Viacom CEO Bob Bakish on Monday touted the turnaround outlook for Paramount Pictures and kids network Nickelodeon and said the company was planning three more streaming services, but no “big, transformational deal.”
He said the company was working on streaming offers in the reality TV, Spanish-language and African-American spaces. “What you’ll see is a multi-faceted offering,” Bakish said when asked about the company’s digital and direct-to-consumer plans. He mentioned direct-to-consumer offers, such as for Noggin and Comedy Central, ad-supported VOD services and the production of programming for streaming platforms. Bakish said that this was a differentiated strategy that doesn’t require acquisitions of companies.
Bakish also said the company has been focused on acquisitions that accelerate its business rather than transforming mega-deals, citing the takeovers of Vidcom, Whosay and Awesomeness. “We are not focused on a big, transformational deal,” he added,” he told the 46th annual UBS Global Media and Communications Conference in New York.
The Viacom CEO once again touted the turnaround momentum of the Paramount studio under the leadership of Jim Gianopulos, which had such box office hits as A Quiet Place and Mission: Impossible – Fallout in its latest fiscal year that ended in September. It has also benefited from a growing TV production business.
The success meant that Viacom’s film unit loss for the latest year narrowed, but management has said it expects a return to profitability, which is likely to come in the current fiscal year. Viacom’s annual adjusted operating loss for its film unit of $39 million followed an operating loss of $280 million in the previous year, and a loss of $445 million in the year before that.
Gianopulos is a “fantastic, highly seasoned and well liked, for that matter” executive, Bakish told the UBS conference, lauding the film team for seven straight quarters of year-over-year improvement in operating income. The Paramount team has built a “much more balanced slate” for 2019, and focused on making sure films stay on budget, he explained. “Jim’s doing great, and there’s more greatness to come,” Bakish concluded.
About Paramount’s growing TV production business, Bakish previously said that it had already reached about $200 million in annual revenue and “probably doubles from there.” On Monday, he said that there is “increasing demand” for entertainment content, with Paramount’s deep library and expertise allowing it to create new revenue.
He said that after nine series in the latest fiscal year, it will make “16, maybe more” this fiscal year, with revenue growth of around 50 percent. He reiterated the goal of making this a $1 billion business in the next couple of years, with a margin of 20 percent.
With competitors vertically integrating, there is more upside ahead, he said. Bakish also was asked about a recent multi-picture deal with Netflix. “There will be a mix of library (intellectual property) and probably some original IP,” he said, calling it “an exciting opportunity.”
Bakish was not asked about Viacom and CBS Corp., both of which are controlled by the Redstone family’s National Amusements.
The corporate siblings, which have been separate companies since 2006, have discussed a recombination twice in recent years amid the industry’s ongoing consolidation without a deal materializing. One key hurdle was former CBS boss Leslie Moonves, who had to leave the company in September following sexual harassment allegations. CBS is now led by interim CEO Joe Ianniello. When CBS announced Moonves’ exit in September, it also settled a legal dispute with National Amusements and said the controlling shareholder “confirmed that it has no plans to propose a merger of CBS and Viacom and has agreed that it will make no such proposal for at least two years after the date of the settlement.”
On the TV side, Viacom’s cable networks have seen U.S. scatter advertising prices rise 30 percent from upfront market levels, the CEO told the UBS conference, reiterating that the back half of fiscal year 2019 would see a return to advertising growth.
Asked about Nickelodeon’s recent ratings declines, Bakish predicted improvements ahead, “particularly in the back half of the year,” saying the new leadership was putting together a promising new programming slate. “I’m feeling great” about the new team, led by president Brian Robbins, and programming strategy, the CEO said.
Bakish’s UBS conference appearance came roughly two years after he was named Viacom’s permanent CEO. Under Bakish, Viacom has focused most resources on its six flagship brands – Paramount, MTV, Nickelodeon, Nick Jr., BET and Comedy Central.
Viacom in its just-finished fiscal year 2018 managed to “cement” its turnaround, while in the just-started year it “will lean more into our investment initiatives and build incremental businesses,” Bakish said, reiterating the company would return to revenue growth in the fiscal year. “I’m excited about ’19.”
At last year’s UBS conference, he had spent much time discussing his focus on stabilizing Viacom’s business during his first year in charge and then going into growth mode via three core strategies. Those are focusing on next-generation business opportunities in the media networks business; diversifying beyond media, such as via live events and consumer products; and cost savings.
Content reboots will also continue, as Bakish on Monday again touted the company’s approach of developing fresh content and rebooting hit franchises, such as via MTV’s return of Jersey Shore and reboot Floribama Shore, as well as Nickelodeon’s reimagination of Rugrats.
“Why wouldn’t you make as much as you can out of your library IP,” he said, after calling Jersey Shore “a great piece of IP we own.” Citing talks about other franchises that could find a new life, he added, “We absolutely believe there is more opportunity at MTV.” MTV’s The Real World for Facebook has a U.S., Spanish and Asian version, Bakish also said, calling that a profitable new approach.