Viacom’s Q3 2018 Earnings Demonstrate Turnaround, Evolution Into Global Multi-Platform Entertainment Company

by Stuart Winchester, Viacom

Viacom released its third quarter 2018 financial results today, articulating progress on its turnaround and detailing Viacom’s evolution beyond its linear roots and into a global multiplatform company.

“Viacom produced another quarter of strong progress, with clear evidence that our turnaround is delivering results and that our evolution into a truly global, multiplatform, brand- and IP-driven entertainment company is well underway,” said Viacom President and Chief Executive Officer Bob Bakish.

Viacom’s core media networks business continues to increase share, Paramount Pictures is surging and profitable, domestic affiliate revenues are up sequentially, and new initiatives are helping to build ad sales strength. Even as these traditional business drivers stabilize, Viacom continues to transform itself by feeding booming digital consumption, growing its Advanced Marketing Solutions (AMS) portfolio, increasing its number of live events, and establishing a burgeoning cross-portfolio studio model that opens significant opportunities for third-party production.

A RESURGENT BUSINESS

Over the past several quarters, Viacom has revitalized four core elements of its business – Paramount Pictures, media networks’ audience share, ad sales, and its domestic affiliate business – while continuing to strengthen its balance sheet and improve its credit rating.

“This improvement in operating performance – combined with meaningful actions over the past 18 months to de-lever our balance sheet – have resulted in a stronger credit profile to help support Viacom’s return to long-term sustainable growth,” said Bakish. “We remain focused on building this momentum with an even stronger September quarter as we continue to position Viacom for the future.”

Here’s a look at how Viacom’s core business elements demonstrated a resurgence in the latest quarter:

Paramount Pictures continues profitability on theatrical hits, television production strength

Paramount’s new management team kicked off their slate with a pair of hits: A Quiet Place brought in $188 million domestically (and another $144 million internationally), on a $20 million budget, while Book Club, acquired for $10 million, raked in $68 million. After growing operating income for six consecutive quarters, Paramount Pictures reached profitability over the past two, with domestic revenue surging 58 percent year-over-year (YOY) in Q3. This trend is expected to continue during the fourth quarter on the strength of the well-reviewed Mission: Impossible – Fallout, which has earned more than $330 million globally – a record open for the franchise – since its July 27 debut.

The studio’s Paramount Television production arm continued to show strong growth, and is aiming for $400 million in revenues for fiscal 2018 behind licensing income from acclaimed series such as the second season of Netflix’s 13 Reasons Why and The Alienist, which earned six Emmy nominations.

With deepened and expanded distribution deals, affiliate revenue is headed back toward growth

As Viacom has renewed or closed major affiliate renewals, the company has often broadened the agreements’ scope to include advanced advertising and co-production elements. Viacom has also captured new distribution, returning in full to Charter and Suddenlink and establishing carriage on vMVPD bundles, such as AT&T Watch. Domestic affiliate revenue has improved sequentially throughout fiscal 2018, and Viacom anticipates growth of one percent in the fourth quarter.

Viacom’s flagship media networks continue to grow audience share behind ratings strength

For the fifth consecutive quarter, Viacom’s flagship brands achieved YOY share growth as a unit. MTV is the fastest-growing network in primetime among the top 50 cable and broadcast channels in its target demo of adults 18 to 34, and the network has recorded YOY primetime ratings gains for four consecutive quarters. Combined, VH1 and MTV own nine of the quarter’s top 10 unscripted cable series. BET (up 23 percent in live-plus same day ratings among adults 18 to 49), and Comedy Central (recording its largest YOY primetime quarterly ratings gain since 2014), also delivered strong quarters.

Viacom’s move into premium content with the Paramount Network also showed momentum, with Western drama Yellowstone compiling an average of approximately 4.4 million live-plus-three-day viewers, good for the year’s most-watched scripted cable series after The Walking Dead.

Advertising Sales are gaining momentum behind Viacom’s Advanced Marketing Solutions portfolio

Strengthened brands and Viacom’s AMS portfolio – which includes branded content, advanced advertising technologies, and experiential offerings – helped drive the company’s best Upfront pricing in five years. AMS revenue grew 33 percent for the quarter, driving projections of a $300 million haul for the year and a return to growth for ad sales in fiscal 2019. Fox is also licensing Viacom’s ad-targeting Vantage product, an additional incremental revenue stream that validates AMS’ sophistication and value.  

