MUMBAI: Viacom CEO Bob Bakish describes his tenure at the giant company using two words – turnaround and evolution. At the end of 2016, Paramount Pictures was coming off a year where it had lost half a billion dollars and consumed another billion in cash. There was friction with distributors with the company’s cable networks not performing as they should have. It highlighted a trend line that was moving in the wrong direction. Cut to 2019, Paramount has delivered an earnings improvement in seven straight quarters with earnings improvement. The studio produced films that matter and made money on them. The television business delivered 400 million dollars in revenue, putting out nine series. Bakish has scripted one of the most fascinating times in the media and entertainment world with his work as CEO of Viacom. At CES 2019, he sat down for a fireside chat to reveal how we made it happen. Here are the excerpts of that insightful conversation with Variety.
You’ve been on record recently saying Viacom doesn’t require a transformational deal. In this environment there were companies even bigger than yours are consolidating. How is that position tenable?
Look, we and I, continue to believe there’s a lot of value in the assets we already own. In 2016 people thought that MTV was dead and buried but today it is the fastest growing network in television. Its audience is up again, in the current quarter, in double digits and we are already beginning to benefit from that resurgence from a monetisation standpoint… there’s a lot of value to the assets we already own. We, unlike most media companies, are truly a global operating media company, we don’t just have sales forces outside the US, you know we own the number one broadcast network in Argentina, we are major broadcaster on Channel 5, we are making content all over the world. We own half of the leading Indian media company called Viacom18 which owns the Colors brand. There’s a lot of value there and if you think about the transition we are in from an industry standpoint. Back in February of ’17 we started talking about something we call a flagship brand which was partially about prioritisation but it was also about unlocking opportunities through multi-platform expression. If you look at MTV, it’s only not only a linear cable network with substantial programming slate, but it also has a piece of the Paramount film slate. We started a digital native division called the Viacom digital Studios which produces original content in short form for distribution both in front of the wall social and other places… that has dramatically taken us from number 22 in space into top 10. There’s a lot of opportunity and when we got to our fourth fiscal quarter of ’18 we saw our company to return to growth, something that hasn’t been the case since ’14. So, we think there’s a lot of growth ahead.
And relative to some of our peers, we are further along in making this transition. Look at the ad business, it’s not all 30 seconds up. We got an advanced ad business with significant branded content assets, significant data-driven assets. We can insert dynamically in 90 per cent of the VoD homes in the US. Something nobody else we can do. We have been doing M&A, we have been doing what I call accelerant deals. We bought a company called Whosay, a branded content company, which clearly increased our capabilities in the lower-end of the branded content space from a price perspective which is important. We also bought a company called Vidcon which is ground zero for social influencers… it has really strengthened our legacy with young-adult audiences and associated talented and it is also an extension of our experiential business, we most recently bought a company called Awesomeness which people think of as a web company and it’s true that they are an expert in marketing content on web but it’s also true it’s a studio in its own right. And increasing our participation in creation of content including for third parties is a big push we are making as a company and that Awesomeness has produced among other things “To All the Boys I have Loved Before”, which was amongst the most watched shows on Netflix.
But these are very small deals. Are you going to look at making bigger deals or are you looking at more of the same smaller deals?
Scale is very much in vogue, vertical integration is very much in vogue. If you look at the history of the industry in certain media vertical integration doesn’t tend to work, bigger is not always better. I don’t think that is the necessary path. What is really important is that you have a plan and you know where you are going and you’re executing against and you are achieving growth and that’s exactly what we are doing.
Let’s address the elephant in the room. There’s a plenty of speculation that Viacom and CBS can be combined this year. How do you manage for you know an uncertain future? Do you have a distinct vision that you are planning for Viacom with smaller acquisitions or are you trying to build for a bunch of different possible futures?
I’m a huge believer in having a plan. Our plan is fundamentally based on the assets we have because that is the only thing I can bet on for sure. We got to focus, we got to play through, we got to execute, we got to grow because there’s only one thing I know for sure that at the end of the year you are going to be talking to me or you are going to be talking to somebody else. What you don’t want to have to say is that ‘well yeah we had this opportunity but we got distracted and we didn’t get it done’. So our mission continues to be focussed on the assets that we have, focus on execution, look broadly to capture value and opportunistically see what else happens, and that’s what we do day in and day out and that’s what we’ll keep doing.
However, in this climate where the pay-TV business is challenged, you guys are dealing with your tensions with some of major distributors. That could end up dropping key channels. How do you manage the future?
You have to make sure you’re adding values. Point one and two is that you have to recognise how the world is changing. To the first point, talking about what we are doing in distribution, we broadened our ability to add value for our mutual benefit, both our partner’s benefit and Viacom’s benefit and certainly our whole extension to advanced advertising, what we call AMS, is fundamental to that.
