“This Continues to Be an Extremely Undervalued Company” – Six Highlights from Bob Bakish’s UBS Global Media & Communications Q&A

by Stuart Winchester, Viacom

Viacom CEO Bob Bakish attends the Ribbon Cutting for the new Viacom Building on January 26, 2017 in Los Angeles, California. (Photo by Todd Williamson/Getty Images)

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.

Viacom Reports Fourth Quarter and Full-Year 2017 Growth as Strategic Plan Advances

by Stuart Winchester, Viacom

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:

Viacom International Media Networks’ ratings also grew four percent, riding the strength of Paramount Channel, Comedy Central, Nickelodeon, Telefe and Channel 5.

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.

Flip Through This Interactive Deck to See How Each Viacom Brand Killed It in Q1 2017

by Stuart Winchester, Viacom

As we report our Q1 2017 earnings today, it’s fair to say that Viacom brands are killing it.

Behind smash hits such as Henry Danger, the Thundermans and The Loud House, Nickelodeon has spent 79 consecutive weeks at the top spot in its core demo.

South Parksharp and loud as ever in its 20th season, led all of TV in its time slot among male viewers, while Trevor Noah racked up his most-watched quarter since he joined The Daily Show behind his biting coverage of the presidential election and beyond.

BET’s Hip Hop Awards and Soul Train Awards were the top two cable award shows for the quarter.

We could go on, but it’s probably more fun for you to flip through the deck below to see what’s happening with all of our brands, from newly acquired Argentinian giant Telefe to Paramount Pictures to a surging MTV. We’ve also included clips from some of the upcoming projects we’re most excited about. For more business results, visit our Investor Relations page on viacom.com.