Viacom chief voices optimism

Philippe Dauman says company is well-positioned

NEW YORK -- Viacom Inc. president and CEO Philippe Dauman said Monday that he is confident the entertainment company is well-positioned in a challenging economic climate, despite layoffs last week and the debt troubles of its controlling shareholder.

Speaking at the annual UBS Global Media and Communications Conference, he also said Viacom's Paramount Pictures film unit is well-financed and does not rely on new outside financing during the current credit crunch.

Asked about debt-renegotiation talks at National Amusements, through which chairman Sumner Redstone controls Viacom and CBS Corp., Dauman said he is not involved in them.

"Our board (which has discussed the issue) is very comfortable with the situation," he said.
Dauman added that his team has no reason not to believe Redstone and NA promises that the controlling shareholder will not sell more stock after having to sell Viacom and CBS shares a couple of months ago.

"We've ensured that Viacom's liquidity or operations are completely unaffected," he said.

Dauman also expressed confidence that key Viacom networks, including Comedy Central, can reach new carriage deals with distributors at strong prices. Comedy Central and other Viacom networks are "tremendously underpriced," he said, adding that affiliate fees make up 30% of the cable network unit's revenue. "We provide very good value."

For example, while Viacom channels account for less than 10% of fees paid to programmers, they account for more than 20% of viewing, according to Dauman. The networks also overindex on VOD viewing, he said.

Dauman also talked up Oscar buzz surrounding "The Curious Case of Benjamin Button" and emphasized that 850 Viacom layoffs unveiled last week will not affect the company's content creation.

He said his target is to keep programming expenses unchanged or slightly higher next year, but to change up the mix to focus on the most promising new content.

One conference attendee asked if Viacom's stock buybacks have been a failed strategy, and if the company should rather buy back debt or pay dividends. But Dauman argued the stock buybacks have been accretive and give the firm flexibility to calibrate them depending on cash flow.

However, he promised Viacom will evaluate the buyback program regularly.

Dauman also said his company is still evaluating the success of recent trials with "The Daily Show With Jon Stewart" and "The Colbert Report" on News Corp. and NBC Universal online-video joint venture Hulu.