Viacom CEO: "Paramount Will Turn Around," Studio Financials Will Improve "Significantly" in Coming Years

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"We simply did not have enough films in the pipeline this year to take full advantage of our capabilities," Philippe Dauman says, reiterating the studio's return to releasing 15 films a year.

Viacom president and CEO Philippe Dauman on Thursday touted the outlook for the conglomerate's Paramount studio and the company's progress in adjusting to the digital age and its ratings and measurement challenges and pushing new business models.

"We think Paramount will turn around," he said on the company's earnings conference call. "That is why we are investing in it." He added: "We are very optimistic about where Paramount can go," he said, citing big franchises and key creative relationships with the likes of Martin Scorsese, Michael Bay and J.J. Abrams. "Paramount will come back and come back strongly in the years to come."

He was asked by an analyst on the call about Paramount's weak results in the past couple of year years, its outlook and whether it needed to combine with another studio as some on Wall Street have every now and then suggested that it could make sense to sell the studio to another Hollywood player. Dauman didn't directly address the deal suggestion, but expressed confidence in the studio and cited the cyclical nature of the movie business. "We see that in a big way" with Universal this year, which is having a record year, he said. "That’s just the nature of the business," he said.

Earlier in the call, Dauman had also reiterated that Viacom was committed to returning Paramount to a full 15-film slate in fiscal year 2016 and “significantly improved financial performance in the years ahead." He said the studio's ability to produce and market films was "stronger than ever, but "we simply did not have enough films in the pipeline this year to take full advantage of our capabilities." Also helping with the goal of improved financials will be the company's growing animation and TV production businesses, he said.

Viacom earlier in the day reported full fiscal year revenue for its film unit of $2.88 billion, down 23 percent. The company cited "lower revenues across the distribution windows reflecting the mix of films." Operating profit for the year ended Sept. 30 dropped 46 percent to $111 million.

Management said that in the current fiscal year, the biggest chunk of film profits will come in the back-half.

"We’re seeing real progress as the ecosystem adapts and coalesces around innovative new models, both in distribution and advertising in the U.S. and around the world," Dauman also said on the call. “We believe these changes will usher in a new period of prosperity and growth.”

He emphasized that success will in the future require more focus on the "long-term health and vitality" of the business, saying that "more than ever" this is a "great time" to be in the content business. He said players with an outlook that is longer-term "than is currently in vogue" will succeed in that environment. 

Dauman also touted Viacom as "the early birds," saying it has been taking a leadership position, ahead of others in the industry, in looking for new audience measurement data and the like. "We are effectively adapting to a digital, on-demand, socially driven global marketplace even as we demonstrate quantifiable success in achieving our strategic goals."

"At Viacom, we are starting to turn the corner," said the Viacom CEO. And he touted how data shows that some young people spend more time with content than sleeping, quipping that media executives are not the only ones losing sleep in this new world. "Of course, the turn is not fully complete," he added. "But we are confident that the pace of change we have set gives us an important long-term advantage over our competition."

On the call, Dauman also said the company was continuing to see improved U.S. ad momentum in the current quarter.

And he said the company expects "significant" improvement at MTV in the new fiscal year.

Discussing Viacom Vantage, the company's bet on alternative audience data, Dauman said it was "a proven success" with demand "strong and building." He said 11 advertisers are using it so far, with dozens in talks to also use Vantage. He said that company expects to triple its number of Vantage ad deals by next year's advertising upfront.

Dauman ended his comments by saying that "2016 will be a significant year as measurement and monetization come into realignment around sophisticated" programs.

Asked about Viacom's SVOD licensing strategy as Time Warner recently said it will consider holding on to digital rights of TV shows longer, Dauman said "we have strategically developed and chosen windows" for different types of shows. He said the company weighs monetary, promotional and other benefits.

He said digital licensing is a growth business in international markets, citing "potentially significant growth" in China where online video platforms are paying for U.S. content and making TV a potential second driver of growth for Hollywood companies in the country beyond the box office.

On another hot topic in the industry, ad loads, Dauman said Viacom will look at it on a network-by-network and show-by-show basis to see where viewership can maybe be boosted by reducing the amount of commercial time. Some networks have boosted their ad loads amid lower ratings.

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