CEO Bob Bakish Shares His Game Plan for Keeping Viacom Vital

when his competitors are all scaling up fast. But as Backish explained to me, he's got a plan for building on the assets he has without making a so called transformational deal. Have a listen, So, I guess what I want to get a sense of is two years or so into the top job, you certainly inherited your share of challenges. Where do you see things now or or at it? Maybe it's not quite mission accomplished? But are you happy with the progress made or is it more

about the improvements still to come? Yeah? Sure, well, um, I wouldn't. I wouldn't ever say anything's mission accomplished, and certainly not in the in the changing world we're living in. But if if you looked at Viacom circa the end of sixteen, which is when I was given the opportunity to lead the company, UM, it was clear that there were issues UM that and that the company was in

need of a turnaround. And and really our journey since then has been about a turnaround and an evolution because, as I said, as we all know, you know, the world is changing, and just merely getting back to where

we were wouldn't be sufficient. So in the context of the company at the end of sixteen, you know, we had a Paramount Pictures unit that just came off a year where it lost half a billion dollars and consumed a billion two in cash, which is pretty good trick for a company that's a library that throws off three hundred million UM. So that was clearly a problem. UM. You know, we had our our domestic networks, UM, iconic brands, etcetera.

But we had some real friction in the distribution space and there was a bunch of noise around that, and candidly, the audience performance of some of those networks UM wasn't what we'd like to be. And it was really a trend line that had been moving in the wrong direction. UM. And so we got to work addressing those issues. And if you look at Paramount as an example today, UH circuit the end of eighteen calendar eighteen, you know, that's a business that now we have. We just finished a quarter.

We haven't reported that quarter yet, so let's skip the most recent quarter. But prior to that, you know, we had seven straight quarters of earnings improvement UM in eighteen. You know, we clearly showed that we could make films that matter and make money on them. And I'd offer A Quiet Place as an example. I'd offer Mission Impossible fall Out as an example, which was the sixth installment of that franchise. It was also the most successful on a box office basis, not only globally but in the US,

and that doesn't usually happen in the sixth iteration. UM. And we had a television business that came from literally nowhere a couple of years ago to deliver four hundred million dollars in revenue as we delivered UH nine series. So Paramount is in a fundamentally better place. That's the result of a really a complete overhaul of the team there now led by Jim Jianopolis, who's awesome. UM, as well as really rethink on the strategy and the slate

construction and all those other things. So feeling very good about that. UH. The most recent proofpoint on that is Bumblebee UM. And you know, while we wouldn't I wouldn't get into all of it. If you look at the review of that movie versus the last Transformers movie, UM, everybody agrees is fundamentally a better movie. The last one we lost over a hundred million dollars on UM. This one's nicely profitable. UM done about three hundred million in

box office to date and it will continue to play. UM. So paramounts of good place. The distribution landscape in US, we all know that's um uh complicated. UM. Back in early seventeen, there was a lot of conversation going around that we were gonna get dropped by Charter. UH. That

obviously would have been a problem. UM. And you know, through really focusing on UH partnership, evolving our strategy to not only provide the right set of access to rights, so really trueing up our on demand grant grants and TV everywhere and the like, which we hadn't really fully UM provided, but also broadening the aperture, entering into advanced advertising partnerships UM, as well as in the case of Charter,

a co production partnership. We got that deal done, very happy with that deal, and we went on to a new or extend well over half our sub base. So that's in a materially different place, uh than it was at the time. So there's a lot of great things going on, and we'll dig into some of these things. But you've been on record recently saying that you know, Viacom doesn't require a transformational deal in this environment that where companies even bigger than yours are consolidating. How is

that position tenable? Well, look, UM, we and I continue to believe there's a lot of value in the assets we already own. You look at that. I mean, in the six Team, people thought MTV was dead and buried. Today it's the fastest growing network in television. UM. It's audiences up again in the current quarter double digits UM and we're only beginning to benefit from that resurgence from monetization standpoint, So I think there's a lot of value in the assets we were we already own. We, unlike

most media companies, are truly global operating media company. We don't just have say sales forces outside the US. You know, we own the number one broadcast network in Argentina. We have a major broadcast networking Chinnel five. We're making content all over the world. Were on half of a leading Indian media company called Viacot my team which owns the

