Paramount Mining TV Production Gold

Paramount Pictures is in the midst of a turnaround that pledges fiscal-year 2019 (ending Sept. 30) profitability for the first time since 2015.

While the vaunted studio improved first-quarter (ended Dec. 31, 2018) operating income by $40 million — its eighth consecutive quarter of improvement — due the theatrical performance of Bumblebee and Instant Family, a key profit driver was television content production.

Television revenue in the quarter ballooned 84% year-over-year driven by the release of Netflix’s “The Haunting of Hill House,” “Berlin Station,” on Epix, the recent greenlight for a third season of “Tom Clancy’s Jack Ryan” on Amazon Prime Video, and production of Netflix series “Maniac” and “13 Reasons Why,”among others.

Studio boss Jim Gianopulos contends the agreement with Netflix and other streaming services replicates past industry practices around “movie-of-the-week” productions for broadcast TV.

“The difference, of course, is that the quality of these films is much higher, making these relationships even more valuable,” Gianopulos said last November when announcing an agreement with Netflix to produce original movies for the streaming service.

To Bob Bakish, CEO of corporate parent Viacom, Paramount’s renewed success underscores a case study driven by new management.

Speaking Feb. 26 at the Morgan Stanley technology, media & telecom confab in San Francisco, the executive’s comments coincided with the promotion of Dan Cohen to president of worldwide home entertainment & television distribution.

Cohen’s priority will be television production, a business Bakish said didn’t exist at Paramount four years ago. The unit generated $400 million in revenue in 2018 — and is expected to grow 50% to $600 million in 2019.

“It’s not about delivering shows, it’s about delivering hits,” Bakish said.

 

Paramount Home Entertainment Posts 12% Quarterly Domestic Revenue Gain

Paramount Home Media Distribution Feb. 5 reported first-quarter (ended Dec. 31, 2018) revenue of $178 million, down less than 3% from revenue of $183 million during the previous-year period.

Domestic revenue increased 12% to $111 million, while international home entertainment sales declined 20% to $67 million.

The lower home entertainment revenue reflected a decrease in the sales of DVDs and Blu-ray Discs, partially offset by digital sales growth.

The studio’s top-selling home entertainment release in 2018 was Mission: Impossible – Fallout, which generated $18.7 million in combined DVD/Blu-ray Disc sales, according to The-Numbers.com.

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Theatrical revenue increased 49% to $149 million from $100 million due to the performances of Bumblebee and Instant Family compared with releases in the prior year quarter.

Bumblebee, starring Hailee Steinfeld, has grossed more than $450 million at the global box office to date, and is “solidly” profitable, according to Viacom.

Domestic box office revenue increased 44% to $89 million, while international revenue grew 58% to $60 million.

License revenue from television production increased 84% due to the first quarter release of Netflix’s “The Haunting of Hill House,” and season three of “Berlin Station” on Epix, among other titles.

Last November, Paramount entered into an agreement with Netflix to produce original films for the streaming service.

Overall license revenue increased 3% to $220 million from $213 million last year.

“Paramount delivered double-digit topline growth and an eighth straight quarter of improved year-over-year adjusted operating results, driven by worldwide theatrical gains, continued momentum at Paramount Television and international theme park revenue,” Viacom CEO Bob Bakish said in a statement.

Viacom CEO Bob Bakish Focusing on Content in Fragmented Market

LAS VEGAS — For Viacom, content truly is king, according to CEO Bob Bakish, who is forging a “culture of content” at the company.

“I continue to believe there’s a lot of value in assets that we already own,” he said Jan. 9 during the Variety Entertainment Summit at the CES show in Las Vegas.

While the Walt Disney Co., with its Fox merger and pending SVOD service, and WarnerMedia, through the AT&T merger and its own pending streaming service, are leveraging consolidation for greater distribution clout in the fragmented market, big deals aren’t necessarily the best path, he said.

“Vertical integration is very much in vogue,” but historically it “doesn’t tend to work,” Bakish said.

“Bigger is not always better,” he said.

In fact, rather than bulking up to compete with online services, he pointed out Viacom produces shows for Netflix, Amazon and Facebook. For instance, the show “Jack Ryan” is on Amazon. The company launched Viacom Digital Studios to produce social media friendly content for outlets such as Facebook.

