Viacom President and CEO Bob Bakish appeared on CNBC’s Squawk on the Street yesterday, joining co-host David Faber from backstage at the Goldman Sachs Communacopia conference.
“Viacom is a story of turnaround and evolution,” Bakish said, before detailing the company’s progress ramping up its studio production business, expanding its digital presence, improving affiliate relationships and revenue, and adapting Viacom to an increasingly digital landscape.
“My job is to move Viacom forward, turn it around, evolve it, make sure it’s a vibrant company for the future to benefit our shareholders, our employees and all our partners, that’s job one, that’s what we’re doing,” Bakish said.
Here are a few highlights of the conversation:
“Viacom is a story of turnaround and evolution”
“Viacom is a story of turnaround and evolution. And on the turnaround side, we’ve had a lot of progress on distribution, and on the evolution side – which is really where this fits – we’ve announced recently that we’re ramping up our studio production, including on our flagship brands, on MTV and Comedy Central and Nickelodeon, and that’s about getting those brands represented in third-party platforms, so that consumers who might not have a full bundle still has access to these brands, still think of them in their entertainment experience, and by the way, could be promotion to bring people into a bigger bundle.”
Viacom is increasingly Over The Top
“[Philo – which includes Viacom – is] a low price point, entertainment skinny bundle delivered via OTT. … AT&T Watch is essentially that too. There’s no broadcast, there’s no sports in there. It’s all entertainment product. It’s a limited selection, so we think there’s more to come, and in fact in every MVPD cable renewal or extension deal we’ve done in the last year and a half, it includes provision that we’ll be added to any OTT or skinny bundles that they have, so it’s more product to come.”
Delivering an evolution
“From the beginning, back to November of ’16, my focus has, was and continues to be running this company, moving it forward, delivering a turnaround, delivering an evolution. And on the turnaround we’ve got proof points on U.S. distribution, where, by the way, we have sequentially improved our distribution revenue every quarter this fiscal year. We’ll have growth in the fourth quarter, the quarter we’re in right now, and we’ll have growth in 2019. We’ve improved our audience shares. We’ve tremendously turned around Paramount.”
The financial picture improves across Viacom
“We’re focused on putting points on the board. We are. Coming out of the third quarter, I think we started to get some recognition on that. Coming out of our fourth quarter, when we deliver not only sequential improvement in domestic affiliate, but growth in domestic affiliate, I think we’ll get some respect for that. When we talk about the numbers that Paramount’s delivering, I think we’ll get some respect for that. And you don’t know what the catalyst to turn [the stock price is], but we have had a real change in sentiment.”
Viacom evolves into a multi-platform global entertainment company
“The fundamental thing we need to do is shift the narrative. People look at us, and they say, ‘yeah, yeah, yeah, you’re a domestic pay TV company,’ and the reality is, that’s wrong. We’re a multi-platform global entertainment company. And that’s why this evolution point, building these new revenue streams, whether it’s studio production, our Advanced Marketing Solutions business, our advanced ad business, which, the strategy is to use that to more than offset any decline on call it the traditional side, that business is growing over thirty percent. You’ll see that business grow, on a percentage basis, accelerate in ’19.”
Earlier in the morning, Bakish also appeared onstage at Communacopia. You can listen to his full question-and-answer session here.
LAS VEGAS, NV – APRIL 25: Jim Gianopulos speaks onstage during the 2018 CinemaCon – Paramount Pictures special summer presentation held at The Colosseum at Caesars Palace on April 25, 2018 in Las Vegas, Nevada. (Photo by Michael Tran/FilmMagic)
Paramount Pictures Chairman and CEO Jim Gianopulos appeared last week at the Bank of America Merrill Lynch 2018 Media, Communications & Entertainment Conference in Los Angeles. In a wide-ranging question-and-answer session, he elaborated on the multiple levers the studio’s new management team has activated to drive Paramount’s renaissance: tightening synergies with Viacom’s media networks, strengthening relationships with popular streaming services, building out Paramount Television, building up the consumer products business, and more deliberately monetizing the studio’s deep library. And it doesn’t hurt that Paramount is churning out great movies.