Colors brand. There's a lot of value there. And you know, if you think about the transition we're in from an industry standpoint, back in February of seventeen, we started talking about something called the Flagship brand, and and flagship brand was partially about prioritization, but it was also about unlocking opportunity through true multi platform expression. And so if you look at MTV, it's not only a linear cable network with a substantial original programming slate, but it's also has

a piece of the paramount film slate. We started a digital native division called Viacom Digital STUDIOSUM, which produces original content for in short form for distribution both in front of the wall, social and in other places. UM. That consumption has ramped up dramatically, taken us from number twenty two in the Space two into the top ten. UM we've gotten in the experience. With my point being, there's

a lot of opportunity. And when you got to our fourth fiscal quarter of a team, you saw we returned our company to earnings growth, something that hadn't been the case since fourteen. So we think there's a lot of road ahead. And in fact, I think relative to some of our peers, we're further along in making this transition UM than others that are. You look at our ad business,

it's not all thirty second spots. We got an advanced ad business where significant branded content assets, significant data driven assets, we can insert dynamically and v O D homes in the US, something nobody else can do. UM. So there's a lot of value there. So we don't need a transformational deal. UM. We have been doing M and A.

We've been doing what what I call accelerant deals. So we bought a company called who say, branded content company, materially increased our capabilities and kind of the lower end of the ended content space from a price perspective, which is important. We bought a company called vid Con, which is ground zero for social influencers. Really UM strengthened our kind of legacy with young adult audiences and talent and associated talent. UH, and it's 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're expert in marketing of content on the web, but it's also true that it's a studio in its own right, and increasing our participation in the creation of content, including for third parties, as a big push we're making as a company, and that that Awesomeness asset proved among other things this year, or the eighteen um to All

the Boys I've Loved Before, which is one of the most consumed films on Netflix. But these are there all deals? Are you gonna need to make bigger deals or are you just gonna be looking for more of the same smaller deals? You know, scale is very much in vogue. Vertical integration is very much in vogue. Um. If you look at the history of industry and certainly media, vertical integration doesn't tend to work. Um, Bigger is not always better, you know, So I don't think that is um the

necessary path. What is really important is that your plan, you know where you're going, and you're executing against it and you're achieving growth, and that's exactly what we're doing. Of course, we look at lots of different things, UM, but again, I feel very good about the path we're on.

We've got a couple other things UH in the pipeline that are of a commercial nature, and you know, some other smaller things we're looking at UH And I think just as a team, we tracked through and it had its twists and turns, but we emerged as a stronger company than we were at the beginning of eighteen. I believe nineteen will be the same. But let's address the elephant in the room. There's plenty of speculation that Viacom and CBS could be combined as as soon as this year.

How do you manage for an uncertain future? Are you do you have this distinct vision of the one you're trying to build it Viacom through these smaller acquisitions, or are you trying to like build for a bunch of different possible futures at once. Well, I'm a huge believer in having a plan. UM. I think that is one of the big reasons I got the job, because when when all our management met with the board, you know in sixteen uh, we were I ran international and running

for a decade. UH. And we came in and we said, yeah, here's where we are. By the way, here's where we came from, and here's where we're going. Because it's hard to get where you want to go if you don't know where that is. So it's very important to have a plan. UM. Our plan is fundamentally based on the assets we have, because that's the only thing I can bet on for sure. UM. But of course you have plan A, Plan B, plan c UM, and you know

we track out accordingly. UM. And regarding the current narrative, look, the more things change, and we all know our our our world is changing, the more things data saying this is now the third time this whole narrative has come up in a relatively brief time. And I'll tell you what I totally before and what more importantly I tell my management team every day, which is we gotta focus, UM, we gotta play through, we gotta execute, we gotta grow

because there's only one thing I know for sure. At the end of the year, you're either gonna be talking to me or you're gonna be talking to somebody else. And what you don't want to have to say is, well, yeah, we had this opportunity, but we kind of got distracted and we didn't get it done. And so our mission continues to be focused on the assets we have, focus on execution, you know, look broadly to capture value, uh,

