Jun 06, 2019

Bakish talks Pluto TV, advanced advertising, and the importance of partnerships

Viacom President and CEO Bob Bakish addressed a crowd of investors at the Credit Suisse Annual Communications Conference in New York City on Tuesday. In a wide-ranging conversation, Bakish touched on the transformation that has taken hold throughout Viacom since he launched the company’s turnaround in early 2017.

“It's really about having a plan, executing on it,” Bakish said. “As you heard most recently in our second fiscal quarter earnings call, we made material progress in the distribution space in the U.S., in the ad space. Our flagship brands continue to perform and take share and they continue to expand off linear air both in media and beyond … We also de-levered the company … bringing down over $4 billion of debt and becoming truly an investment grade company again, not just one with an investment grade rating.”

Bakish went on to describe the strategic rationale behind Viacom’s recent acquisition of free-streaming service Pluto, underscore the health of the company’s relationships with distributors, and re-affirm its march back to ad sales growth. A few highlights of the conversation, which you can listen to in full here, are below.

Pluto TV gives Viacom a growing global platform to connect with tens of millions of consumers

“… The thing that really excites us about Pluto is it's an opportunity for Viacom to create a platform. It's a platform for us to have tens of millions of direct relationships with consumers all around the world. It's a platform for IP owners to exhibit their product on. And when we signed the deal to acquire it, they had 130 suppliers. As of last month, we had 150."

Pluto TV is a significant accelerant to Viacom’s growing and substantial advanced advertising business

“We see [Pluto TV] as a $1 billion opportunity in the not too distant future. … The only thing you have to believe for that to be right is that we can monetize this inventory, because today over half of that inventory is unsold, and Pluto had a very nascent TV ad sale or very nascent ad sales force. We have a very substantial Advanced Marketing Solutions [AMS] business, which is transacting a range of inventory beyond linear television and also some enhanced linear television inventory. We built that to an over-$300 million business in 2018. That AMS business will be roughly 20% of our ad business as we exit fiscal 2019.”

Viacom’s Advanced Marketing Solutions and access to diverse, hard-to-reach audiences is driving a return to ad sales growth

“… It's not that we are in the kids’ market or the adult market or – we're in the solutions market. And what agencies and clients need in this fragmenting landscape is solutions. … because in a world where there is declining TV reach, our reach has actually grown. If you take the highly valuable 18-to-34 demographic, very elusive demographic on television, we not only lead in the linear television space, but when you add Pluto to that, we reach 50% of all 18-to-34-year-olds in the United States today. … We will deliver not only growth full-year [to ad sales], we'll deliver it in the third [current] quarter as well.”

Viacom’s focus on improving relationships with distribution partners has stabilized its linear subscriber base, while the digital and mobile base grows

“We embarked on a more partnership-driven strategy [with Viacom’s distributors] where, importantly, we broaden the value equation. We said we'll not only license your linear feeds and ensure you have the right, call it, on-demand grant, but there's also an opportunity for us to work together in the advanced advertising space and that's good both for near-term monetization and longer-term strategic positioning against other forms of competition and, in some cases, work in the co-production space, now of course the broadband-only space through Pluto. … We have now, again with AT&T being done, renewed or extended virtually the whole traditional sub base and we continue to grow our penetration in non-traditional services both over-the-top and mobile.” [see all of Viacom’s distribution partners here]

Viacom continues to make strategic acquisitions to fuel growth

“We did deploy some capital along the way in the form of what we call these accelerant acquisitions. First one was WHOSAY which is a branded content company which we quickly integrated. That's performed well for us. We acquired a company called VidCon, which is kind of ground zero for social influencers, again, very happy with that deal. We acquired AwesomenessTV at a very attractive price point. That's not only a digital kind of native company, but it's also a studio in its own right and it's a studio that produces content that is at a very attractive price point and skews a bit teen growth, but is actually when you look at some of their product, it plays wider than that. And then most recently, Pluto Television.”

Related Articles