The excerpts below portray a studio in the midst of an awesome transformation. Listen to the full interview here.
Paramount is in a renaissance
“About the culture, I think people do feel that Paramount is in a renaissance and they are part of it and they feel engaged in that. We’ve also extended deals that were expiring – new five-year exclusive deal with Hasbro, which brought us across the Transformers properties, but also has properties like Dungeons & Dragons and Micronauts and many other very popular properties and IP that they are very deeply engaged in producing. We extended our deal with J.J. Abrams, who is arguably one of the most talented people in the movie business and the television business, and also extended a new deal with David Ellison to provide some of our biggest tent-poles like Mission: Impossible and now Top Gun and others, and as well as Terminator, a franchise that he owns. So, you add to that Jerry Bruckheimer and others, so I feel really confident that the team that we have on the executive side and the team that we have on the creative and production side externally that we have ongoing relationships with Leo DiCaprio, Martin Scorsese and others will enable us to continue putting together a great slate.”
Making movies for someone or for everyone
“And I think you’ve heard me say and it’s now a longstanding tradition even when we had at Fox, which is make it for someone or make it for everyone. And that in itself is a principle that has guided us so that even recently where we had films like A Quiet Place, which was a very modestly budgeted, originally a thriller horror movie that broke out and did $340 million and a little movie like Book Club, which was – had a very distinct audience of older women. We bought it for $10 million and it made $70 million. And then, of course, the movie for everyone, which is Mission: Impossible that has now surpassed all the prior films and continues to head toward $775 million or more million dollars worldwide. So, the current slate, we’re very confident in.”
Uniting across Viacom
“…[Viacom CEO] Bob Bakish and [Non-Executive Vice Chair of the Viacom Board of Directors] Shari [Redstone] have been very focused on uniting those elements of the company across all of Viacom. … So, we have films like Nobody’s Fool, which is a Tiffany Haddish movie that’s in concert with BET. Similarly, a film called What Men Want, which is a play on the original What Women Want, one of our films, which will be done again with, with BET. Dora the Explorer live movie, which we’re doing with Nickelodeon, as well as an animated movie we’re doing with them. So we’re harnessing all the value and potential and capabilities of the Viacom labels to drive – both to define our slate in the branded area and also to promote our big tent-pole films as well. What they did, for example, on Mission: Impossible was a massive global campaign putting all the resources of the Viacom brands, and particularly internationally MTV, which is very well-situated, as is all of Viacom and there are 3.8 billion homes.”
“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-reviewedMission: 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.
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.
On Tuesday, Viacom President and CEO Bob Bakish sat down with Activision Blizzard Studios Co-President Stacey Sher for a panel moderated by Fortune’s Andrew Nusca at the Fortune Brainstorm Tech Conference in Aspen, Colorado. The topic was “the future of entertainment,” and Bakish delivered a broad overview of how Viacom not only fit into that future, but was actively shaping it with a focused strategy, an invigorated leadership team, and a series of initiatives to broaden and modernize its business.
Here are a few highlights from Bakish’s remarks, emphasizing how Viacom is repositioning itself to thrive as an independent company within a rapidly changing and consolidating industry. You can watch the full remarks below.
Step 1: have a plan
“I was given the opportunity to run Viacom roughly a year and a half ago. I’m a big believer in you have to have a plan. … We rolled out a plan. Plan had number of elements to it, probably central to it, which will relate to our conversation, was this notion of flagship brands. That had to do with prioritization and true multi-platform expression. … The other thing was you need to have a killer management team. It’s another place where the company hadn’t changed much. Made significant changes on the network side of the business, really completely overhauled the Paramount team from the top down, and then we got to work executing. If you look at what’s happened in the quarters since, I describe Viacom as not a light switch, but a story of incremental progress against a destination.”