and then opportunistically see what else happens. And that's what we do day in and day out, and that's what we're gonna keep doing. So let's talk about some of those core assets. Those flagship brands, MTV, Comedy Central, great brands to have of However, in this climate where the pay TV businesses challenged, Uh, you guys are dealing with your tensions with some of the major distributors. Distributors that

could end up dropping key channels. MTV and a lot of these channels were big for so many years because they spun off all these additional channels. How do you manage a future when there seems to be a secular decline playing out for the business model that got you so big in the first place. Sure, so, UM, I think the essence of it is you have to make sure you're adding value. Point one and point two is

you have to recognize how the world is changing. And so to the first point, UM, you know, if we talked about what we're doing in distribution, we broadened our ability to add value for our mutual benefit both our partners benefit an m v P d UH and Viacom's benefit, and and certainly our whole extension into advanced advertising what we call a MS UH you know, is fundamental to that. The second thing I say, in terms of how the world is changing, the fundamental thing that's going on UM

is fragmentation in terms of how people access content. The world we used to live in was relatively simple. That this is in the television space. Obviously we operate in other spaces, but in the television space, you know everyone okay, eighty five percent of people got the same product and that was big basic UM and that was very nice structure. UM. Today that's no longer true, and it continues to fragment.

So you have people still the vast majority of people in the highest priced UM segment, but you've got people at forty oh actually no forty five dollars because that price is starting to creep up as people try to make economic businesses there. You've got people in the teams, you got uh you know, people are on ten bucks. In terms of the s FOD space, you even have some single digit numbers, and you have free out a VOD and so that world is not gonna change. That's

the world we're gonna be living in. And what's important is that we take these what we can now call flagship brands and we make sure we can we participate eight in all those levels, um, the big basic levels. That's fairly obvious. Uh. You know we are active in the V M, v P, D or O T T space. We are also active, uh in in the s VOD space through our third party production business, where we are making product really for everyone, and we're not just making product,

we're making hits. Did you watch Jack Ryan on Amazon? We made that? Um? Did you watch um Maniac on Netflix? We made that? Did you watch to All the Boys? We were I Love before we made that? Um? And you know we in terms of paramount television is are We're gonna go from nine series to sixteen series in this fiscal year, growing that revenue about fift At the

same time, we've gotten the domestic brands. If you're gonna watch the Real World this year, you're gonna watch it on Facebook and you could watch it the US version, you could watch a Latin version, you can watch an Asian version, all of which will be produced and by the way, they'll be interactive. So that's another way we're participating in that space. And you could think of that as an a VOD space. So UM our brands are evolving. UM.

The product we're providing is segmenting across price points. Don't be surprised if you shortly see our brands participating in a differentiated mobile bundle. Today, our brands are carried on a T and T watching the US and by the way, that whole mobile carriage. And there's been a lot of conversation up five G as there should be. You know, at at CES this year. UM I probably went to Mobile World for the first time five or six years ago. UM And in the last eighteen months we've done mobile

deals outside the US. We have about thirty of them now where Telefonica carries our flagship brands across Latin America. UM in terms of it's in a real kind of substitute abal video product. There's other We have a Paramount Plus product in Europe which is rolling out, which combines Paramount first window you could think of as HBO window, UM films with women, Vico Media Networks, television product all in a consolidated app available both on set top and

UM with leading mobile operators. Are those deals the future? Are they big enough? They're absolutely future. I mean the thing like we're in this We're in the state of transformation of our industry. And you can either view that as glass half full or half empty. I view it as half full. And mobile distribution really is the catalyst that will turn this whole decline of television argument on its head because you have multiples UM of today three G soon four G, never mind five G because five

G initially is more about fixed broad them. But whatever UM, it will eventually be hand sent UM. Those are if you have maybe outside the US five million pay TV homes at the high side, UM probably more like three hundred million quality ones. If you take out India and China, you've got a billion five three G homes and growing. And so I think these kind of deals where you're bringing product either product that looks like what you get

exactly on television. So that's Telephonica example, UM an aggregated product UM that combines a lot of different things under one brand. So that's like a paramount plus. With Telenore product UM, you know, we're on We're in Indonesia with a with a mobile care that's a hundred and sixty million subs. Uh. We're on their data tier with our Nick Play and Nick jr Play apps, which provides access to you know that product on an on demand basis.