“Viacom doesn’t really require a transformational deal,” he said. Instead, the company is doing what he calls “accelerant deals,” such as recent pacts to acquire VidCon, which celebrates online video creators, and Awesomeness TV, which produced To All the Boys I’ve Loved Before released on Netflix.

The goal is “unlocking opportunity through truly multi-platform distribution,” whether it be AVOD, SVOD, legacy platforms or other models, he said.

“Relative to some of our peers, we’re further along in this transition,” he said.

One of the new technologies he is enthused about is the coming 5G mobile delivery standard.

“Mobile distribution is what will turn this [content monetization] decline on its head,” Bakish said.

5G and the move to 10G for traditional TV distribution will both expand the pipelines for content, he noted.

He’s also intrigued by self-driving cars, which will open up more free time for consumers to view entertainment.

Content owners cannot “crawl into the ivory tower” and hope the future will go away, he said.

“You can look at this transformation as glass have full or half empty. I’m half full,” he said.

Viacom CEO: We’re Seeing Incredible Turnaround at Paramount

Among major studios, Paramount Pictures has taken an outsized share of fiscal hits in recent years — only generating its first operating profit since 2015 in March.

Speaking Sept. 12 at Goldman Sachs 27th Annual Communacopia confab in New York, Bob Bakish, CEO of corporate parent Viacom, said Paramount is a very different place today — thanks in part to a trio of theatrical hits and increased television content production, among other initiatives.

Specifically, low budget titles A Quiet Place and romantic comedy Book Club, together with Mission: Impossible – Fallout, the sixth installment in the Tom Cruise-starring franchise, overperformed at the box office – with A Quiet Placeand Book Club now generating significant sellthrough revenue.

Indeed, A Quiet Place grossed more than $188 million domestically, making it the second-highest grossing horror film in the U.S. over the past decade. The film has earned more than $332 million worldwide with a production cost of approximately $20 million.

Released in May 2018, Book Club earned more than $68 million at the domestic box office — more than six times its $10 million acquisition cost. The titles were released in retail (digital and physical) channels on July 10 and Aug. 28, respectively.

“Both those films are killing it in transactions for us right now,” Bakish said.

The executive said that when combined with the global box office of Fallout– the largest in Mission: Impossible franchise history, Paramount has turned the fiscal corner.

“Take those three things together, and there’s no question the [Paramount] mountain is back,” Bakish said.

In addition to movies, Paramount Television has upped content production from nine series on broadcast and online to 16 shows this year and is poised to generate $400 million in revenue.

Notable series include “13 Reasons Why” for Netflix; “The Alienist” for TNT and “Tom Clancy’s Jack Ryan” from Amazon Prime Video. Original movie production for third-party SVOD players has begun with announcements pending, according to Bakish.

“Paramount is not only back in the TV production business, it’s a hit maker,” said Bakish. “It’s a great opportunity.”

What Viacom is not doing is developing a mass market SVOD service to compete with Netflix.

“That business is looking more and more crowded,” Bakish said. “It is a very capital-intensive game if you look what program expenses at those platforms are.”

Instead Viacom is approaching over-the-top video with strategy targeting niche SVOD services such as Noggin.com and distribution through third-party platforms such as Amazon Channels.

“Putting Noggin on Amazon Channels more than doubled subs rather quickly,” Bakish said. “And we’re in the late stages of adding other distributors. We think that’s a very effective strategy.”

Viacom is launching an ad-supported OTT video service featuring library content, and creating third-party licensed content featuring Viacom brands MTV, Nickelodeon, Comedy Central, BET, etc.

Bakish says its “part promotion, part revenue,” with digital initiatives produced under Viacom Digital Studios, which launched nine months ago.

“We’re feeling very good about the momentum we have going into the [current] fourth quarter. We are very focused on operating the assets we already own. It’s a quest for scale both inside and outside the company,” he said.

 

 

 

Viacom Launching Ad-Supported Indian-Themed VOD Service in the U.K.

Viacom CEO Bob Bakish has vowed to expand the media conglomerate’s entertainment assets globally.

In November, Viacom 18 Media’s ad-supported Voot streaming video service will expand operations to the United Kingdom – the first of several planned international markets launches.

Viacom 18, which is majority (51%) owned by Mumbai, India’s TV18 and 49% by Viacom, will produce 18 original multi-lingual, multi-genre series for the platform through its Viacom 18 Motion Pictures unit. A news service is slated for as well.

