English Entertainment
Viacom reports lower revenue for Q1 2018
BENGALURU: American multinational media conglomerate with interests primarily in cinema and cable television, Viacom Inc (Viacom) reported lower numbers for the quarter ended 31 December 2017 (Q1 2018, quarter under review) as compared to the corresponding year ago quarter Q1 2017 (y-o-y). The company reported 7.6 percent y-o-y decline in revenue for Q1 2018 at $3,073 million from $3,324 million. Two segments are revenue heads for the company – Media Networks; and Filmed Entertainment.
The drop in revenue reflected declines in both segments says the company in its earnings release. Operating income increased 1.6 per cent y-o-y to $717 million from $706 million, primarily reflecting lower total expenses including the impact of a $42 million restructuring charge recognised in the prior year quarter. Net earnings from continuing operations attributable to Viacom grew 35 per cent, or $139 million, to $535 million, principally due to the enactment of tax reform. Diluted earnings per share for the quarter increased $0.33 to $1.33, and adjusted diluted earnings per share decreased $0.01 to $1.03.
Media Networks
Media Networks revenues decreased 1.1 per cent to $2,560 million in the quarter, as a 1 per cent increase in advertising revenues to $1,308 million was more than offset by a 4 per cent y-o-y decrease in affiliate revenues to $1,094 million. Domestic revenues declined 6 per cent to $1.93 billion while international revenues grew 18 per cent to $631 million. Excluding a 5-percentage point favourable impact from foreign exchange, international revenues increased 13 per cent in the quarter, primarily driven by a 6-percentage point favourable impact from the acquisition of Telefe, as well as growth in Europe.
Domestic advertising revenues decreased 5 per cent to $937 million, reflecting lower linear impressions partially offset by higher pricing, as well as growth in digital advertising revenue. International advertising revenues increased 22 per cent to $371 million. Excluding a 5-percentage point favourable impact from foreign exchange, international advertising revenues increased 17 per cent, principally due to a 10-percentage point favourable impact from the acquisition of Telefe, as well as growth in Europe.
Domestic affiliate revenues decreased 8 per cent to $907 million, primarily due to subscriber declines and lower SVOD revenues, partially offset by rate increases. International affiliate revenues grew 18 per cent to $187 million in the quarter.
Excluding a 5-percentage point favourable impact from foreign exchange, international affiliate revenues grew 13 per cent driven by organic growth, as well as a 2-percentage point favourable impact from the acquisition of Telefe.
Ancillary revenues grew 5 per cent to $158 million in the quarter, including a 2-percentage point favourable impact from foreign exchange. Domestic ancillary revenues increased 8 per cent to $85 million and international ancillary revenues increased 1 per cent to $73 million.
Adjusted operating income for Media Networks decreased 7 per cent to $913 million in the quarter, principally due to an increase in segment expenses and lower revenues
Filmed Entertainment
Filmed Entertainment revenues decreased 28 per cent to $544 million in the quarter, with domestic revenues down 42 per cent to $270 million, and international revenues down 6 per cent to $274 million. Theatrical revenues declined 48 per cent to $100 million due to the number and mix of current quarter releases. Domestic and international theatrical revenues decreased 49 per cent and 46 per cent, respectively.
Licencing revenues decreased 13 per cent to $213 million in the quarter. Domestic licensing revenues decreased 36 per cent while international licencing revenues grew 8 per cent, primarily driven by the mix of titles available in each market.
Home entertainment revenues were down 25 per cent to $183 million, principally due to the comparison against the release of Star Trek Beyond in the prior year quarter. Domestic home entertainment revenues decreased 38 per cent while international revenues increased 1 per cent. Ancillary revenues decreased 38 per cent to $48 million, with domestic ancillary revenues down 49 per cent and international ancillary revenues up 27 per cent.
Filmed Entertainment reported an adjusted operating loss of $130 million in the quarter compared to $180 million in the prior year quarter, an improvement of $50 million that primarily reflects lower operating expenses.
