Viacom Announces First Quarter 2018 Results, Accelerates Transformation Efforts

by Stuart Winchester, Viacom

Viacom released its financial results for the first quarter of fiscal 2018 this morning, underscoring the significant progress being made to transform its business amid rapid industry change.

Aggressive moves to expand next-generation platforms and solutions, initiatives to grow beyond TV and film, the launch of a premium content network, strengthened relationships with distribution partners, and the demonstrable success of its Flagship Six strategy all position Viacom for potential growth in the second half of 2018.

“In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the company for the future,” said Viacom President and CEO Bob Bakish. “Viacom’s most-watched portfolio of domestic cable brands grew viewership share in the quarter, led by our powerful flagship networks, which now includes Paramount Network – the biggest and most ambitious network rebrand in our history. Internationally, we continue to deliver double-digit top-line and bottom-line Media Networks gains while launching innovative new partnerships in growth territories around the world.

“Viacom has also made considerable progress in its push to accelerate consumption and monetization on next-generation platforms, achieving substantial growth in worldwide digital advertising revenues, expanding distribution on fast-growing virtual MVPD and mobile services, and ramping up resources and talent at Viacom Digital Studios. Additionally, since the end of the quarter, we continued to expand our digital capabilities with the acquisition of influence marketer WHOSAY and the world’s premier online video event, VidCon. In addition, our strategy to further diversify our core properties off-screen through live events, hospitality and consumer products continues to progress, with the much anticipated Broadway premiere of the SpongeBob SquarePants musical in the quarter, along with new initiatives across our portfolio.

“We remain deeply committed to maintaining strong financial discipline and delivering returns for our shareholders. In the quarter, Viacom continued to improve its leverage profile and we are on track to achieve $100 million in new cost savings in the current fiscal year, and hundreds of millions more in 2019.”

Here’s a closer look at what Viacom is doing to advance its strategic plan and transform the company in the year ahead:

Flagship Six networks anchor Viacom’s spot atop the basic cable universe

Led by its Flagship Six of MTVBETComedy CentralNickelodeonNick Jr. and Paramount Network (which launched after the quarter ended, replacing Spike in the U.S.), Viacom continued to stand at the top of the basic cable universe, holding the largest share of viewers in all key demos:

And the portfolio continued to grow: MTV primetime ratings (+14 percent) and share (+25 percent) both surged, BET recorded a second consecutive quarter of double-digit year-over-year ratings growth (+16 percent), Nick hit its 10th consecutive quarter as the top network among kids, and Comedy Central documented its third straight quarter of increased year-over-year audience share.

Viacom’s other core brands – VH1, TV Land and CMT – recorded year-over-year quarterly ratings and share growth. For VH1, this marked its 10th consecutive quarter of ratings growth, making it the only entertainment net across both cable and broadcast that can make this claim.

Complementing these growing ratings are strengthened affiliate relationships with Suddenlink and Charter, which should help further boost viewership and the advertising revenue that goes along with it.

Paramount Network launches Viacom Media Networks into the premium content space

Paramount Network rumbled to life last month, propelling Viacom Media Networks into the premium content realm and capitalizing on the deep storytelling tradition of Viacom’s iconic Paramount brand. Strong ratings immediately followed, first for Lip Sync Battle: Live Michael Jackson Celebration and then for the premiere of Waco starring Taylor Kitsch. Several more high-profile shows land over the coming months, including a Heathers reboot, American Woman with Alicia Silverstone, and Yellowstone starring Kevin Costner.

Viacom had already been invested in the creation of premium television content, however, under the umbrella of Paramount Television, a production studio seated under Paramount Pictures that tripled revenues in 2017. The studio’s robust content pipeline includes Hulu’s Catch-22, EPIX’s The Contender, TNT’s The Alienist (cable’s number one new drama series), Amazon’s Jack Ryan, and new seasons of USA Network’s Shooter, EPIX’s Berlin Station, and Netflix’s 13 Reasons Why.

The turnaround of Paramount Pictures continues

Paramount Pictures Chairman and CEO Jim Gianopulos has assembled a new leadership team dedicated to igniting growth. The July release of the next Mission: Impossible film will act as the springboard for a 2019 slate that will include eight films co-branded with Viacom’s media networks. Major production deals with Hasbro, Skydance, and The Fast and the Furious producer Neal Moritz should further bolster a lineup that already includes Bumblebee, Gemini Man, and sequels to Top Gun and World War Z.

Viacom’s push into next-generation platforms accelerates

Yesterday, Viacom announced the acquisition of VidCon, turbocharging a next-generation digital platform strategy that also includes Viacom Digital Studios and recently acquired influence marketer WHOSAY.

This digital pivot has already yielded results, with global video consumption on Viacom’s sites, mobile apps and connected devices surging 38 percent year-over-year during the quarter. As Viacom Digital Studios ramps up to scale and begins distributing unique content across the company’s massive social footprint, Viacom anticipates a doubling of video views and significantly increased watch time on YouTube and Facebook this year.