“Voot is integral to our strategy as we gear up for a future-ready Viacom18 that is screen, platform and pipe agnostic,” Sudhanshu Vats, managing director at Voot, said in a statement. “We are building a digital-first brand to harness [our] strengths across its brands, creative franchises and businesses in multiple Indian languages.”

With an Indian origin population of around 1.8 million consumers, the U.K. market presents a significant opportunity for Voot to leverage.

Voot Originals will feature content across multiple genres, psychology, mystery, sports biopics, comedy, drama, thriller, politics, history, crime and suspense, among others.

“The digital medium brings us close to the consumer at a very personal level,” said Monika Shergill, head of content at Viacom18 Digital Ventures. “Our entire content strategy is based on a deep data backed analysis of the needs and desires of our consumers and their consumption preferences and patterns.”

Voot said it would also will also strengthen its user interactivity options with the adoption of Google Watch Action, an industry first in the Asia-Pacific region for premium OTT players. Voot’s platform will also employ Dolby Surround Sound for all original programming – a first for Indian-based OTT video services.

“At an execution level, we have been extremely lucky to be partnering with a galaxy of very talented and committed actors, writers and directors to bring forth our second bundle of Voot Originals,” said Shergill.

 

CBS, Shari Redstone Clash Gets Oct. 3 Court Date

The legal skirmish between CBS and corporate parent National Amusements, which is led by co-owners Sumner Redstone and his daughter Shari Redstone (who runs the company in place of her ailing father), will gets its day in court on Oct. 3.

On that day, the Delaware Chancery Court will begin proceedings to determine whether CBS has the legal authority to flood shareholders with a dividend issuance that would reduce National Amusement’s voting power from 79% to 17%. The issuance would not undermine NAI’s stock ownership or market cap.

Shari Redstone responded to the CBS move by changing the company’s bylaws and requiring 90% approval vote by the board of directors on such matters.

At issue is Ms. Redstone’s desire to meld CBS with Viacom, whose assets include Paramount Pictures, BET, MTV, Nickelodeon and Comedy Central, among others.

Les Moonves, who heads CBS, has been lukewarm to the idea. Moonves, who would head the combined company, wants to install his own management team, including COO Joseph Inniello as his second-in-command.

Redstone wants to put Bob Bakish, current CEO of Viacom, in that position.

CBS, which delayed its annual shareholder meeting due to the conflict, has rescheduled it for August 10.

 

Nickelodeon President Cyma Zarghami Departs

Nickelodeon June 4 announced that longtime president Cyma Zarghami is stepping down after more than 30 years with the network. As Zarghami exits, Nickelodeon claims to have the highest share of total viewing in kids’ television.

While Viacom conducts a search for a successor, Sarah Levy, COO of Viacom Media Networks, will lead the brand on an interim basis.

Levy will work with Nickelodeon’s management team to launch a pipeline of more than 800 new episodes and accelerate the brand’s push into new and next-generation streaming platforms, film, live experiences and consumer products.

Zarghami joined Nickelodeon in 1985 and was named president in 2006. Under her leadership, Nickelodeon became a global brand for kids, spanning linear and multiplatform programming, film, live experiences and consumer products.

“Over the course of her career, Cyma has played an integral role in growing Nickelodeon into the dominant force in kids’ entertainment,” Bob Bakish, CEO of Viacom, said in a statement. “Her instincts for creating content and experiences that kids love have been vital to the brand’s success around the world.”

Upon assuming control of Viacom, Bakish said the media company would focus ongoing efforts on select brands, that include Paramount Pictures and Nickelodeon and Nick Jr., among others.

“We continue to evolve the business and connect with young audiences in new and innovative ways,” Bakish said. “I want to extend my deepest gratitude to Cyma for her leadership and wish her every success.”

Paramount Posts First Quarterly Profit Since 2015

Paramount Pictures April 25 reported second-quarter (ended March 31) operating income of $9 million on revenue of $741 million. It was Paramount’s first quarterly income since Sept. 30, 2015. The studio reported a $66 million loss on revenue of $895 million during the previous-year period.

Theatrical revenue decreased 79% to $50 million, primarily due to fewer titles in the quarter and a modified release strategy that resulted in certain legacy slate titles moving from theatrical to licensing distribution. Domestic and international theatrical revenues decreased 64% and 86%, respectively.

