Dec 05, 2018

Affiliate renewals, Advanced Marketing Solutions, and third-party production drive ongoing transformation.

On Monday, Viacom President and CEO Bob Bakish appeared onstage with UBS cable and telecommunications analyst John Hodulik for a keynote question-and-answer session at UBS’ Global Media and Communications Conference.

Bakish discussed Viacom’s linear and mobile distribution universe, its rapidly evolving suite of Advanced Marketing Solutions products, and the ongoing build-out of its premium studio-production business. Read five key takeaways below, and listen to the full conversation to hear what Bakish had to say about the turnaround of key Viacom properties, including Nickelodeon, MTV and Paramount Pictures.

1. Viacom’s affiliate network is maintaining strength behind strong brands

"Viacom brands lead every demo we serve."

“… [Over the past year, Viacom has] now renewed or extended well over half of our sub-base, maintaining basic distribution and simultaneously building a platform for the future, including at the moment having the broadest advanced advertising distribution in the industry. We can insert a 90 percent of VOD homes dynamically. … And again, the brands are healthy, not commonly talked about, but worth remembering Viacom brands lead every demo we serve. So, we're number one on 2 to 11s. We're number on 18 to 34. We're number one on 18 to 49. Those are facts.”

2. Viacom’s Advanced Marketing Solutions drove huge revenue increases in 2018 – and should double in 2019

“… Viacom was early to recognizing that to have a sustainable growth in domestic advertising, we needed to evolve our product line to improve pricing yield, and quite frankly have incremental inventory – that's what AMS [Advanced Marketing Solutions] is all about. In 2018, or in the upfront, we brought seven products to market, everything from our Vantage product, which is non-Nielsen demo delivery on national networks, our dynamic ad insertion which includes both set-top, [multichannel video programming distributor] plant national feed in the case of Charter and Comcast, and also vMVPD [virtual multichannel video programming distributor] dynamic insertion on Sling and seemed to be DirecTV now. And then there's branded content piece.

When you put all that together in fiscal 2018 we delivered $343 million of revenue. We see that business doubling in fiscal 2019 as more inventory comes online.”

3. Viacom’s third-party studio production business continues to grow behind a deep IP library

“You'll see us continue to build our studio production business, most significantly at Paramount [Television], where we're making episodic television product for third parties, whether they're traditional networks or streamers. In 2018, began to do that in international through our Viacom International Studios, as well as you saw very early traction in domestic networks Nick and MTV. …

In total, when you put the whole thing together, we see that being a $1 billion business in a couple of years and we see it being a 20 percent margin business as it scales. And importantly, while we're doing these products for third-parties ultimately all the IP reverts to Viacom and so we're building library value as well.”

"I continue to believe that mobile represents the most significant single opportunity for content companies, and certainly for a company like Viacom."

4. Even as it ramps up third-party production, Viacom will deliver content direct to consumers in strategic ways


“… [What you'll see is a multifaceted strategy. So we will do a set of D2C [direct-to-consumer] offerings. The first two in the marketplace are Noggin and Comedy Central Now. They will be distributed both D2C and what we call B to B2C [business to business-to-consumer] which is a D2C-like product distributed through a distributor. …

We're looking at three other [D2C] categories, those are African-American, those are reality, and those are Spanish, and those aren't too hard to figure out when you think about what our IP library looks like. And by the way, most of those are going to be very heavy library products.”



5. Viacom is teaming up with domestic and international distributors to seize the enormous global opportunity in mobile

“I continue to believe that mobile represents the most significant single opportunity for content companies, and certainly for a company like Viacom. And I believe when we look back on this day three years from now, there will be real value created.

If you look at what we're doing today, so in fiscal 2018, for example, we did our first mobile deal in the U.S., with AT&T, with their AT&T launch product that's an entertainment skinny bundle distributed on mobile. We have six services on that platform. By the way, did that deal outside of any other broader deal with AT&T, so that was standalone incremental deal that they saw value in our brands and their applications in the mobile space. We've done 10 deals outside the U.S. in fiscal 2018, four video product and that's everywhere from Latin America to Europe to Asia.”