Viacom will continue to move toward the center of consumers’ digital lives, both internationally – where the company secured a major mobile distribution deal with Telefónica in Latin America– and domestically, where a significant direct-to-consumer experience could be announced later this year.

Viacom’s live events business is growing rapidly

VidCon, which draws more than 30,000 attendees to its flagship Anaheim event and is in the beginning stages of international expansion, adds a powerful arrow to Viacom’s live-events quiver. Every flagship brand will host at least one major live event in the U.S. this year, including Comedy Central’s ClusterFest, which drew 40,000 fans in its inaugural run last year; SpongeBob the Musical, which opened to soaring reviews on Broadway; and The BET Experience, which will continue to attract tens of thousands of fans around the BET Awards in June.

International ad, affiliate and general revenue surge

Viacom International Media Networks continues to crank out steady growth: a 13 percent overall revenue jump, a 17 surge in advertising revenue, and 13 percent growth in affiliate revenues.*

Strong growth in Europe and the integration of Argentinian broadcaster Telefe contributed to these impressive numbers. The launch of Paramount+ in the Nordics, the debut of a free-to-air Spike network in Italy, and a restructuring of our jointly owned Viacom18 property in India should all contribute to further gains.

*All international revenue numbers are adjusted for a five percent favorable impact from foreign exchange

To see what Viacom will debut in the months ahead, scroll through the timeline below, or click here to view the full-screen version.

Remembering Brad Grey

by Stuart Winchester, Viacom

Brad Grey, who led Viacom’s Paramount Pictures for a dozen years and left a rich legacy at the studio, passed away on Sunday evening following a battle with cancer. He was in his home in Holmby Hills, California with his family by his side. He was 59 years old.

“Brad Grey was an extraordinary talent with a passion and gift for storytelling that won’t be forgotten,” said Viacom President and CEO Bob Bakish. “He has left an incredible legacy at Paramount and across the entire entertainment industry, from the beloved hit franchises he developed for both film and television, to the countless individuals he mentored and supported throughout his career. All of us at Viacom and Paramount mourn his passing, and our thoughts are with his family at this difficult time.”

Grey’s commitment to delivering poignant, compelling stories to audiences around the world bolstered the 105-year-old studio’s deep library with films across many genres. Starting with the smash hit Transformers in 2007, Grey guided Paramount into the franchise era with the original Paranormal Activity and continuations of the classic Mission: Impossible and Star Trek series. The studio complemented these releases with a parade of must-see standalone films, including the cerebral Interstellar, the gripping World War Z, and the gonzo Wolf of Wall Street.

NEW YORK, NY - JULY 27: Alec Baldwin, Tom Cruise and Chairman and CEO of Paramount Pictures Brad Grey attend the New York premiere of "Mission Impossible: Rogue Nation" at Times Square on July 27, 2015 in New York City. (Photo by Kevin Mazur/WireImage)

NEW YORK, NY – JULY 27: Alec Baldwin, Tom Cruise and Chairman and CEO of Paramount Pictures Brad Grey attend the New York premiere of “Mission Impossible: Rogue Nation” at Times Square on July 27, 2015 in New York City. (Photo by Kevin Mazur/WireImage)

Aside from box office success – eight of Paramount’s 10 top-grossing films came over Grey’s tenure – this varied slate earned many accolades for the studio, including at least one Academy Awards Best Picture nominee in 11 of Grey’s 12 years. Most recently, Paramount earned a pair of Oscars in February: Viola Davis took Best Supporting Actress for her work in the widely hailed adaptation of August Wilson’s Fences, while the gorgeous Arrival earned the award for Sound Editing (both earned Best Picture nominations). At the 2008 Academy Awards, Paramount’s No Country for Old Men won four Oscars – Best Film, Best Director, Best Supporting Actor and Best Adapted Screenplay.

 

HOLLYWOOD, CA - FEBRUARY 22: Paramount Chairman and Chief Executive Officer Brad Grey (R) and Cassandra Grey attend the 87th Annual Academy Awards at Hollywood & Highland Center on February 22, 2015 in Hollywood, California. (Photo by George Pimentel/Getty Images)

HOLLYWOOD, CA – FEBRUARY 22: Paramount Chairman and Chief Executive Officer Brad Grey (R) and Cassandra Grey attend the 87th Annual Academy Awards at Hollywood & Highland Center on February 22, 2015 in Hollywood, California. (Photo by George Pimentel/Getty Images)

 

“All of us at Paramount are deeply saddened by the news of Brad Grey’s passing,” said current Paramount Chairman and CEO Jim Gianopulos. “He was at the helm of the studio for over a decade and was responsible for so many of the studio’s most beloved films. I was proud to call Brad a friend, and one I greatly admired. He will be missed by us all, and left his mark on our industry and in our hearts.”

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