Viacom Activates Powerful Studio Model Growth Driver As MTV, Nick Move Into Third-Party Production

by Stuart Winchester, Viacom

Pinky Malinky is an upbeat teenager who has a lot in common with his peers: he posts rabidly on social media, he hangs out nonstop with his two best pals, and he constantly must navigate the social pressures of school and life. But there’s one very important thing that will make Pinky unique among Nickelodeon characters (besides the fact that he’s a talking hotdog): when his show debuts later this year, fans will find him exclusively on Netflix.

But Pinky won’t likely be alone for long – across Viacom’s ecosystem, brands are digging into their vaults to identify intellectual property that could be an ideal fit for a digital or linear programmer outside of Viacom. MTV, under the banner of MTV Studios, is for the first time cracking open its rich, 35-year archive to offer its iconic, youth-centric content – Real World, Daria, Aeon Flux, the Emmy Award-winning Made, just to start – in new or reimagined form on non-Viacom platforms. In addition to strategically tapping the 200 titles in its massive library, MTV Studios will churn out new ones, including, to start, The Valley (working title), about a group of friends growing up in the U.S.-Mexico border town of Nogales, and MTV’s Straight Up Ghosted, in which victims of this mobile-age abandonment will confront their disappearing former intimates.

Similar efforts will follow at other Viacom networks.

This studio model – under which Viacom will license and produce new episodes of fully owned content for third parties – will present an enormous growth opportunity, as the company’s brands increasingly feed the insatiable global demand for premium content.

Viacom is uniquely positioned to do this. The company’s voluminous original content libraries house an enormous number of beloved properties that speak deeply to their fans. Its archives stretch back decades – and, in the case of Paramount Pictures, more than a century. Its properties resonate deeply with high-value audiences: kids (Nickelodeon), African-Americans (BET), youth (MTV), the LGBTQ community (Logo), and more. Viacom’s global footprint means that those audiences stretch across cultures and borders. As the first port-of-call for creatives pitching shows tailor-made for these audiences, Viacom’s brands are keenly aware of what is in the market. Its production expertise is second to none.

And even as these sorts of deals multiply, Viacom will retain all consumer products rights for all properties, fueling the company’s increasingly robust consumer products operation.

The possibilities for third-party licensing and production are practically limitless. Pinky Malinky – which will feature Nick branding at the show open and embodies Nickelodeon’s patented spirit of fun and surprising stories and characters – is just the first of up to a dozen properties that the brand is positioning for reboots or co-productions this year alone.

Valen-time to hang out with my best friends! ❤️❤️ @babs_buttman @jj_james0n

A post shared by Pinky Malinky (@pinky_malinky) on

“Proliferating distribution platforms create incremental demand for VIAB’s [Viacom’s] content because high-quality branded content is one of the most valuable forms of differentiation for competing distribution platforms,” Needham declared in a bullish March analysis of the company’s stock. “VIAB’s film and television libraries represent differentiated, globally scalable, long-lived content.”

Take, for example, Jack Ryan, the Tom Clancy action hero who fought his way through five Paramount Pictures films, starting with 1990’s The Hunt for Red October. The quintuplet of movies grossed hundreds of millions of dollars and still carries strong brand recognition and a built-in fanbase. But while there is no obvious basecamp for Ryan within Viacom’s current brand archipelago, his bulletproof vest is a perfect fit for Amazon Video, which will debut the 10-part Jack Ryan series in August.

This branching out into third-party content production has been subtly underway for some time, both in the United States and abroad. Paramount Television, the production arm of Paramount Pictures that is producing Jack Ryan, has quietly built a $400 million-per-year business from scratch by producing premium content like Netflix’s 13 Reasons Why and USA Network’s Shooter.

