Viacom CEO Bob Bakish On 'Cloverfield Paradox' Sale, OTT . Feb 8, 2018 19:26:36 GMT -6
Post by The Ultimate Nullifier on Feb 8, 2018 19:26:36 GMT -6
Viacom CEO Bob Bakish On 'Cloverfield Paradox' Sale, OTT Plans And Nickelodeon Leadership
In a newsy earnings call, Viacom CEO Bob Bakish addressed the decision to sell Paramount’s The Cloverfield Paradox to Netflix, where it launched on Super Bowl Sunday, calling it “a bit of a one-off.”
Even so, the studio will “continue to look broadly at opportunities” for “creative thinking and ways to create more value,” he said.
Bakish, who has had the top job for a bit more than a year, covered several other hot topics, though a disclaimer at the top of the call said he would not address the recent news of formal discussions with CBS. The company reported earnings this morning that beat Wall Street estimates but reflected U.S. advertising weakness and an 8% revenue decline. Investors still seemed encouraged, boosting shares 6% to $32.45 within the first hour of trading.
The CEO asserted that there is “no leadership change at Nickelodeon,” despite recent rumblings that Sarah Levy’s expanded duties as COO of the global entertainment group augur a shuffle at the top of the network. Nick’s ratings softness was a notable rough patch in the quarterly results, though Bakish said Nick president Cyma Zarghami and her team are working on a rebound, something “we have done before,” he noted.
While some have viewed the Levy promotion as a sign that Zarghami may not continue after her contract expires in the coming months, Bakish maintained, “the intent is to streamline our structure and break down silos and make sure we are as agile as we can be.”
Like every traditional programmer doing battle with streaming services and mobile and social players of all stripes, Viacom is planning to roll out a direct-to-consumer OTT service. Execs said on the call that it is on track to launch by this fall in the U.S. and will include “tens of thousands of hours” of content, CFO Wade Davis said during the call.
In further articulating the strategy, Bakish made a thinly veiled reference to Starz, whose OTT service has inflamed tensions with distributors such as Altice, which continues a carriage impasse with Starz parent Lionsgate. Compared with such an offering, “We do not view this as a substitute product. We view this as a complement.”
Davis said one MVPD partner, which he did not name, is exploring an integration of the Viacom OTT into its the “This is a product that we think works in that ecosystem.”
While Paramount Pictures in general continues to struggle, Bakish and Davis painted a brighter picture for 2019.
Revenue from Paramount Television, which is producing shows like The Alienist for TNT and Tom Clancy’s Jack Ryan for Amazon will hit $400 million in annual revenue by 2019, Davis projected, with profit margins “at or above” 10%, with 14 shows in the pipeline.
On the film side, the studio has 16 films slated for 2019, half of them from the synergistic shingle Paramount Players, which is the in-house home for properties from across the Viacom fold with big-screen versions. Of the eight releases in 2019, Davis said, six will have budgets of $25 million or less.
While the call emphasized the bright spots for 2019, many analysts noted that it is only February of 2018 and some of them maintain skepticism about Viacom’s near-term prospects.
“The question of the day, for the stock, is whether anybody will care, given M&A expectations,” wrote Todd Juenger of Sanford Bernstein. “The market should care. Even in a re-merger scenario, the performance of the asset determines the relative price paid. And should heavily inform expectations about performance going forward (and the ability of CBS, or anybody else, to improve it).”
Doug Creutz of Cowen pointed to “steep declines in Viacom’s audience in recent years (at least according to current measurement techniques), the overall deteriorating value proposition of networks, and ongoing problems at Paramount.” While the companies recent focus on six core cable network brands is a positive step, he added, “execution on strategy remains very important, and the overall secular problems facing TV in general appear amplified in Viacom’s case due to the youth of their audience.”
Even if a deal is consummated to rejoin CBS, Creutz wrote, “we are not sure this implies a significant premium for Viacom shareholders due to the shared ownership of the two companies.”