennials.
This is not Noah’s first trip to an awards podium – this past spring, he took Best Host at MTV’s reconfigured Movie and TV Awards.