Viacom Posts Strong Second Quarter 2018 Earnings, Revitalization Accelerates

by Stuart Winchester, Viacom

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 (NickelodeonNick Jr.MTVBETComedy CentralParamount 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:

  1. 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.
  2. 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

Viacom continues to reinforce its brands and drive revenue through live events, recreation, consumer products and other business lines. This quarter marked a nearly 100 percent increase in live-event attendance over 2017, and there are plenty more events in the pipeline, including Comedy Central’s Clusterfest, the BET Experience, Nickelodeon SlimeFest, and the first VidCon since the online video conference joined Viacom – all of which should serve to double live-event and recreation revenue this year.

Viacom’s future looks strong

“Looking forward, we see continued momentum as we pivot from stabilization and revitalization of our business to a new phase of growth,” Bakish said.

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’s Creative Renaissance Ignites With “Jersey Shore Family Vacation” and “A Quiet Place”

by Stuart Winchester, Viacom

In the last week, Paramount Pictures’ A Quiet Place won the domestic box office and MTV’s Jersey Shore Family Vacation rolled to the strongest unscripted cable debut in six years. The efforts provide commercial evidence of Viacom’s ongoing transformation – fueled by wide-ranging creative investments in talent, programming, and marketing.

The chart-topping numbers are especially encouraging in a media environment of ever-more-elusive audiences. The divergent paths to success of these two properties – A Quiet Place delivering something novel by elevating a horror story to a genre-busting blockbuster that appeals to all audiences, Jersey Shore Family Vacation building on MTV’s deep well of intellectual property to connect with its core demographic – underscore the way in which a creative renaissance is driving Viacom’s growth.

Marketing a near-silent film in an era of loud

Making a bet on the film’s potential playability, Paramount unveiled A Quiet Place at SXSW to great response. The highly original film immediately started compiling incredibly strong reviews. A clever marketing campaign then helped launch A Quiet Place to a $50.3 million opening weekend, good for the second-best domestic opening of 2018 (behind Black Panther). With a $17 million budget, the Platinum Dunes-produced and John Krasinski-directed film is a validation of Paramount’s reoriented slate and refreshed marketing approach under CEO Jim Gianopulos, who joined the studio last year.

“An innovative concept, with great talent both behind the camera and in front, and a savvy distribution and marketing plan led to Paramount’s biggest opening since 2016,” wrote Viacom CEO Bob Bakish in a staff memo about the film’s success.

Building strong relationships with talent has become a particular focus for Viacom under Bakish, and Krasinski, who will produce and star in the Paramount Television-produced Jack Ryan for Amazon and co-created Paramount Network’s hit show Lip Sync Battle, demonstrates the enormous cross-brand potential that forming such deep relationships can yield.  

A Quiet Place’s unique storyline – featuring a family tiptoeing through a post-apocalyptic world infested with insectoid monsters that will devour anyone who makes a sound – created an opportunity for Paramount to execute an equally original pre-release marketing plan. They delivered: moviegoers in nearly 100 theater chains caught the sonically attuned monsters devouring noisy spectators in pre-show spots, with the stern warning that “the movie theater should be A Quiet Place.” A pre-Super Bowl ad, a launch of the second trailer on Ellen, and a kick-off spot and accompanying stunts at the SXSW Film Festival primed diverse audiences for the film’s release.

“Paramount’s reconstituted management team is focused on allowing great filmmakers to make great movies, and then doing everything we can to support those movies,” said Paramount Pictures Chairman and CEO Jim Gianopulos. “In A Quiet Place, we did exactly that: We gave a talented young director license to put together something unlike anything else out there, and then threw our marketing and distribution expertise behind the project.”

Tapping an iconic property to connect with a core audience

Jersey Shore Family Vacation had less work to do in the name-recognition department, as its iconic predecessor, Jersey Shore, had long ago etched its cast into the cultural conversation. The unknown was whether this fist-pumping bunch, six years older and reunited in the beaches and bars of Miami, would still connect with audiences.

It did. The show’s nearly 10 million total viewers and 4.2 average rating in the core 18-34 demo on live-plus-three-days metrics made Jersey Shore Family Vacation the most-watched unscripted debut on U.S. cable since 2012. The original Jersey Shore had ignited a global franchise – with spin-offs in the UK, Spain, Poland and Mexico, plus the recently launched hit Floribama Shore in the U.S – and the cast’s return resonated globally, with the premiere airing in nearly 180 countries and territories.

The strong ratings complemented a seven-hour trending run on Twitter and acted as an emphatic endorsement of MTV’s revamped creative direction under President Chris McCarthy. Under his leadership, the network has grown ratings for three consecutive quarters for the first time in seven years behind a blend of revitalized franchises, returning classics and original programs.  

“MTV is about celebrating youth culture and music where talent and creativity unite to produce content that resonates across generations,” said McCarthy, who also oversees VH1 and Logo. “Jersey Shore Family Vacation and the new Floribama Shore demonstrate how MTV can harness our heritage to create programming that appeals to a mass audience while serving as a great launching pad for our new series.”

These Charts Show Viacom Leading All Cable Families and Two Key Ratings Demos

by Stuart Winchester, Viacom

Once again, Viacom leads all cable families in total viewership, a full percentage point ahead of its nearest competitor. There’s a lot driving this continued strength, including Nick’s status as the king of kids’ programming, with 12 of the top 20 rated cable TV shows for kids between 2 and 11 airing on one of its networks. Viacom does well in all demos, though – several of our networks combine to make up fully half of the top 20 cable series for viewers 12 to 34.

The charts below spell out these viewership and ratings successes in more detail, but they show the company’s strong position as we report our Q1 2017 earnings today. For more business numbers, check out our Investor Relations page on viacom.com.

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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.