In May, Viacom International Studios (VIS) united the extensive production capabilities of wholly Viacom-owned Argentinian broadcaster Telefe and majority-owned Brazilian comedy brand Porta dos Fundos with Viacom’s Miami-based production operations, creating a multi-lingual machine that will develop, produce and distribute original content around the world. A matrix of SVOD, pay TV and free-to-air distribution deals will place VIS-produced long-form series (Borges on Netflix in Latin America), cinematic adaptations (Telefe’s Animal on Fox Networks’ platforms in Latin America), telenovelas (Vikki RPM on Caracol Televisión in Colombia), and co-productions (Club 57 on Rainbow Group in Italy and Nickelodeon elsewhere) in diverse markets and maximize the potential of formerly regional or local properties.

These licensing deals will therefore sprinkle tastes of Nickelodeon and MTV and Telefe and other Viacom properties throughout the global content ecosystem, while segmenting the full brand experience for consumers who subscribe to a Viacom linear or digital distributor. Even so, this nascent third-party production is already acting as a powerful growth driver as Viacom diversifies outside of its core television business under President and CEO Bob Bakish.

“Building on the success of Paramount Television and Telefe’s quickly growing production business, we’re going to much more aggressively tap into the huge demand for content and unlock more of our IP and production and creative capabilities to drive incremental revenues from third-party platforms,” Bakish said on Viacom’s second-quarter 2018 earnings call in April. “This isn’t just an idea. … there is a lot of interest from SVOD partners in licensing library properties from MTV and Nickelodeon IP for brand-new interpretations. At the same time, we’re also developing new IP for the sector and have already closed deals for brand-new original Nick IP and animation with third parties and we see more in the pipeline.”

“We Feel Great About Where Viacom Is Today,” CFO Wade Davis Tells Gabelli Conference

by Stuart Winchester, Viacom

NEW YORK, NY – APRIL 08: Viacom CFO Wade Davis attends the 2014 UJA-Federation of New York’s Leadership Awards Dinner at Pier Sixty at Chelsea Piers on April 8, 2014 in New York City. (Photo by Taylor Hill/FilmMagic)

“We feel great about where Viacom is today,” Viacom Executive Vice President and Chief Financial Officer Wade Davis told an audience of investors at the recent Gabelli Movie & Entertainment Conference. “From a fundamental standpoint, we think a lot of the strategies that we’ve been focused on and putting in place are paying off. … the first half of 2018, our fiscal 2018 is really a transition into delivering growth in the second half of 2018 and beyond, and we feel really good about that, focus 100 percent on delivering that.”

Here are a few more highlights from Davis’ remarks at the event. You can listen to the full event here.

Advanced Marketing Solutions and strong linear pricing are driving ad sales growth

“Pricing is incredibly strong right now in the linear market … So the growth is coming from what we call our Advanced Marketing Solutions portfolio or AMS [advanced addressable inventory and brand solutions]. So between those two areas – advanced addressable inventory where we’re activating new pools generally of non-linear inventory that are addressable in nature, and brand solutions – we have a portfolio business that as we’ve said publicly is going to approach $300 million this year. It’s really — it’s growing 40-plus-or-minus percent quarter-over-quarter, and we think that rate of growth will carry into 2019, and actually in the first part of 2019 accelerate.”

Growth comes over the top  

“So when you think about where Viacom is, we’re extremely well represented in the traditional distributor-led virtual MVPDs [multichannel video programming distributor]. That’s Sling, that’s DIRECTV NOW, and those are really the virtual MVPDs that matter. … We’d love to be on [Hulu and YouTube], we’re in discussions with those guys all the time. … And as we’ve gone through and stabilized our relationships with the traditional distributors, we’ve had a lot of success in getting ourselves very well positioned with respect to any virtual or OTT product that any of those traditional distributors will launch.”

Mobile is a global growth engine

“Mobile is a place where we’re significantly benefited by our global business. We made a lot of investments in bringing mobile bundles to market internationally. I guess we’ve announced at the moment five different partnerships that we have with mobile distributors around the world in which we’re licensing some form of bundle of our content into the mobile distributors. … And we’re in very advanced discussions with the three biggest operators in the United States, feel very good about where we’re positioned with them.”

Cornerstone networks in major international markets and mobile are driving growth outside the U.S.