Company speak
Viacom President and CEO Bob Bakish said, “In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the company for the future. Viacom’s most watched portfolio of domestic cable brands grew viewership share in the quarter, led by our powerful flagship networks, which now includes Paramount Network – the biggest and most ambitious network rebrand in our history. Internationally, we continue to deliver double-digit top-line and bottom-line Media Networks gains while launching innovative new partnerships in growth territories around the world.
Adding further, Bakish said, “Viacom has also made considerable progress in its push to accelerate consumption and monetisation on next-generation platforms, achieving substantial growth in worldwide digital advertising revenues, expanding distribution on fast-growing virtual MVPD and mobile services, and ramping up resources and talent at Viacom Digital Studios. Additionally, since the end of the quarter, we continued to expand our digital capabilities with the acquisition of influence marketer WHOSAY and the world’s premier online video event, VidCon. In addition, our strategy to further diversify our core properties offscreen through live events, hospitality and consumer products continues to progress, with the much anticipated Broadway premiere of the SpongeBob SquarePants musical in the quarter, along with new initiatives across our portfolio.
“We remain deeply committed to maintaining strong financial discipline and delivering returns for our shareholders. In the quarter, Viacom continued to improve its leverage profile and we are on track to achieve $100 million in new cost savings in the current fiscal year, and hundreds of millions more in 2019,” concluded Bakish.
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English Entertainment
The end of Freeview? Britain debates switching off aerial tv by 2034
UK: The aerial is losing its grip. As broadband becomes the default way Britons watch television, the UK is edging towards a decisive, and divisive, question: should Freeview be switched off by 2034? The issue, highlighted in reporting by The Guardian, has exposed deep fault lines over access, affordability and the future of public service broadcasting.
For nearly 25 years, Freeview has delivered free-to-air television from the BBC, ITV, Channel 4 and Channel 5 to almost every corner of the country. Even now, it remains the UK’s largest TV platform, used in more than 16m homes and on around 10m main household sets. Yet the same broadcasters that built it are now pressing for its closure within eight years.
Their case rests on a structural shift in viewing. Smart TVs, superfast broadband and the Netflix-led streaming boom have pulled audiences online. Advertising economics have followed. By 2034, the number of homes using Freeview as their main TV set is forecast to fall from a peak of almost 12m in 2012 to fewer than 2m, making digital terrestrial television, or DTT, increasingly costly to sustain.
But critics say the rush to switch off risks abandoning those least able, or least willing, to move online.
“I don’t want to be choosing apps and making new accounts,” says Lynette, 80, from Kent. “It is time-consuming and irritating trying to work out where I want to be, to remember the sequence of clicks, with hieroglyphics instead of words. If I make a mistake I have to start again.”
Lynette is among nearly 100,000 people who have signed a “save Freeview” petition launched by campaign group Silver Voices. She fears the government is about to “take [Freeview] away from me and others who either don’t like, can’t afford, or can’t use online versions”.
Official figures underline the fault lines. A report commissioned by the Department for Culture, Media and Sport estimates that by 2035, 1.8m homes will still depend on Freeview. Ofcom’s analysis shows those households are more likely to be disabled, older, living alone, female, and based in the north of England, Wales, Scotland and Northern Ireland.
Freeview is owned by the public service broadcasters through Everyone TV, which also operates Freesat and the newer streaming platform Freely. After two years of review, DCMS is expected to set out its position soon, drawing on three options proposed by Ofcom: a costly upgrade of Freeview’s ageing technology; maintaining a bare-bones service with only core PSB channels; or a full switch-off during the 2030s.
The broadcasters have rallied behind the third option. They argue that 2034 is the logical cut-off, when transmission contracts with network operator Arqiva expire. By then, they say, the cost of broadcasting to a dwindling audience will far outweigh the returns from TV advertising.
Ofcom agrees a crunch point is approaching. In July, the regulator warned of a “tipping point” within the next few years, after which it will no longer be commercially viable for broadcasters to carry the costs of DTT.