Step 2: execute
“If you look at our U.S. networks and audience share, you’ll see that we’ve consistently grown audience share. You look at a brand like MTV, which had a ratings decline in the ten percent for five years running. Now, five quarters in, we’ve consistently grown ratings every quarter. That’s a function of a different strategy and a different team and focusing on execution.”
As competition grows, Viacom benefits by building upon its content production expertise – and profiting off this competition by producing their content
Again, with what we call the tech companies coming in, do you have some incremental competition? Yes, you do. But at the same time you have a series of demand that needs to be filmed. Take Paramount Television, which is the television production side of Paramount. It didn’t exist four years ago. Today, or this fiscal year, it’ll do $400 million of revenue and it’s producing hits. It’s producing hits like 13 Reasons Why for Netflix, like The Alienist for the Turner networks, like the upcoming Jack Ryan series for Amazon, which will drop at the end of August. There’s fantastic opportunity to feed that ecosystem. At the same time, we look at our IP that we’re developing in house and we do think about, “Is this better as a linear network show on an owned and operated network, i.e., I don’t know, Nickelodeon, or is it better as a studio production, branded studio production for a third-party platform?”
Continue to drive growth through great content – both with new ideas and iconic IP
… we are mining franchises. Part of it is, sure, we’re creating new product that didn’t exist before. If you look at Paramount as an example, you have a film like A Quiet Place. Different idea, great characters in it, great storytelling, great execution, including focusing on how much it cost to make, and a great result. You also have a film like Mission: Impossible, which premiered in Paris last week, will open in the U.S. in two weeks. It is really an extraordinary film. … Yesterday, we announced that we’re taking the Rugrats franchise. It’s probably a franchise most of you have heard about. Nickelodeon franchise. We’re bringing that back in a new iteration, both for feature film and for episodic video, i.e. television, and we’ll do a whole bunch of digital native stuff. It no doubt will show up in our experiential space as it comes to life. It’s really mining those opportunities, pursuing some different business models, but making sure consumers have access and using that combination to ultimately drive growth, which is at the end of the day what I’m focused on, which is making Viacom once again grow.
Embrace technology to drive growth
At the same time, we’re using an extraordinary amount of technology in the, I’ll call it, monetization space. For example, when you look at advertising sales or what we’ve historically called advertising sales, Viacom is at the forefront of data-driven advertising in television. … Starting a year and a half ago, in every affiliate renewal we did, and we’ve renewed or extended well over half the sub-base in the U.S. by now, we incorporated the provision for dynamic ad insertion. We’re now able to insert dynamically in 90 percent of [video-on-demand] homes in the U.S. and in the two largest cable operators in the U.S. in a portion of the national avails.
Operate at (the appropriate) scale
[In answer to a question from Fortune’s Adam Lashinksky: The conventional wisdom is that Netflix, Apple, Amazon, are spending billions and billions of dollars, and therefore you and others your size can’t compete. Do you think that conventional wisdom is wrong? If so, why or how?]: “Yeah, I think it is wrong. The reason I’ll say that is it’s overly simplistic. Because if you think of scale, which is at the root of a lot of these arguments, there’s plenty of examples of scale where there’s actually no value to the combination. We see that today in some assets that own both media assets and distribution, but there isn’t really a lot of crossover. Look, I’d say is there scale or is there relevant scale. The other thing is, and I learned this because I ran our business outside the U.S. for 10 years … Those are places where we had a one percent share, so we didn’t have scale. We had to figure out how could we act like we had more scale? Those were doing things like partnering and creating ad sales, houses, and the like. That’s creating virtual scale. In a world where, yes, people are spending extraordinary amounts of money … By the way, we spent about five billion dollars on content, so we’re not exactly irrelevant in that regard, and we have relationships with leading creatives in front of the screen, behind the screen, in feature film, in episodic television, and, yes, in digital native. … I think there is an opportunity to be more nimble in this regard and not be vertically integrate and, frankly, serve a lot of different demand.