“The [international] business is growing double digits, both top line and bottom line. … We operate in 180 countries. We have cornerstones in the biggest, most important markets, India and Asia, UK, which is the most attractive largest media market outside of the United States, and we’re the number one broadcaster in Argentina … And then there are some underlying trends that we think are different than the domestic market. … You do have a much more progressive mobile infrastructure [internationally]. As we said, a lot of these international markets, their principal Internet access is mobile and consequently their mobile offerings are a lot more mature. … And there’s also some of the same trends and tailwinds that we’re seeing in the SVOD [subscription video on demand] marketplace, domestically are starting to play themselves out globally.”

A “world-class team of operators” is transforming Paramount Pictures

“Every member of [Paramount Pictures’] senior management team except for the CFO is new. … We’ve completely overhauled all of the processes, the green light process, development process, global marketing, et cetera. So the business is running much more efficiently. We have a world class team of operators who bring new energy to the studio. … [and Paramount Television] should do about $400 million of revenue this year, and should, for the first time, be a contributor to operating income. It’s important to keep in mind that this is really still a startup. … it’s still in a growth phase, and we expect very, very strong double-digit growth on the revenue base above and beyond the $400 million that we expect this year.”

A “forever effort” transformation will save Viacom hundreds of millions of dollars

“…  when you think about our focus on margin enhancement, it really relates to efficiencies outside of content investment. So we’ve announced that we’ve undertaken a cost transformation effort. And for us, that’s not just a onetime restructuring. I think a lot of media companies and even Viacom historically would, from time to time, announce a restructuring in which they would write off some content, let some people go. But this is an effort that we view as a forever effort and something that’s part of the new culture that we’re trying to build. We have a team that’s a full-time team staffed focused on this. We’ve been very public about the amount of savings that we’re going to be able to deliver out of the current efforts being more than $100 million in the current year and in excess of $300 million in 2019 and beyond.”

A comprehensive reimagining of the content pipeline is connecting Viacom networks with their natural audiences

“The big issue for us and the big opportunity for us is bringing the focus that we’ve cited around our flagship six networks, being able to concentrate the spend where it matters most and being very precise about what the programming strategy and the brand promises for each of those brands. … So a good example of that is MTV which had historically been dabbling in very expensive scripted programming. That scripted programming is not programming that worked particularly well on MTV for MTV’s audience, and it consumed a ton of dollars for a very small amount of hours. Not enough hours to actually have MTV be a destination for high-end scripted dramas. So what we’ve done is we’ve concentrated our efforts around high-end scripted on the Paramount Network. As it relates to MTV it’s allowed us for really in some cases less money dramatically increased the amount of original programming that we have on the network, but most importantly, it’s programming that’s aligned with a vision that’s important to MTV’s audience.”

Philo Launches Low-Cost Streaming Entertainment Pack Featuring Viacom, Others

by Stuart Winchester, Viacom

Responding to strong consumer demand for a low-cost entertainment package unburdened by expensive sports channels, television technology company Philo has teamed up with Viacom and several other large media companies to launch a first-of-its-kind streaming service.

The $16-per-month package will include 11 top Viacom networks in a collection of 35-plus channels from A+E, AMC, Discovery and Scripps. All U.S. consumers will be able to stream Philo on their TVs (Roku), computers (most browsers), and mobile devices (iOS app and Android via Chrome). Additional offerings, including four Viacom networks, will be available in a $4-per-month add-on package.

“The video market is evolving quickly, and advances in technology continue to bring additional choice to consumers,” said Viacom Executive Vice President, Head of Distribution & Business Development Tom​ ​Gorke​. “Philo’s platform is a great step forward for the ecosystem, providing a full entertainment pack with a leading-edge interface and innovative social features, all at an appealing retail price. We’re excited to work with Philo to create even more choice for our networks’ loyal fans.”

Philo will deliver the sort of sleek, intuitive experience that modern viewers demand: easy to navigate and available across devices, the service will include an unlimited 30-day DVR, a deep well of on-demand programming, intelligent search, custom homepages, and live pause and save, among other features.

The launch of the low-cost Philo product fulfills a long-stated goal of Viacom CEO Bob Bakish, whose experience running the company’s international divisions imprinted upon him the viability of entertainment-only packs, which are popular in Europe.

