Viacom reorganization to focus on six priority flagship brands in Q1 earnings announcement
Viacom Inc. announced its Q1 fiscal 2017 results and gave an update on its strategic priorities in its go-forward strategy, which finds the cable giant concentrating its efforts on its six priority flagship brands – Nickelodeon, Nick Jr., MTV, Comedy Central, BET and Spike.
In a release of the Q1 numbers, Viacom president and chief executive officer Bob Bakish noted a 5% increase driven by domestic affiliate performance, continued international strength and theatrical revenue gains, an operating cash flow increased to $159m and a new strategic plan that focuses on those six flagship brands plus a deeper integration of Paramount Pictures.
"Today we share a strategy that will enable Viacom to realize the full potential of its premier global portfolio of entertainment brands,” said Bakish in a release. “Building on our leading domestic and growing international footprint, this strategy will expand the depth and reach of our flagship brands across multiple platforms and around the world, while also providing for more competitive differentiation and increased adaptability for our business overall. There is much work to be done, but we are confident we have the plan and people to take our brands to greater heights and build a bright future for our company.”
In the Q1 earnings call this morning, Bakish noted that the company is pursuing broader, more forward-thinking partnerships, including the acquisition of Argentina Spanish language network Telefe, which will open up new opportunities globally.
“Viacom’s first quarter results reflect improvement in our core businesses, with increases in revenues and operating cash flow, continued strong international performance, including initial contributions from the acquisition of Telefe, and a return to positive growth in affiliate revenues,” said Bakish in the release. “We are already benefiting from changes made early in the second quarter and seeing green shoots in our strongest businesses, as well as those that are poised for a turnaround. As we implement our strategy across the company, we believe we can drive significant value for shareholders.”
Continuing on the global theme, chief financial officer for Viacom, Wade Davis, noted on the call that worldwide revenue increased 2% while domestic revenues were flat, with international revenues up 5%. He also talked about the strength in kids programming helped revenues, and talked about the company’s strategic agreement with Shanghai Film Group and Huahua Media, which will let Paramount and Viacom produce and distribute films in the Chinese market. The goals of the company, financially, are to strengthen the balance sheet and “focus on returning key revenue streams to growth. We expect to continue to see improvement,” said Davis.
Strengthening flagship brands
On the call, Bakish noted four underlying needs of the company, including needing more focus, being distinct, unlocking the benefits of scale and being more adaptable as a company. To that, he noted a five point strategic plan for the year.
Promoting the six flagship brands was first and foremost. Bakish said putting efforts into the six would capture broader opportunities. The brands must create compelling value and brand promise with a “rich offering of wholly owned content,” he said, adding that the brands must be global. The brands will cross pollinate from TV to film, with each one contributing one to two co-branded films each year with a focus on franchises and tentpoles.
Bakish talked about Nickelodeon’s dominance with kids, being the number one network for kids and “cable’s most popular network…showing no signs of slowing.” The network has its first co-branded animated film coming out this year, Amusement Park with Jennifer Garner and Mila Kunis.
In turn, Paramount will be brought to television as Spike rebrands to the Paramount Network.
Bakish noted that high-performing brands and channels beyond the flagship six will not go away, but that they don’t have the global or film potential as the flagships.
Maximizing approach to talent and content development – Formerly siloed. Inched towards a more holistic approach to scheduling, marketing and digital. Share ideas more aggressively across borders. Nickelodeon already established in this model, as is MTV. We need to do a much better job of keeping our talent within the Viacom ecosystem.
Another point was maximizing the company’s approach to talent and content development. It had formerly been siloed and has been inching towards a more holistic approach to scheduling, marketing and digital and now will go full force on that front. The company also intends to share ideas more aggressively across borders.
Nickelodeon is already established in this model, as is MTV, said Bakish. “We need to do a much better job of keeping our talent within the Viacom ecosystem.”
On that front, Comedy Central is launching 10 new shows this year. He used Trevor Noah as a great example. This last quarter was the highest-rated quarter ever for the Daily Show under Noah. Viacom will continue driving greater growth for the show and host.
Viacom also plans to deepen partnerships to drive traditional revenue streams. Bakish said they will “emphasize partnership more than the company ever has.” That includes reinforcing the pay TV ecosystem, supporting virtual partnerships, and adding a comprehensive cross-portfolio package called Epic.
Another point is that Viacom will be making big moves in the digital and physical world, including short-form video, which they see as an area of great growth. Viacom is creating a new business unit for short-form content leveraging brands.
They also want to create “more and stronger expressions of brands in the physical world,” which Bakish said will build incremental business.
“Over one million people went to an MTV event last year. We’re looking to expand on that,” he said, adding that Comedy Central will enter the festival space with event and influencer marketers Superfly, which will create greater opportunities for Viacom’s roster of standup comedians.
Overall, Viacom will contine to optimize its organization with better collaboration across its portfolio and more holistic relationship with partners, driving growth and earnings and delivering value.