So and and by the way, some of these are D two C, so you're opting in as a consumer through an app store. We're taking sevent somebody's taken thirty. Some of these are UM through a third party intermediary. You could think Amazon Channel store, UM. Some of these are what we call B two B two C deal. Those with carriers you could think about Telefonica or Telenore or UM telcom Cell which is the Indonesian one and that. So I think this this kind of hybrid economy of

distribution where unfortunately everybody doesn't get the same thing. People are getting different products, bigger bundles, smaller bundles UM, but fundamentally you have more reach. And by the way, all those type platforms are addressable advertising. So you look at the difference between UM sling and Dish in the US. For us, we're carried on both. That's good, UM, but actually all the sling ads are dynamic. We can insert a specific add to a specific person based on specific data.

On the Dish platform. We can't do that for obvious reasons. It's the DTH going down. I mean, you can do it because with some technical work. But that is another UM big move forward in terms of our ability to create value in the space, and we are in the super early days of that UM so anyway, exciting time. So you're focused more and more on production though, And what's interesting about that is I wonder if there's sort

of a double edged sword to the success there. You empower the Netflix is and the facebooks of the world with your content. That makes it harder, doesn't it for the comedy centrals and mtvs to get as many eyeballs on their content because there these people are watching on Facebook. So doesn't it kind of hurt your core business? Now it doesn't, but here because 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 platform. Right, So I'd rather have a young adult show with the MTV brand than not. Point one point two is the most important thing for from Rykom from a consumer perspective is to continue to have our flagship brands be top of mind for consumers as they think about entertainment. And that entertainment might be going to see a movie in

the theater. That entertainment might be flipping on your flat screen and watching a pay video bundle, that might be accessing product on an app. That might be going to a festival like slime Fest outside of Chicago, which we do in the summer with Nickelodeon. That's what we want and having a extended ecosystem of entertainment experience associated with these brands that cross this fragmenting environment is what it's all about because it will reinforce itself. It provides great

solutions for advertisers. I was with a major CMO last night, UM talking about this before one of the many parties UM. Just last week we were with another UM and with another CMO in a different category, and it's all about being able to get reach into say men eighteen and thirty four, which is not an easy demo to reach

these days. Harder than ever use UM a cross section of platforms, you know, leveraging our linear distribution at NG, our app distribution, adding um are over the top distribution, adding our vds, Vacom Digital studios, product that's resident, and variety of social media platforms. UM doing branded content in and UH in a program that's synchronized to reach that.

In this example, man male eighteen to thirty four, who this particular client and a whole set of clients for that matter, you know, are interested in influencing to buy a product or service. And I think that's very much the future. And and unless you believe, unless you realistically understand that's what's going on. If you go to crawl into the ivory tower of we got to only stay here, you'll never go your company and as a as a you know, public company, UM and a company that wants

to create opportunities for its employees. By the way, and we've been doing lots of work on culture and made a lot of progress there as well. UM that growth is very important. People have to see that there's opportunity they can grow with. And so you've got to deal with this environment. So let's talk about that culture though, because via Com has been through a lot prior to you coming in there, How do you energize thousands of employees who especially it's not even about via conversation when

you look at it that broader macro media world. There's pessimism, there's negativity. So how do you get people going? Well, I think it starts with you gotta have a plan, and you have to make sure people understand what it is so they can understand how they fit in. And they can and you both you and they can understand if you're making progress and if so, you can put more fuel in the tank, or if you're not making progress in one area, you can you can decide to

go some you know, a different direction. That's fundamental. And I can tell you you know, circa sixteen when I was running international, I didn't know if I was gonna stay black because I didn't believe there was a plan with the future. If you talked to and I'm somewhat biased obviously, but I think you'll find if you talk to people in Vitam today, they fundamentally believe we have a plan. They see there's no question that we've effectuated a turnaround. You know at our at our studio on

the West coast, that we have. We are in a far better place from a distribution relationship standpoint, and I've been expanding that business. That we are actively participating in places that we hadn't before, including, you know, providing original content on a day and day out basis to the avid you know, Digital um, I don't know, Stratosphere um. That we're active in events and that in total, we actually grew the earnings of the company and and we're