EVOLVING INTO A MULTI-PLATFORM, GLOBAL, BRAND- AND IP-DRIVEN ENTERTAINMENT COMPANY

As Viacom transforms elements of its core business, the company has also been evolving to thrive in a digital and mobile landscape. Here’s a closer look at the three key initiatives – expanding the digital footprint, establishing a broader studio production business, and growing live events and adjacent businesses – that are driving the company’s evolution:

Digital consumption explodes under the Viacom Digital Studios umbrella

Behind the fast-growing Viacom Digital Studios, Viacom tripled its total digital streams since Q3 2016 to approximately 7 billion in this quarter, while recording YOY jumps in video views and watch time of 112 and 104 percent, respectively. The acquisition of Gen Z-focused digital video producer Awesomeness should further drive Viacom’s momentum in this space.

Viacom is building a cross-portfolio studio production operation that is aiming to be a $1 billion global, episodic content production business by 2020

From its launch in 2013, Paramount Television grew into a $400 million business, and Viacom is now expanding this studio production model across its portfolio. With deep vaults of intellectual property to feed the insatiable global demand for content, Viacom’s brands are ideally situated to feed this pipeline: Nickelodeon has already forged a deal to produce two seasons of Pinky Malinky for Netflix, while MTV Studios will leverage assets like The Real World, Daria, Made and others from its enormous and largely untapped youth-focused IP library. More deals are on the way, and other Viacom brands will soon launch their own studio models. Meanwhile, the newly formed Viacom International Studios is already producing Spanish- and Portuguese-language shows for Netflix, Amazon, Telemundo, Fox and others.

Live events attendance is becoming a substantial business driver

Demonstrating the power of its brands to transcend screens and translate across a variety of experiences, Viacom drew millions of fans to 65 branded live events – including Comedy Central Clusterfest, the BET Experience and Viacom’s first Vidcon – in the first three quarters of fiscal 2018. At the cross-section of live events and digital platforms, Bellator inked a nine-figure, multi-year distribution deal with global sports streaming service DAZN that will double Bellator’s revenue and make the organization profitable. Live events helped Viacom drive ancillary domestic revenues up 31 percent YOY during the quarter, to $93 million.

Viacom will wrap up its fourth quarter and full fiscal year in September. To see what Viacom will debut in the months ahead, scroll through the timeline below, or click here to view the full-screen version.




Viacom Gets All Kinds of Awesomeness

by Stuart Winchester, Viacom

AwesomenessTV Holdings, LLC (aka Awesomeness), a media company and leading digital-first destination for original programming, has established an unparalleled connection to GenZ – that coveted up-and-coming cohort born along with the tech revolution of the mid-1990s. Fed by strong relationships with top digital talent and influencers, Awesomeness has accumulated 6.4 million YouTube subscribers and another 158 million subscribers on its Awesomeness Network, becoming the premiere digital media network for the most digitally savvy cohort in history.

And now Viacom is acquiring Awesomeness, which will live under Viacom Digital Studios (VDS) and play an important role in Viacom’s robust and growing premium content production ecosystem, drive additional growth at VDS, and strengthen Viacom’s established digital and social relationships and dominance in youth culture.

“Awesomeness has done an incredible job building their brand into a digital media powerhouse for today’s most sought-after and hard-to-reach youth audiences,” said Kelly Day, President of Viacom Digital Studios and former Chief Business Officer of Awesomeness. “The team brings strong digital expertise, deep connections with top talent and influencers, and a robust branded content studio and creative agency that will accelerate the growth and scale of Viacom Digital Studios.”

Andie is on a mission to shake her stigma with the help of her three best friends in “Foursome,” which airs on YouTube Premium. Starring Jenn McAllister, Rickey Thompson and more.

Viacom is already a top player in youth culture, having curated strong audience connections with kids via Nickelodeon and young adults via MTV. The addition of Awesomeness’ young teen fan base further strengthens this broad demographic reach, while Awesomeness’ strong existing relationships with digital platforms, talent and influencers complements VDS’ existing efforts to reach these GenZ consumers on the mobile, social and digital platforms they call home.

While VDS has been growing briskly – more than tripling digital streams since 2016 and doubling YouTube subscribers over the past year, as total social views and watch time soared by 112 and 104 percent, respectively – Awesomeness’ dedicated sales force, branded content studio, and existing relationships with brands such as Hollister, Gatorade and Invisalign will further drive VDS’ growth and profitability. Awesomeness’ expertise across digital programming and distribution, production, talent management and audience development will also help fill out VDS’ still-growing staff.