In an unpredictable, changing landscape, the only thing you can do is execute
[Answering the moderator’s question of whether Viacom would be independent a year from now]: “Who knows what the future will bring? My guess is, yes, we will be independent a year from now. We’re certainly executing in that regard. We definitely have the full support of our board. We’re talking about a number of interesting ideas, both organic and inorganic, but we’ll just have to see how the whole ecosystem plays out.”
More than 2 million fans dialed up the CMT Awards earlier this month, watching across three Viacom networks (CMT, Paramount Network and TV Land), as Blake Shelton took Video of the Year and Male Video of the Year for I’ll Name the Dogs, and Carrie Underwood carried Female Video of the Year for The Champion, featuring Ludacris. Little Big Town hosted. Dan + Shay scored an upset Duo Video of the Year win for Tequila. Luke Bryan, Dierks Bentley and Florida Georgia Line debuted energetic new singles. Even the Backstreet Boys picked up an award.
And don’t forget about the Royal Family spoof:
CMT Music Awards
But for some fans, that parade of star power across their screens just isn’t enough. For the second consecutive year, thousands of the most dedicated descended upon Nashville for the CMT Summer of Music Festival, which this year sprawled across three days and five events and drew an estimated 25,000 fans.
“Last year, we evolved the CMT Music Awards from a one-night-only-TV event into a multi-day festival spread across the city,” CMT General Manager Frank Tanki told Billboard. “It was a huge success with fans and advertiser partners alike, allowing everyone involved to experience CMT is an entirely new and powerful way.”
This multiday meeting of high-powered sponsors (Ram Trucks, Boston Beer, Kind Bar, Pedigree pet food), with rollicking events (a puppy festival, an emerging-artists concert, a taping of Crossroads, a block party), injects a multidimensional element into CMT’s marquee event.
Fans in Nashville for the awards would usually just “end up at the honky tonks on lower Broadway,” CMT Senior Vice President of Partnerships Adam Steingart told Variety. “But there’s so much more to provide to them that enhances the overall experience.”
NASHVILLE, TN – JUNE 06: Little Big Town performs onstage at the 2018 CMT Music Awards at Bridgestone Arena on June 6, 2018 in Nashville, Tennessee. (Photo by Jason Kempin/Getty Images for CMT)
This broadening of an annual awards show into an immersive fan adventure is a strategy long used by CMT’s fellow Viacom network BET, which hosts the four-day BET Experience (which is ongoing now through June 24 in Los Angeles), leading up to its annual BET Awards (this Sunday, June 24). This increasing focus on live events is in fact proliferating across Viacom, as the company increasingly diversifies outside of its core business under President and CEO Bob Bakish.
“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.,” Bakish told a gathering of investors at the Morgan Stanley Technology, Media & Telecom Conference in March. “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 rapidly growing international division has united two Latin American content powerhouses with its Viacom International Studios (VIS) production unit, transforming the studio into a global content machine with development, production and distribution capabilities. A number of SVOD, pay TV and free-to-air distribution deals will accompany the expansion, which complements and bolsters Viacom’s burgeoning premium content business.
The combination folds the production capabilities of wholly Viacom-owned Argentinian giant Telefe and majority-owned Brazilian comedy brand Porta dos Fundos under the same umbrella as the Miami-based studios that churn out Latin American content for Nickelodeon, MTV, Comedy Central and other Viacom brands.
“Since combining our production and sales forces last year after the acquisitions of Telefe and Porta dos Fundos, our focus has been on creating the highest-quality Spanish- and Portuguese-language content and expanding our distribution beyond Latin America, making the new Viacom International Studios a true global player in Latin American original content,” said VIMN Americas President Pierluigi Gazzolo. “With more than a decade of producing original, hit content for the Viacom brands, and expertise and content delivered through our acquisition of Telefe and investment in Porta dos Fundos, we are growing the reach of our product and client base with SVOD players, MVPDs and broadcast partners around the world. These partnerships are testament to the power of our brands and strength of our original productions.”
