Viacom CFO Says Paramount Bottom Line Will Improve Much This Year
Wade Davis also tells a conference that "we're hard at work repairing" the "frayed" relationships with pay TV distributors and that animated film 'Amusement Park' could be pushed back to 2019.
Viacom feels "great about the progress we have made" at Paramount Pictures over the first six months of Bob Bakish's tenure as permanent CEO, CFO Wade Davis told Gabelli & Company's 9th Annual Movie and Entertainment Conference in New York on Thursday.
"This fiscal year, we are going to deliver hundreds of millions of dollars of operating income improvement over the prior fiscal year," he said in the session that was webcast, without detailing whether the studio will return to a profit this fiscal year, which ends in September.
For the most recent fiscal year, Viacom posted a film unit operating loss of $445 million. For the first two quarters of the current fiscal year, it has posted a combined operating loss of $246 million.
Davis also forecast "very strong" financial improvement in fiscal year 2018. The Viacom CFO said that "most significantly" there is a new management team, led by Hollywood veteran Jim Gianopulos, which will manage the existing film slate for 2017 and 2018 and prepare its own first slate for fiscal year 2019. "It takes some time to turn around," he said about the studio.
Gianopulos recently took over as chairman and CEO from Brad Grey. Davis told the Gabelli conference on Thursday that he has been working closely with the Paramount Pictures team. "This is my second week in New York since November 15," he said. "[Bakish] sent me to L.A. really for the majority of my time," and his focus has been on improving transparency and putting in place a restructuring plan for the studio.
"We have accelerated a lot of the delivery in the television production business that's well ahead of plan and will be hundreds of millions of dollars of revenue this year," Davis said in highlighting one key positive development for the studio. He also highlighted a recent slate financing deal with two Chinese partners.
Davis spent some time Thursday touting the new strategy of letting Viacom's flagship TV network brands account for half the Paramount slate, saying Nickelodeon has been ahead of others in that regard. In that context, Davis also signaled that one Nickelodeon animated movie that was in January moved from 2019 to 2018 may get pushed back again. "There will be a film that might be in '18, could be in '19, called Amusement Park," he said.
"We have already greenlit a television series. The movie will really be used to launch that intellectual property and follow that up with the television series."
Asked about the general state of things at the company, the CFO told the Gabelli conference: "It's an exciting time for Viacom," adding: "There is no shortage of things to focus on."
He once again highlighted that Bakish has focused on rebuilding relationships with pay TV distributors, saying they have become "incredibly frayed" under former CEO Philippe Dauman. "We're hard at work repairing those relationships."
He said distributors are "our largest, most important customers," and the company is betting "on the health of the pay TV system over the long-term." Davis said he and Bakish met all key players early on and asked distributors how Viacom could help them, which he said was "something that was shocking to them" because "none of the programmers had ever done that."
The CFO said Viacom has been looking to grow the value of distribution partnerships and to do so without any current carriage deal expiration deadlines looming. "We are also looking at ways that we can help, in partnership with them, build advanced ad products," which is appealing to them, Davis said.
Discussing ratings challenges at MTV, Comedy Central and BET, he said those are being addressed by "significant management changes" in recent months, adding that MTV was "the furthest along," while "BET is going to take a little bit more time," as changes to the development, programming and marketing leadership have happened more recently.
Shari Redstone, vice chair of Viacom and CBS Corp., had said at a conference last week that it was the potential to resuscitate Viacom as a stand-alone business that ultimately scuttled a potential recombination of the two companies about six months ago.
"What I saw very quickly was the energy that existed at Viacom," Redstone, daughter of former CBS and Viacom chairman Sumner Redstone, told the Code Conference. "Having a vision and a strategy was a new thing, and it was an exciting thing. If we had done a merger at that time, the momentum we had built so quickly would have been lost."