doing in such way and I'm talking about it. We're just kind of starting to talk about this. But what unites all of that is a culture of content. That is what viacom is. Whether you make short form, long form, feature length, or an event, whether you're actually on the creative side, the monetization side, of the sports side, they're all working in this culture of content. And they see the progress we're making. I know because I talked to

them at least quarterly. I talked to the whole employee based on Facebook Live and take questions and do all those things, and obviously talk to people every day, but they see the progress and that's how you get people excited, because at the end of the day, people are pretty simple. It comes down to what's in it. For them, and what's in it for them is a future. And if you look at Viacom circa you know, January of versus January of, there's a lot broader and deeper understanding that

the future is looking pretty interesting. And and that's how you keep you engaged. We're here in Las Vegas and cees. You know you're gonna spend your time on the show floor. What are the kind of technologies that are catching your eye that are relevant to your business? Is future? Sure? So I actually was on the floor yesterday, um and uh, because I think this is an opportunity to be a bit a bit of a sponge and see what's going on.

And if you think about the fun the metals of our business, the entertainment business, UM, there's kind of two things that are important. One is you get consumers to want to spend time with your product. That's important, um. And two as you get paid for it. If you can have those two things, everything else can probably sort itself out. And if you look at the arc of consumption.

I remember, because I've been in this business, you know, thirty years when second television sets started really showing up at scale in kids bedrooms and other places and that drove more minutes. That was a good thing. And then you know, more recently computers with infrastructure started showing up in places like offices and that you know, that wasn't really a heavy video space, but there was more impressions.

And then, of course much more recently you get into over the top and you get into mobile, and that's much more time with product. And what I saw yesterday, UM was clearly you know, there's two things that are coming, and they're coming like a freight train, and they're fundamentally good. UM. One is the continuing acceleration of broadband infrastructure, both in the name of five G, which is definitely coming, as you all know. Maybe it's fixed broadband first, but it'll

be wireless that's gonna fun. And and all the wireless carriers and we talk to them all we do business fall and they're all times we need use cases, and certainly entertainment is is a use case. UM. And the other thing that's gotten less less uh press at CES is ten G. And that's the cable industry talking about their next line because they're delivering one G right now. Uh. They're the only people doing that, by the way. UM. And now their next pushes to deliver ten x that

over the next you know, five years or something. So you put those two things together, you have a lot of people wanting to drive increased broadband consumption and needing stuff to put through it. That's good and so that's the one. And the second thing was if you walk the floor of the cars, Um, that's another freight train that's coming, five G autonomous cars that people don't have to drive. Now. I don't know what you're gonna do if your brand is the ultimate driving machine. It's a

serious question because that's gonna be a niche business. But people are going to be look at them. They've got people, movers and monitors. People are gonna be And so just like adding a TV set to a bedroom or adding mobile on the go, the last vestige of video free consumption is the automobile. And that's coming and that's going to be thinking about how it plays in absolutely absolutely And so what do you fork is that like relevant

two years from now? Five years? So now are you able to say at this point, um, look, I think you know, in terms of at at scale, it's more five years than two years for sure, because I think there's still some liability issues that got to get worked out in that space. Um, like, you own the car, but you didn't drive the car and it crashed. Who's who's that on? I don't know, But but at those are details that will get worked out. The fundamental thing

is time. And yeah, sure some people will work in cars. You know, when I'm when I'm being driven, I typically have a loptome I'm working. But a hell of a lot more people are going to be entertained in cars

and that's a good thing. So between what's going on in broadband, which is only going to accelerate on a global basis, including mobility and this next wild card, which is the automobile, there's just gonna be more demand and everyone and their brother is trying to get a piece of that pie, and most of them don't make content.

So back to our studio production initiative, there's a lot of legs to this game, and what what we're focused on is making sure our brands Paramount, MTV, Nickelodeon, etcetera, are resident in this growing, albeit complicated ecosystem. Well, it's going to be interesting to see where your brand is in this very interesting future. Bob, thanks for coming in and talking with me about it. It's like pure This

has been another episode of Strictly Business. Tune in next week for another helping a scintillating conversation with media movers and shakers, and please make sure you subscribe to the podcast to hear future episodes. Also, leave a review in Apple Podcast let us know how we're doing. M