Others see risks beyond economics. Questions remain over whether internet TV can reliably deliver emergency broadcasts, such as the daily Covid updates, in the way that universally available DTT can. The UK radio industry has also warned that an internet-only future for TV could push up distribution costs and force some radio stations off air if PSBs no longer share Arqiva’s mast network.
“It is a political hot potato,” says Dennis Reed, founder of Silver Voices, who says he has “dissociated” his organisation from the government’s stakeholder forum, which he believes is “heavily biased” towards streaming.
The Future TV Taskforce, representing the PSBs, counters that moving online could “close the digital divide once and for all”. “We want to be able to plan to ensure that no one is left behind,” a spokesperson says, adding that rising DTT costs could otherwise mean cuts to programme budgets.
The numbers show the scale of the challenge. Of the 1.8m Freeview-dependent homes projected for 2035, around 1.1m are expected to have broadband but not use it for TV. The remaining 700,000 are forecast to lack a broadband connection altogether.
Veterans of the analogue switch-off, completed in 2012 after 76 years, recall similar fears of “TV blackout chaos”. Around 6 per cent of households were labelled “digital refuseniks”, yet a targeted help scheme and a national campaign, fronted by a robot called Digit Al voiced by Matt Lucas, delivered a largely smooth transition.
This time, the BBC is less keen to foot the bill. Tim Davie, the outgoing director general, has said the corporation should not fund a comparable support programme for a Freeview switch-off.
Research for Sky by Oliver & Ohlbaum suggests that with early awareness campaigns and digital inclusion measures, only about 330,000 households would ultimately need hands-on help ahead of a 2034 shutdown.
Meanwhile, viewing habits continue to fragment. Audience body Barb says 7 per cent of UK households no longer own a TV set, choosing to watch on other devices. In December, YouTube overtook the BBC’s combined channels in total UK viewing across TVs, smartphones and tablets, albeit measured at a minimum of three minutes.
That shift may accelerate. YouTube has recently blocked Barb and its partner Kantar from accessing viewing session data, limiting transparency just as online platforms consolidate power.
“When the government chose British Satellite Broadcasting as the ‘winner’ in satellite TV it was Rupert Murdoch’s Sky instead that came out on top,” says a senior TV executive quoted by The Guardian. “There already is such an outsider ready to be the winner in the transition to internet TV; it is YouTube.”
Freeview’s future now hangs on a familiar British dilemma: modernise fast and risk exclusion, or protect universality and pay the price. Either way, the aerial’s days as king of the living room look numbered.
English Entertainment
Christian Vesper steps down as Fremantle’s global film and drama CEO
LONDON: Christian Vesper is leaving Fremantle after ten years as ceo, global film and drama, ending a tenure that turned the company into an internationally recognised centre of excellence for drama and film. Since joining in 2016, Vesper expanded Fremantle’s scripted footprint, overseeing or exec producing over 80 films and series in the last five years, with the 100th slated for release in 2026.
Vesper shepherded hits including Bugonia, Pillion, Queer, Maria, The Chronology of Water, Picnic at Hanging Rock, The Luminaries, On Becoming a Guinea Fowl, and the upcoming Rachel Weisz starrer Séance on a Wet Afternoon. Festival favourites and critical darlings under his watch include Without Blood (Angelina Jolie, Salma Hayek), M. Son of the Century (Joe Wright, Luca Marinelli), Faithless (Tomas Alfredson, Frida Gustavsson), Cannes winner My Father’s Shadow, and The Listeners (Janicza Bravo, Rebecca Hall). He also set up the Fox revival of Baywatch.
Vesper forged a formidable slate of first-look and creative collaborations with global talent, including Emma Stone and Dave McCary’s Fruit Tree Production; Kristen Stewart, Dylan Meyer and Maggie McLean’s Nevermind Pictures; Pablo and Juan de Dios Larraín’s Fabula; Rachel Weisz and Polly Stokes’ Astral Projection; Edward Berger’s Nine Hours; Johan Renck and Michael Parets’ Sinestra Films; Sarah Condon’s Fair Harbour; and Richard Yee and Krishnendu Majumdar’s Me+You Productions.