Viacom International Studios held a preview of upcoming content for new clients in May, shortly after Viacom announced the formation of the upgraded entity.
The reformulated VIS will inject global scale into many formerly regional properties, unlocking potential for high-quality content to reach a far larger audience. Fox Networks Latin America, for example, will distribute Telefe’s thriller movie Animal (from Oscar-winning screenwriter Armando Bo), on digital and linear platforms across the region, while Netflix will air the Comedy Central-Porta dos Fundos co-produced Borges in Latin America. Nickelodeon and Italy’s Rainbow Group will co-produce the 60-episode Club 57 time-travel epic, with VIS handling global distribution and Rainbow Group retaining rights in their home country.
“But those local cornerstones are not only about our strength in those particular markets, but they’re also content engines more broadly, and one of the things you’re going to see that you haven’t really seen yet is our Telefe asset becoming a major producer of novela product for the world,” he said. “We’re going to be distributing about 700 hours globally, that’s not something that Telefe used to do. It’s something I’m very excited about.”
This ramping up of Spanish- and Portuguese-language content production with studios in Miami, Buenos Aires and Rio de Janeiro will act as a powerful international complement to Viacom’s burgeoning premium content capabilities under Paramount Pictures’ Paramount Television production studio. Behind hits such as USA Network’s Shooter, Netflix’s 13 Reasons Why, and TNT’s The Alienist, Paramount Television has grown from nothing just a few years ago into a sought-after production hub with anticipated revenues of $400 million in 2018 alone.
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
“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.”
Laugh with Majah Hype, wake up with Nikki Glaser, cook with Snooki, get animated with JoJo – and do it all on your phone.
Viacom Digital Studios (VDS) is here, poised to deliver hundreds of hours of premium digital content that will transport digital native stars from BET, Comedy Central, MTV and Nickelodeon to the social and mobile platforms where their fans live.
This was the headline of Viacom’s spectacular first NewFront event earlier this week at Manhattan’s Chelsea Piers, where the company marched confidently into the digital realm by detailing dozens of new short-form properties to feed its massive online social footprint of more than 850 million fans, elaborating on new content deals with Snap and Twitter, and announcing an expansion of its recently acquired VidCon conference to London this February.
“The launch of Viacom Digital Studios is an amazing opportunity to reimagine our iconic brands for a new generation of young, mobile-first audiences,” said VDS President Kelly Day. “We’re bringing the power and scale of Viacom’s global content engine and storytelling capabilities to entertain and engage our fans whenever and wherever they’re consuming content.”
VDS has been steadily ramping up since Day joined Viacom late last year, jolting year-over-year social video views and minutes viewed in the U.S. upward by 70 (to 4.3 billion) and 78 percent (to 4.7 billion), respectively.
The digital studio is a lynchpin of Viacom CEO Bob Bakish’s revitalization plan, as the company moves deliberately to expand its core television business onto next-generation platforms.
One of the most shocked-into-silence moments for the audience at Paramount Pictures’ CinemaCon presentation came when Tom Cruise, hero of five previously released Mission: Impossible films, recapped the intensity and challenge of conducting a freefall stunt for the franchise’s forthcoming sixth installment.
“Each take is like running an 800-meter sprint,” Cruise said. “We did 106 takes.”
This blunt understatement captures just one extraordinary moment in one forthcoming film from Paramount, the resurgent studio that over the course of that two-hour presentation unveiled or confirmed new installments to its cherished franchises, sequels to some of its most popular films from new and antique vintage, an aggressive Viacom co-branded slate through its Paramount Players division, a trio of animated adventures, and new films based upon a longstanding and expanded partnership with Hasbro.