With distribution deals with major SVOD players and its own Emmy-winning, youth-focused studios that have produced 200 hours of long-form television and feature film content, Awesomeness’ proven content development and production abilities are an especially good fit for Viacom, which has moved deliberately to ramp up its capabilities in this area recently: consolidating several operations across the Americas into Viacom International Studios to service global markets; moving to a studio model under which Nickelodeon, MTV and other brands will license and produce shows based on intellectual property for third-party platforms; and building Paramount Pictures’ Paramount Television production arm from scratch into a $400-million-and-growing annual business.

During an all-night, lock-in graduation party, a group of new grads will do whatever it takes to make their remaining high school dreams come true in “All Night,” which airs on Hulu. Starring Jenn McAllister, Eva Gutowski, Teala Dunn, Jake Short, Brec Bassinger and more.

Awesomeness alumni have already been helping to power Viacom’s transformation in this increasingly digital and mobile age: VDS President Kelly Day, VDS Executive Vice President of Talent and Development Paula Kaplan, and Paramount Players President Brian Robbins – who co-founded Awesomeness in 2012 with Joe Davola – each joined Viacom directly from Awesomeness, a testament to that entity’s penchant for producing top-grade talent.

Global & Netherlands LGBT Research, Young Americans’ Political Empowerment, Kids in Their Own Words and More: Viacom Global Insights, July Edition

by Christian Kurz, Global Consumer Insights, Viacom

June was Pride Month – and to celebrate, we have stories on LGBT acceptance around the world as well as in the Netherlands. Other new insights include young Americans’ rising political empowerment, global kids in their own words, how age impacts social media behavior, and taking TV away from consumers to reveal its role in their lives. As always, on our blog you can find these and all our stories in English, Latin American Spanish and Brazilian Portuguese.

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Viacom to Launch Nickelodeon’s Preschool Video Subscription Service, NOGGIN, available on Amazon Prime Video Channels

Viacom will further accelerate its expansion on next-generation platforms by teaming up with Amazon to bring Nickelodeon’s NOGGIN to Amazon’s Prime Video Channels this May.

For $7.99 per month, young fans will be able to enjoy NOGGIN, an OTT product that provides curriculum-driven content to preschoolers, including: short-form videos; educational content; music videos featuring preschoolers’ favorite Nick characters; and over 1500 full-length library episodes of PAW Patrol, Dora the Explorer, Peppa Pig, Blue’s Clues, Max & Ruby, Go, Diego, Go! and Peter Rabbit, among others.

PAW Patrol episodes are featured on NOGGIN. Image courtesy of Nickelodeon.

“Our audiences continue to enjoy Viacom content in more places and with more flexibility than ever before,” said Tom Gorke, Executive Vice President, Head of Distribution and Business Development for Viacom.

“The availability of NOGGIN on Prime Video Channels will be a great new way for Nickelodeon fans to watch and interact with the best in preschool content on the popular Amazon platform.”

Along with the rapid growth of Viacom Digital Studios and recent acquisitions of influence marketer WHOSAY and online video conference mecca, VidCon, NOGGIN’s expansion on Prime Video Channels is another way that Viacom is strengthening its presence on key next-generation digital platforms.

Nickelodeon launched NOGGIN as a stand-alone app in February 2015, and the ad-free platform has since topped the charts of Apple and Google, ranking as one of the Top 10 Kids Apps on the App Store’s Free Apps chart, as well as being the no. 1 grossing app for Music and Video in the Family Category on Google Play.

Nick Animation Dazzles with Content Celebrating Women’s History Month

Viacom celebrated Women’s History Month with events and activations throughout the company, including a global cross-brand collaboration for International Women’s Day on March 8, and employee events (including an employee Art Exhibit) sponsored by HERE, Viacom’s resource group for women.

Women’s History Month is especially fascinating at a creative company like Viacom, as different brands and divisions offer bespoke contributions to honor women’s achievement.

Take, for example, Nickelodeon’s Culture & Digital Community team in Burbank, which collaborated with their in-house archives team to curate and create a selection of digital content for the Nick Animation social media pages to honor women in Nickelodeon cartoons throughout March. Selections of their work are highlighted below.

Charlotte Pickles by Alison Loccrichio | Nick Animation

This one, created by intern Alison Loccrichio, sketches a magnificent portrait of her “favorite boss” Charlotte Pickles (who was indeed a boss; I can’t recall a single episode of The Rugrats where she was not dressed in a power suit with a ‘90s-era cell phone permanently attached to her ear), as part of a Women’s History Month series, “featuring pioneering Nickelodeon animated characters”:

Yes, Charlotte Pickles was truly a pioneer.

