Viacom CEO Says Stock Price Is His Biggest Frustration, Paramount Network Needs More Time

Bob Bakish - 2017 BET Upfront NY - Getty - H 2018
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Bob Bakish doesn't get to discuss CBS' lawsuit against its and Viacom's controlling shareholder, but he lauds his team's turnaround efforts and talks about the upcoming court decision on the AT&T-Time Warner deal.

Viacom CEO Bob Bakish touted the company's turnaround efforts at an investor conference on Tuesday but expressed frustration with its stock price and acknowledged the company would need to strengthen the ratings performance of the Paramount Network and Nickelodeon.

MoffettNathanson analyst Michael Nathanson opened the chat with Bakish, at the MoffettNathanson Media & Communications Summit in New York, by saying that Viacom and Bakish couldn't comment on Monday's lawsuit from CBS Corp. against Viacom' and CBS' controlling shareholder National Amusements, which is owned by the Redstone family, to block a merger of the two companies and reduce NA's voting power. Nathanson highlighted that this was really a CBS and NA issue.

Speaking at the conference in a session that was webcast, Bakish started off by saying. "I fundamentally believe we made a lot of progress at Viacom in the last year or so," including by bringing in new executives at the networks unit and having "a complete management overhaul" at the Paramount studio that he said would set up the studio to grow and be profitable in 2019.

But Bakish also reiterated that the turnaround of Viacom's business will continue to be a process. "It's not a light switch," he said.

His biggest disappointment so far? The company's stock price, the Viacom CEO said. "Fundamentally, we are not yet seeing a financial appreciation of what we have done." He emphasized that "we are 1,000 percent focused, me and our senior management team, on pushing the company forward."  

The value of Viacom, which has seen improving financials and operating momentum over the past year-plus under Bakish's leadership, was understood to have been one key focus in recent talks between the independent board committees of CBS and Viacom about a possible recombination. The other issue was understood to be the future role of Bakish. 

CBS said in its Monday lawsuit that it was seeking to prevent the Redstones from ousting any board members or changing the company’s bylaws before a Thursday board meeting that will formally consider the possible Viacom deal, and also a dividend that would reduce National Amusements’ voting stake from 79 percent to 17 percent. CBS said a special committee of its board had over the weekend reached the "unanimous decision" that the proposed Viacom transaction was "not in the best interests of CBS stockholders."

While Bakish didn't get asked about or address his take on a possible recombination with CBS, M&A was a topic of debate during his appearance. "It will either maybe restart the race on vertical integration" or force companies to pivot in different directions, he said about the upcoming court decision on AT&T's planned acquisition of Time Warner. And he said that while nobody expected Rupert Murdoch to sell parts of 21st Century Fox, the company's deal with Walt Disney wasn't something he sees as a factor that would fundamentally "influence the future" of the industry and its direction. 

Discussing Viacom's TV networks business, the CEO said its current position in terms of distribution was "night and day" compared to when he took over as permanent CEO in December 2016. In terms of ratings trends, MTV and other key networks have gotten stronger, while others are not where they need to be yet.

"We do have some ratings issues with our Paramount Network," which launched in January as a rebrand of the former Spike, he admitted, mentioning some scheduling changes this week and upcoming originals after the first original series Waco, which he said "performed very well." He mentioned "two pieces of signature original programming in the very near future," namely American Woman, starring Alicia Silverstone, Mena Suvari and Jennifer Bartels, and Taylor Sheridan's Yellowstone with Kevin Costner. He called both "pretty spectacular." Overall, the network "needs a little more time to bed down," he said. 

Bakish also mentioned Nickelodeon as having ratings challenges. "It's part working on the linear television side and also partially expanding our share of non-linear television," he said.

Asked about why he was confident that the Paramount studio would return to growth and profitability in 2019, Bakish cited the new management talent brought in by studio head Jim Gianopulos, his team's well-planned slate and growth in the unit's TV production business. "The damage was really self inflicted," he said about the challenges of the studio when he took over. "The results were disastrous" on the slate side because of bad planning. Bakish also predicted that the back half of the current fiscal year would be profitable for Paramount.