“We’re laying the foundation…to deliver to you films for every possible audience for years to come,” Paramount Pictures Chairman and CEO Jim Gianopulos, who has spent the past year building a new management team for the studio, told the audience.
As we zoom (buckled up) toward the July 27 release of Mission: Impossible – Fallout, Paramount confirmed that many of its other most beloved franchises will soon get a new installment. Arnold Schwarzenegger and Linda Hamilton will return in a new Terminator movie next November. And Transformers, which has delivered five more or less contiguous sequels, will, as previously announced, dogleg off into Bumblebee, which hits theaters this Dec. 21.
Director Travis Knight showed off the first Bumblebee clip at the event, telling the audience, “I wanted to return to the essences of what made the Transformer franchise so impactful right from the beginning: character, emotion, spectacle and explosions, lots and lots of explosions.”
Many other films will get their first sequel, including the recently released hit A Quiet Place,2013’s World War Z, 1988’s Coming to America (look for Coming 2 America), and, as previously confirmed, 1986’s Top Gun, which also stars original Maverick Cruise.
And before he drops a fourth Cloverfield movie on us at some as-yet-to-be-announced future point, J.J. Abrams’ Overlord will transport moviegoers into a bizarro version of behind-enemy-lines World War II on Oct. 26.
Beyond the realm of the sequel, the studio will drop fans into the labrynthian world of Dungeons and Dragons and the sci-fi realm of Micronauts, both through the studio’s partnership with Hasbro (the same partnership behind Paramount’s Transformers and G.I. Joe movies).
Other standalone projects will pit assassin Will Smith against a younger cloned version of himself in Gemini Man, and cast Mark Wahlberg and Rose Byrne as the overwhelmed adoptive parents of three in Instant Family.
Tapping Viacom’s deep content well to co-produce Paramount films has been a priority under CEO Bob Bakish, and the studio confirmed that one of Nickelodeon’s most resiliently popular characters, SpongeBob SquarePants, will return for his third big-screen adaptation, It’s A Wonderful Sponge, in 2020. The film will be one of three newly announced releases on the animation division’s slate, joining Luck – which exposes the millennia-old battle between organizations of good and bad luck – and Monster on the Hill, set in an alternative world of wrestling monsters. Additionally, the previously announced Wonder Park will debut next March.
Other top Viacom brands are joining Nickelodeon in collaborating with Paramount, through the Paramount Players division led by Brian Robbins and formed to further integrate the brands with the movie studio. In association with MTV, Eli, the story of a boy being treated for a rare disease in a clinic-cum-haunted-prison, will roll out in January 2019. BET will reconstitute the 2000 hit What Women Want with What Men Want, portraying a frustrated female sports agent who gains the power of mind-reading. Paramount Players is also working on Nickelodeon’s live-action Dora the Explorer and Are You Afraid of the Dark, both slated for 2019 release.
Viacom posted strong second quarter 2018 earnings this morning, outperforming projections with significant gains in both adjusted operating income and adjusted earnings per share as the company accelerates its pivot from stabilization and revitalization to growth.
Double-digit gains across all international Media Networks revenue streams, Paramount Pictures’ return to profitability, ratings increases at key flagship networks, significant benefits from cost savings, further diversification into live events and other adjacent businesses, and an increased focus on next-generation platforms and solutions all set Viacom on a trajectory toward a full fiscal year of growth.
“Viacom continued to accelerate progress against its strategic priorities, delivering improvements across key metrics in the quarter,” said Viacom President and CEO Bob Bakish. “Our flagship brands increased audience share among important demos for the fourth consecutive quarter, and we saw sequential improvements in domestic advertising and affiliate revenue performance. Internationally, Viacom continued its winning streak, achieving double-digit revenue and profit gains in the quarter while expanding its global footprint through new channel launches and innovative mobile distribution deals across Europe and Asia. Our cost transformation initiatives are well under way; we anticipate more than $100 million in cost savings in fiscal 2018, and now expect over $300 million in run-rate savings in fiscal 2019 and beyond.