Grey Griffin Voices Lola, Lana and Lily from the Loud House | Nick Animation

Here’s another, featuring Grey Griffin, the actor who gives voice to Lola, Lana and Lily on The Loud House. “There’s always room for talented people,” said Griffin. “Don’t let anyone discourage you by telling you what a ‘small world’ it is. I mean, it is a tight circle, but if you’re good enough, the circle will widen!”

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Viacom Gets Social with 47 Finalist Spots for 2018 Shorty Awards

by Stuart Winchester, Viacom

From iconic award shows to hilarious late-night programming, from fun kids’ polls to incisive cultural exposés, Viacom’s properties echo across the social media universe. The breadth of this digital-social footprint is on display in the 47 Viacom finalists for this year’s Shorty Awards, an annual celebration of the best in social media.

MTV, which has been surging behind a reinvigorated programming lineup, earned 13 nods, including one with Viacom’s Velocity in-house branded content agency and two with influence marketing shop WHOSAY, one of the company’s newest additions. WHOSAY is a finalist in four additional categories, while Velocity is competing in 10 more, including three nominations for its long-form Culture of Proximity documentary.

Paramount Network, Viacom’s newest U.S. channel, debuted strong with a pair of nominations, while Nickelodeon (five nominations), TV Land (three), and Comedy Central (two) also appear in multiple categories. Viacom’s International Media Networks check in with three nominations for their work around the MTV EMAs, while Paramount Pictures, VH1, and Spike (which Paramount Network replaced in the U.S.) each earned one. Viacom itself earned two nominations for the debut of its Hype & Influence series, a video exploring America’s relationship with hip-hop and black culture.

A full list of Viacom’s finalists is below, along with links to details about each nomination and a selection of work.

MTV

Brand Identity – TRL (MTV)

Twitter Presence – TRL (MTV)

Integration with Live Television – TRL (MTV)

Snapchat – 2017 VMA Snapchat Coverage (MTV)

Instagram Partnership – VMA Nominee Announcement on Instagram Live (MTV)

Chatbots – VMA Best New Artist Voting Chatbot (MTV)

Snapchat Discover Story – Girl Code Snapchat Series (MTV)

Snapchat Discover Story – MTV Cribs Snapchat Series (MTV)

360 Video – Fifth Harmony: Road To The VMAs in 360° (MTV)

Live Event Coverage – 2017 MTV Video Music Awards (MTV)

Augmented Reality – AR MTV Moon Person (Viacom Velocity, MTV)

Brand Identity – 2017 MTV Video Music Awards: Pushing The Limits with Josh Peck (WHOSAY, MTV)

Video Pre-Roll – 2017 MTV Movie & TV Awards: Getting Ready With Me (WHOSAY, MTV)

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217 Years to Women’s Equality? Not on Viacom’s Watch

The World Economic Forum is concerned that, if nothing changes, full global gender parity is likely 217 years away.

Viacom thinks that we should start closing that gap today.

Today, March 8, is a good day for it: it’s International Women’s Day (IWD), an annual celebration of change-makers fighting for gender equality. Viacom, along with other media companies, nonprofit organizations, charities, politicians, entrepreneurs and activists around the globe, will celebrate women in a tradition dating back to the suffrage movements of the early 20th century.

Today, Viacom brands, talent and executives will spread a message of equality and social activism through the company’s global platforms, through a series of fan and employee events, and through support for larger movements lending a megaphone to women’s collective voice.

Here’s the breakdown on how Viacom will promote International Women’s Day:

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Viacom’s #SeeHer PSAs Portray Positive Female Role Models In Media

On Feb. 1, Viacom launched the first in a year-long series of PSAs across MTV, VH1, Comedy Central, Paramount Network, CMT, TV Land and Nickelodeon. These vignettes feature inspiring, diverse women role models, both real and fictional.

Take a look at the first vignette, a feature film trailer highlighting a female engineer using her technological dexterity to prevent a world crisis. The vignette ends with that young girl sitting in science class, daydreaming about these future heroics.

“Portraying a strong female character isn’t rocket science,” announces the narrator.

This spot is part of the Association of National Advertisers’ ongoing #SeeHer initiative, of which Viacom is a leading partner. The goal is to accurately portray women and girls in media and advertising by 2020 (100 years after women’s suffrage passed in the United States).

