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.

Viacom Renews Charter Deal, Includes Co-Production and Advanced Advertising Elements

by Stuart Winchester, Viacom

Viacom and Charter Communications have announced a multi-year renewal and expansion of their partnership, the latest in a string of recent distribution agreements that have expanded consumer options for accessing the media company’s content.

The Charter deal includes co-production of original content via its Paramount Television property and a collaboration around advanced advertising, underscoring Viacom’s commitment to continue evolving its partnerships in the rapidly changing media space.

As part of the agreement, core Viacom networks –  including Nickelodeon, BET, MTV, Comedy Central, Spike (soon to be Paramount Network), VH1, TV Land and CMT – will be available to all Charter subscribers.

The announcement comes just one day after Viacom and four other major entertainment groups partnered with internet television company Philo to launch an affordable, sports-free entertainment pack, a first-of-its kind offering that fills a gap in the U.S. television landscape.

Earlier this year, Viacom inked a deal with Altice USA – which owns Optimum, Lightpath and Suddenlink systems – that also included advanced advertising components.

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.