The second thing I would say in terms of how the world is changing is the fundamental thing is going on is fragmentation in terms of how people access content. In the television space 85 per cent people had the same product and that was big basic and that was very nice structure. Today, that’s no longer true and it continues to fragment. So you have a vast majority of the people in the highest priced segment, but you got people at 45 dollars, that price is starting to creep up as people are trying to make economic businesses there. We have people in teens, people around 10 bucks in terms of the SVoD space, then you have some single digit numbers and then you have free, the AVoD mode. So, that world is not going to change, that’s the world we are going to live in, and what’s important is that we take these called flagship brands and we make sure that we participate in all those levels. The big basic levels, that’s fairly obvious… you know we are active in VMVPD in the OTT space, we are also active in the SVoD space through our third party production business.
Are those deals in the future big enough?
We are in the state of transformation of our industry. You can either view that as glass half full or half empty. I view it as half full. Global distribution really is the catalyst that will turn this whole decline of television argument on its head because you have 3G, soon 4G, never mind 5G as 5G is more about fixed broadband. It will eventually be handset. If you have 500 million pay TV homes outside the US at the high side, probably 300 million quality ones, if you take out India and China. These kinds of deals where you bring in product either products that look like exactly what you get on television so that’s Telefonica and aggregated product that combines a lot of different things under one brand.
We are in Indonesia with a mobile carrier that has 160 million subscribers. We have Nick Play and Nick Junior Play apps which provide access to that product on an on-demand basis. Some of these are through a third party intermediary, you could think Amazon channel store, and some of these are called B2B2C deals with carriers. You could think about Telefonica or Telenor or Telecom Cell. Now in this kind of hybrid economy of distribution, unfortunately, everybody doesn’t get the same thing, people are getting different products bigger bundles or smaller bundles.
So you look at the difference between Sling and Dish in the US. For us we are carried on both, but all the Sling ads are dynamic, we can insert a specific ad to a specific person based on specific data. On the Dish platform we can’t do that, for obvious reasons, it’s a DTH going down, we can’t do it because of some technical work but that is another big move forward in terms of our ability to create values and we are in the super early days of that.
So your focus will be more and more on production now, and what’s interesting about that is if there is a double edged sword to the success there. Doesn’t it make it harder for you to get eyeballs because people are watching your content on Netflix or Facebook? Doesn’t it hurt your core business?
No, it doesn’t. For two reasons, one is whether we make a show for Facebook or not it’s not going to influence whether they have shows on their platforms. Point two is the most important thing from a consumer perspective and that is to continue to have our flagship brand on top for consumers that think about entertainment. And that entertainment might be going to see a movie in a theatre, on your flat screen watching pay video bundle or access to product on an app. Out of the extended ecosystem of entertainment experience associated with these brands that cross this fragmented environment is what it’s all about. It provides great solutions for advertisers. It’s all about being able to get reach to say men 18-34, which is not easy to reach these days, it is harder than ever. Use a cross-section of platforms, leveraging our linear distribution, adding our app distribution, adding our over the top distribution, adding our Viacom Digital Studios product, in branded content, in a programme that synchronised to reach that 18-34 group.
How did you energise thousands of employees especially at Viacom, because looking at their world, there is pessimism, there is negativity. How did you get people going?
You have a plan and you have to make sure people understand what it is and how they fit in and both you and they can understand if you are making progress and if so it is the path you want to take. Or if you are not making progress in one year you can see if you want to take some different direction. If you talk to people at Viacom they fundamentally believe in our plan. That we are actively participating in places that we haven’t before including providing original content on a day-in-day-out basis to the AVOD digital stratosphere and that we are acting in advance. In total, we actually grew the earnings of the company and all of that is the culture of content. Whether you make short-form, long-form, feature-length or event, whether you are on the creative side, monetisation side, or sports side, they all are working in this culture of content and they see the progress we’re making. I know because I talk to them, at least quarterly, I talk to them on Facebook live and take questions and ask them do you see the progress. Because at the end of the day people are pretty simple, it comes down to what’s in it for them and that is the future.
Here at Las Vegas with CES you are spending a lot of time. What are the kind of technologies that are catching your eye?
If you think about the fundamentals of our business there are kind of two things we are working on. One is we get the consumers to spend more time, that’s important, and two is that you are getting paid for it. If you have those two things, everything else can sort itself out. And if you look at the arc of consumption, I remember because I’ve been in this business 30 odd years when second TV sets starting showing up in scale in kids’ bedrooms and other places and that drove more minutes. That was a good thing and then more reasons like computers with infrastructures started to show up in places like offices and that wasn’t really in the heavy video space but there were more impressions and of course much more recently you get into over the top and you get into mobile and that’s much more ton of a product. There are two things that are coming like a freight train. One is the continuing acceleration of broadband infrastructure both in the name of 5G which is definitely coming as you all know, maybe its fixed broadband first but that’s going to flood in and all the wireless carriers when you talk to them all they say we need use cases and certainly entertainment is a use case and the other thing that’s got less press at CES is 10G and that’s the cable industry talking about their next length. They are delivering 1G now and their next push is to deliver 10x that which will be five years or something. 5G autonomous cars that people don’t have to drive is also coming. So just like adding a TV set to a bedroom or adding mobile on the go, the last vestige of video free consumption is automobile.
