Viacom Lays Out Turnaround Plan

Viacom's turnaround plan will focus primarily on six flagship brands, rebranding its Spike channel as the Paramount Network next year, and be "highly selective" in any over-the-top deals, with those being mostly for library content, CEO Bob Bakish said in an analyst call Thursday. The flagship brands are Nickelodeon, Nick Jr., MTV, BET, Comedy Central and Paramount, with Viacom planning for each brand to contribute a film or two per year to the Paramount slate, Bakish said, with one example being the four Paramount films planned through 2020 using Nickelodeon intellectual property. Other branded networks, like VH1, "will not go away" but will work to reinforce the flagship brands, Bakish said. He said Viacom's turnaround plan also involves using company resources like ad sales and data to help grow multichannel video programming distributor partners as it looks to deepen its MVPD relationships instead of what has been transactional relationships "related to zero-sum economic negotiations." Bakish said Viacom is creating a new business unit to produce short-form video content for distribution by owned-and-operated and third-party platforms. Chief Financial Officer Wade Davis said the company expects strong growth starting in the second half of the year from the changes. Viacom said fiscal Q1 revenue rose 5 percent to $3.3 billion from the year-ago quarter, due mainly to better theatrical sales and growth in domestic affiliate revenue from subscription VOD and OTT agreements. In a note to investors Thursday, Wells Fargo analyst Marci Ryvicker said the results "prove to us that the turnaround is real and likely to continue." She said Viacom's plan "makes sense" and likened it to past Time Warner efforts at breaking down silos between its brands, "which seems to have worked." She upgraded the stock to "outperform." The emphasis on the six flagship properties makes sense but doesn't go far enough, and there should be a wind-down of niche networks over time, Citi analyst Jason Bazinet emailed investors. Viacom shares closed up 4.3 percent on Thursday at $43.89.