“At Paramount Pictures, turnaround efforts have firmly taken hold as the studio improved margins and returned to profitability. This month’s outstanding box-office performance of A Quiet Place, the first film produced and released under the new team at Paramount, is a clear sign of our progress.
“Viacom also took strides to advance its participation into next generation platforms and solutions. We continued to benefit from growth in the vMVPD space, delivered revenue gains in Advanced Marketing Solutions, and significantly increased original content production through Viacom Digital Studios to drive off-linear consumption. Additionally, we continue to diversify into adjacent businesses by building on our live events strategy with upcoming tentpoles including Comedy Central’s Clusterfest, the BET Experience, Nickelodeon’s U.S. debut of SlimeFest and our first-ever VidCon.”
Viacom’s core business continues to strengthen
Improved performance throughout Viacom’s core business – domestic and international Media Networks and Paramount Pictures – allowed the company to meet or beat guidance on key metrics year-over-year for the quarter, producing five percent adjusted operating income growth and a 16 percent jump in adjusted earnings per share.
Domestically, both advertising and affiliate revenues increased. Viacom’s flagship brands (Nickelodeon, Nick Jr., MTV, BET, Comedy Central, Paramount Network), grew audience share year-over-year for the fourth consecutive quarter, while the company continued to hold the top share of basic cable viewing in key demos, including adults 18-34, African-Americans, and kids 2-11. BET grew year-over-year ratings and share by double digits for the third consecutive quarter, while VH1, CMT and TV Land notched year-over-year growth in audience share and ratings. MTV’s programming resurgence continued, with a third straight quarter of year-over-year primetime ratings growth led by Jersey Shore: Family Vacation, which, with 10 million viewers on its opening weekend, was the biggest unscripted cable premiere since 2012.
Viacom International Media Networks is on pace for another record year after posting double-digit increases in profitability, as well as across all revenue streams.
Paramount Pictures returns to profitability
After notching a $75 million year-over-year improvement in adjusted operating income under its new management team, Paramount Pictures raised the curtain on the third quarter with the release of smash hit A Quiet Place. The film rode overwhelmingly positive critical response and deft marketing to the studio’s best opening since 2016 and the second biggest domestic opening so far this year, earning more than $200 million in its first three weeks alone on just a $20 million production budget. Additionally, the studio’s Paramount Television production business anticipates $400 million in revenues this year. Behind these and other catalysts, Paramount expects meaningful improvement to its full-year adjusted operating income for the full fiscal 2018.
Viacom is aggressively increasing its digital output on next-generation platforms
Anchored by 850 million social media followers, the newly formed Viacom Digital Studios is poised to create more than 600 hours of short-form original content this year. This quarter alone, social video views shot up 70 percent (to 4.3 billion), and domestic minutes viewed increased by 78 percent (to 4.7 billion minutes) year-over-year.
The addition of Nickelodeon’s Noggin app to Amazon and a renewed agreement that adds more Viacom content to Snap’s programming slate, in addition to recent and forthcoming mobile deals, will continue to expand the reach of Viacom’s increasing volume of on-the-go-content.
Growing ad revenue through Advanced Marketing Solutions
Viacom today detailed how its Advanced Marketing Solutions (AMS) portfolio would provide even greater opportunity to take advantage of new advertising platforms. The company also broke AMS – which increased its revenue 29 percent in the quarter – into two basic categories:
Advanced addressable video inventory contains advertising units that Viacom can target to consumers, either through its brands’ apps, or by using set-top-box data from its advanced advertising partners, including Comcast, Charter and Altice USA.
Brand solutions is a bundle of consulting, creative services and associated activations that includes social campaigns led by influence marketers WHOSAY, creative integrations with in-house integrated marketing and creative solutions team Viacom Velocity, and experiences at retail stores or Viacom’s growing portfolio of live events.
Viacom live events and consumer products lines continue to grow