Based in London, Vesper reported to Andrea Scrosati, group coo and ceo continental Europe, who will now oversee the film and drama division on an interim basis alongside the wider leadership team.
Scrosati said: “Christian’s vision has built the credibility of our drama and film slate. With him at the helm, we delivered consistent success and critical acclaim. We appreciate that he now wishes to focus on new horizons, and we all wish him well.”
Vesper said: “After 10 years, the time is right to step down. Fremantle has been a huge part of my life. I’m proud of what we’ve achieved — the 100th film this year underlines the progress made. We’ve built a dedicated, talented team, and I know they will take our film and drama business to even greater heights. Now is the perfect moment for my next adventure.”
Before Fremantle, Vesper spent 14 years at Sundance TV overseeing scripted projects and co-productions including Rectify, The Honorable Woman, The Last Panthers, Top of the Lake and Deutschland 83. He also held roles at HBO, iFilm, October Films and USA Films.
From festival acclaim to awards galore — four academy awards, two golden globes, five baftas, eight cannes winners, seven venice winners including the golden lion — Vesper leaves Fremantle’s film and drama operations in a position of strength, a legacy of ambition, vision and global impact, and a company poised for even bigger hits.
English Entertainment
Paramount extends deadline on Warner Bros. hostile bid
NEW YORK: Paramount Skydance has gone on the offensive against Warner Bros Discovery, calling its amended merger with Netflix an admission of weakness and still a bad deal.
In a sharply worded filing late on January 22, Paramount said the revised Netflix agreement “falls well short” of its own $30-per-share all-cash offer and urged WBD shareholders to vote it down at a forthcoming special meeting. The company has also extended its tender offer to February 20, buying time as it presses for regulatory clearance.
At the heart of the attack is money and certainty. Under the Netflix transaction, WBD shareholders would receive $27.75 a share in cash, assuming the group can offload $17bn of debt on to the spun-out Discovery Global business. If that assumption fails, the payout shrinks, dollar for dollar.
Paramount argues it almost certainly will fail. Based on leverage levels at Versant Media, a close peer, Discovery Global could sustain only about $5.1bn of net debt. That would push roughly $11.9bn back on to WBD’s studios and streaming arm, cutting the implied cash consideration from Netflix to about $23.20 a share.
WBD’s own advisers appear to share the scepticism. Discounted cash-flow analyses valued Discovery Global’s equity as low as $0.72 a share. Paramount has previously pegged it at between zero and 50 cents. Yet WBD is asking shareholders to approve the Netflix deal without disclosing the final capital structure of Discovery Global, despite admitting they “will not know or be able to determine” the actual merger consideration at closing.
Paramount says that rush is no accident. Once approved, the Netflix deal would shut the door on what it calls a value-maximising alternative, a $108.4bn enterprise-value transaction, all cash, with far less regulatory baggage than Netflix’s $82.7bn-equivalent proposal.
That baggage matters. Paramount warns that a Netflix-WBD tie-up would further entrench market concentration, handing Netflix an estimated 43 per cent of global subscription video-on-demand customers. Prices would rise, creators would lose leverage and cinemas would suffer, it argues. Regulators, especially in Europe where Netflix already dominates and HBO Max is its main rival, are unlikely to be persuaded by Netflix’s attempt to define the market as including YouTube, TikTok and Instagram.
By contrast, Paramount pitches its own bid as pro-competitive, bolstering theatrical output and strengthening Hollywood’s creative ecosystem.
The gloves also come off on governance. Paramount says the WBD board publicly defended the original Netflix deal even as it renegotiated it, refused to engage with Paramount once talks with Netflix reopened and continues to withhold “highly material” information while racing to a vote.
Shareholders appear to be listening. As of late on January 21, more than 168.5m WBD shares had been tendered into Paramount’s offer.
The message from Paramount is blunt. The Netflix deal is smaller, shakier and riskier. The cash is on the table, the clock is ticking and shareholders now have a choice to make.
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