Viacom CEO Sees More Upside "Without Consolidation," Is "Not Looking to Create Another Netflix"
Bob Bakish tells the Royal Television Society conference in London that he expects the Paramount Television production business to reach $600 million in revenue next year, and discusses regulation of digital platforms.
Viacom doesn't need a big, transformative deal right now to see further financial and operational upside, CEO Bob Bakish said in London on Tuesday, without discussing the possibility down the line of a long-suggested eventual recombination with corporate sibling CBS Corp.
Speaking at the Royal Television Society conference in the British capital, whose theme this year is "Is Bigger Better?", he reiterated that "we have been working hard…on running the company we have, because we see incremental value to those assets." While acknowledging that there has been "a quest for scale" across the industry, Bakish concluded: "Where I sit today, we have a very clear path to value creation ahead of us.... [There is] a lot of exciting road ahead without consolidation."
Bakish and his team have been making smaller acquisitions and investments to boost the company's digital and live event businesses, something the CEO signaled on Tuesday would remain the focus of any deal making. For example, Viacom this summer struck a deal to acquire youth media company Awesomeness for around $25 million plus some debt, and led a $15 million investment round in kids media startup pocket.watch.
Bakish said that overall his team has focused on both "turnaround" and "evolution" efforts, meaning improving core networks, ratings and distribution deals, as well as pushing into new businesses and revenue streams, such as digital and events. “It really is an exciting new chapter in Viacom history," he said.
Bakish's colleague David Lynn, president and CEO of Viacom International Media Networks, in his conference opening remarks said that Walt Disney's $71.3 billion agreement for large parts of 21st Century Fox has been a watershed deal with a "seismic impact" on all others in the business, with many asking if they are big enough and if Rupert Murdoch and Disney chairman and CEO Bob Iger feel the need to get bigger. "The answer has been a fresh outbreak of M&A," Bakish said, without discussing his own interest in such megadeals.
Asked about Viacom's thinking on its own potential streaming service or services, Bakish signaled that the company was more focused on niche offerings tied to its core brands, most of which aren't focused on much high-end scripted fare. "We are not looking to create another Netflix," he said. "We see that space as becoming crowded and quite capital-intensive."
Asked about suggestions for regulation of digital platforms, the Viacom CEO noted that there is no level playing field so far. For example, Nickelodeon isn't allowed to show advertising for high-fat, sugar and salt snacks, while "on the digital platforms there is no such regulation," he explained before predicting change. “It’s pretty clear that over time we will get regulation. What it looks like and how quickly it comes are all valid questions. But the world just needs to move in that direction as responsibility follows consumption.”
Bakish also once again touted the broader turnaround of the company's studio, saying "Paramount is in a radically different place" today than when he took over as CEO. Paramount Pictures has improved its performance amid the growing TV production business and a new slate planning approach under studio chairman and CEO Jim Gianopulos.
Bakish also again touted the rise of Paramount Television, reiterating that it will this year be a $400 million revenue business before next year reaching $600 million as the studio goes from producing nine to making 16 series. He reiterated that it is shooting to become a $1 billion business in a couple of years. Among the production arm's TV series are the likes of Netflix's 13 Reasons Why and Amazon's Jack Ryan.
While streaming giants are taking consumers’ time, “on the other hand, we are finding great opportunity in supplying them," Bakish said. He added that MTV is likely to unveil over the next week or so a reality show it is making for a streamer other than Netflix.
Bakish did not address a recent settlement between Viacom's parent company National Amusement, led by Shari Redstone, and corporate sibling CBS Corp. that included new board members and a commitment to make no imminent new proposal from NA to merge CBS and Viacom. NA has suggested such a recombination twice so far. CBS Corp. chairman and CEO Leslie Moonves was ousted earlier this month after a new group of women accused him of sexual misconduct. Joseph Ianniello was elevated from his COO role to that of president and acting CEO of CBS Corp. while the board conducts a search for a permanent CEO and chairman.
Viacom's cable network brands, including MTV, Nickelodeon, Comedy Central and BET, have been focusing on improving their ratings momentum, which has mostly worked since Bakish was named permanent CEO in late 2016. The company has also been cutting operating costs at its networks unit and focused on six core brands.