Using the tagline “If you see her, you can be her,” the #SeeHer movement employs two of the world’s most pervasive industries – advertising and media – to illustrate the extraordinary things that women are doing every day.

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“2018 Is About Reinvention” – CEO Bob Bakish on Viacom’s Growth Initiatives

by Stuart Winchester, Viacom

Viacom CEO Bob Bakish sat down with Morgan Stanley media analyst Ben Swinburne at the Morgan Stanley Technology, Media & Telecom Conference last week. On a San Francisco stage in front of hundreds of members of the investment community, Bakish outlined how various growth initiatives in the international, mobile, direct-to-consumer, short-form video and live event spaces will complement Viacom’s existing business lines.

“So, if you think of 2017 really as a period of stabilization, revitalization in the company, as we look forward and we’re already hard at work at this and putting points on the board, 2018 is really more about reinvention and driving the company forward as a growth company in the future,” Bakish said.

Here are a few highlights from Bakish’s talk with Swinburne. Listen to the full conversation here. 

Viacom’s future is mobile

“And then the thing that’s really exciting really longer term, but not much longer term is the mobile space, and that’s the incremental category that will invert the whole argument. In the last quarter, we did a first of its kind deal with Telefónica in Latin America where we licensed all of our flagship brands that are in Latin America to their Movistar Play, the first-of-its-kind deal for them too, so that those services will be available to all their mobile television subscribers. … We’re also in a very interesting conversation in the U.S. right now about bringing our brands to mobile and I believe that will happen in fiscal 2018 as well. And if you can think about all the time spent on mobile and all those devices out there, I think you quickly realize what a powerful growth engine that will be for our business.”

Viacom’s content library is coming directly to consumers

“… later in the year, you’ll hear about the products we’re going to launch that leverages those assets … which we’re going to implement on direct-to-consumer basis in a differentiated way that we believe leverages not only our library assets, but also our ad sales capabilities and its complementary to what we’re doing in MVPD [Multichannel Video Program Distributors] space.”

Viacom’s growth initiatives could generate hundreds of millions of dollars in near-term value

“… we’re actively growing our participation in … the digital-native side, the Consumer Products side and the live events side, think of those as three different tracks, all complementary to the brand and to our financials. We think that is hundreds of millions of dollars of near-term value.”

Every flagship brand will have a live U.S. event

“Again, the events space in this fiscal year, every flagship brand [Nickelodeon, Nick Jr., MTV, BET, Comedy Central, Paramount Network], will have an events in the U.S. That is something that was not true before. So, that’s Nickelodeon, that’s Comedy Central … So, that’s an important incremental activity and one that consumers and advertisers and for that matter, talent, like.”

Viacom’s relationship with distributors continues to improve

“We’ve got this Advanced Ad product we can bring to the table to increase the value of some of your local avails, and we really did turn a new page,” Bakish said of settling on a deal to return Viacom to Altice. “So, we’re sitting here today in a much better place vis-à-vis distribution. We don’t have any large near-term – any large MVPD deal up in fiscal 2018. And by the way, we’ve been improving our product. … I think people are starting to understand that it’s differentiated and that it is valuable. … And you put those things together both in the U.S. and certainly globally, that will be a growth platform.”

International continues to grow rapidly

“[Viacom International Media Networks] is a business that in the last quarter grew ad sales, affiliate sales, ancillary sales, double-digits. It’s a business that grew the bottom line strong double-digits. And it’s not weighted to any one particular thing, it’s driven by our, let’s call it global or in this case ex-U.S. portfolio of brands, MTV, Comedy Central, Nickelodeon, Paramount Network and it’s driven by our local cornerstones, which include Channel 5 in the UK, which is an acquisition we did a couple of years ago, which transformed our business there. … That includes our other local cornerstone which we acquired. Last thing I did in International, Telefe, which is the number one broadcaster in Argentina, which is a story in its own way, which maybe we will come back to, but that’s an incredible asset and really makes us – positions us to be a major player in Spanish language content which we have not historically been, but we are quickly becoming. And so, the combination of those global brands and the local cornerstones is what’s driving the growth.”

Kids’ Fluid Approach to Life, Italian Youth + Politics, Viewers’ Love for TV and More: International Insights Digest, March Edition

by Christian Kurz, Global Consumer Insights, Viacom

Viacom’s latest consumer insights include global kids’ fluid approach to life, youth and politics in Italy, viewers’ love for TV, teens speaking out against injustice, and the decline of casual sex. As always, on our blog you can find these and all our stories in English, Latin American Spanish and Brazilian Portuguese.

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