“What the country and the world arguably needs is a compelling lower-priced option that we believe can be served through what we’re calling an entertainment pack,” Bakish told an audience of investors at the Deutsche bank Media, Internet and Telecom Conference in March.

Consumers can start a free seven-day Philo trial with just a phone number. Here’s what they will find on each tier:

Basic tier, 37 channels (Viacom nets in bold) – $16 per month: A&E, AMC, Animal Planet, AXS TV, BBC America, BBC World News, BET, Cheddar, CMT, Comedy Central, Discovery Channel, DIY, Food Network, FYI, GSN, HGTV, History, IFC, Investigation Discovery (ID), Lifetime, Lifetime Movies, MTV, MTV2, Nickelodeon, Nick Jr., OWN, Science, Spike, Sundance Channel, TeenNick, TLC, Travel Channel, TV Land, Velocity, VH1, Viceland, We TV

An additional 9 channels – $4 per month: American Heroes Channel, BET Her, Cooking Channel, Destination America, Discovery Family, Discovery Life, Logo, MTV Live, Nicktoons

The launch of Philo comes as Viacom has renewed distribution agreements covering almost half of its subscribers in the past year, including a recently wrapped deal with Altice Communications and a renewal with Charter Communications. Terms of the Charter deal have yet to be announced.

Nick Follows MTV OTT Success in Return to Japan

by Stuart Winchester, Viacom

Nickelodeon legends SpongeBob, Dora and Leonardo and his shell-clad gang are packing their passports. Their destination? Japan.

But they won’t be rolling up in the turtle’s party wagon or following Dora’s Map to get there – this crew and more Nickelodeon favorites will arrive in the Land of the Rising Sun via an over-the-top (OTT) and mobile channel on Japanese subscription service dTV-Channel.

via GIPHY

“Over-the-top and mobile offer an important growth path for Nickelodeon and our other flagship brands in mature subscription TV markets like Japan,” said Mark Whitehead, president and managing director of VIMN’s Asia Pacific region. “This is another strong example of Viacom forging deep and innovative partnerships with OTT and mobile distributors, like NTT DOCOMO’s dTV-Channel™ in Japan, to make our ‘must-see’ content available when, where and how consumers want to view it.”

When the new channel launches in the first quarter of 2018, it will bring Nick content back to the nation of 127 million for the first time since 2009. With its re-entrance into Japan, Nick will have a home in every major international market that it is able to enter, with the exception of China.

The launch of the Nick channel follows a strong run for MTV’s OTT product in Japan, where online viewership (on AbemaTV and MTV MIX on Hulu Japan), now surpasses that on linear versions of the channel.

More than TV: Finding Innovative Ways to Reach Our Audience

(L-R) Todd Spangler, Bernadette Aulestia, Rebecca Glashow, Tom Gorke and Eric Lempel attend Variety's Entertainment and Technology Summit NYC at Le Parker Meridien on April 30, 2015 in New York City. (Photo by Mike Coppola/Getty Images for Variety)

(L-R) Todd Spangler, Bernadette Aulestia, Rebecca Glashow, Tom Gorke and Eric Lempel attend Variety’s Entertainment and Technology Summit NYC at Le Parker Meridien on April 30, 2015 in New York City. (Photo by Mike Coppola/Getty Images for Variety)

TV content is everywhere. Emerging distribution platforms and the explosion of high-quality programming has created what many call the new golden age of television. Viacom Media Network’s Executive Vice President of Sales and Business Development & Content Distribution Tom Gorke joined a panel of distribution and marketing leaders recently to discuss how programmers and networks are taking advantage of these new opportunities, particularly in the online space. Speaking at Variety’s Entertainment and Technology Summit in New York City, Gorke was joined by:

  • Rebecca Glashow, senior vice president Digital Media Distribution and Partnerships, Discovery Communications
  • Eric Lempel, vice president and general manager Americas, head of Global Marketing & Consumer Support, Sony Network Entertainment International (for Playstation Vue)
  • Bernadette Aulestia, executive vice president Domestic Network Distribution, HBO

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