Licensing revenue grew 37% to $477 million, primarily driven by the release of The Cloverfield Paradox on Netflix, as well as Paramount Television product, including “The Alienist.” Domestic licensing revenue increased 46% while international licensing revenue grew 31%.

“Turnaround efforts have firmly taken hold as the studio improved margins and returned to profitability. This month’s outstanding box-office performance of A Quiet Place, the first film produced and released under the new team at Paramount, is a clear sign of our progress,” Bob Bakish, CEO of parent Viacom, said in a statement.

Paramount Pictures Home Media Distribution posted revenue of $163 million, which was down 18% from revenue of $198 million last year. The home entertainment unit has generated $346 million through six months of the fiscal year, down 22% from $441 million last year.

Domestic home entertainment revenue decreased 29% while international home entertainment revenue increased 13%. Ancillary revenue decreased 54% to $51 million, with domestic and international ancillary revenue down 63% and 11%, respectively.

Overall studio revenue topped $1.2 billion through six months, down 23% from revenue of $1.65 billion through the same period last year.

 

CBS/Viacom Merger Caught Up in Management Roles

Ongoing talks regarding the possible merger of CBS Inc. and former corporate parent Viacom isn’t revolving around price or who would head both companies. That would be CBS CEO Les Moonves. Instead, the multibillion dollar deal is reportedly hung up by who would be Moonves’ second-in-command, among other management decisions.

CNBC reported that Moonves is eyeing CBS COO Joe Ianniello, while Shari Redstone, who controls majority shares of Viacom, wants Viacom CEO Bob Bakish assuming the role.

Moonves contends that if the Viacom board of directors wants him to lead the combined companies, he has the right to name his management team. Shari Redstone believes otherwise.

“[The acquisition price] is not actually going to be the key issue whether or not these talks succeed in reaching a deal,” said David Faber, host of CNBC’s “The Faber Report”.

Ianniello, who was recently promoted to the COO position from CFO, has been with CBS since the media company separated from Viacom in 2005. He typically backs up Moonves on fiscal calls.

Bakish, who replaced Philippe Dauman in 2016 as CEO of Viacom, formerly headed Viacom International Media Networks. He has been with the company since 1997.

“So, we are setting up, it would seem, for a potential debate and/or clash between Shari Redstone and Les Moonves about what the reporting structure in the new company will be,” Faber said.

Indeed, as controlling shareholder at Viacom (including Paramount Pictures), Redstone has the right to replace the board or even Moonves, according to Faber.

In addition, both Bakish and Ianniello have clauses in their employment contracts that call for significant financial compensation in the event of a change in ownership of either company. For Ianniello, that reportedly would be $70 million should he not get the No. 2 position in a combined CBS/Viacom.

Analysts contend cost synergies in the merger would range from $500 million to $750 million.

Viacom CEO: ‘Our Brands Coming to Mobile’ in the U.S.

Look for Viacom and its key brands – Paramount Pictures, MTV, Nickelodeon, Comedy Central and BET – to go increasingly mobile in the United States.

Speaking at the Morgan Stanley Technology, Media & Telecom confab in San Francisco, CEO Bob Bakish said recently announced moves partnering with Spain’s Telefónica making Viacom’s brands available on the telecom’s Movistar Play platform, underscored a need to “export” that strategy in the United States.

“We’re also in a very interesting conversation here in the U.S. right now about bringing our brands to mobile, and I believe that will happen in 2018,” Bakish said.

The executive said the year revolves around growing margins in established businesses, new distribution channels as well as improving synergies among internal brands through consumer products, live-events and incremental studio opportunities.

“We see a clear path toward top-line growth,” Bakish said, adding he expects Paramount growth to materialize in 2019.

The executive said Paramount is transforming from an underleveraged “fiscal mess” in 2016 that “ate over” $1 billion in cash, to a unit with a content library growing more than $300 million in value annually.

Half the studio’s release slate will be franchise sequels, with the remaining branded around Nickelodeon.

Viacom in January rolled of the Paramount Network (formerly Spike TV), an ad-supported service distributing original (“Waco” miniseries, starring Taylor Kitsch as cult leader David Koresh) and catalog content.

Future original series include, “Yellowstone,” starring Kevin Costner; “American Woman,” a single-camera comedy set in the 1970s amid the sexual revolution and the rise of feminism, starring Alicia Silverstone and Mena Suvari; and “Heathers” an hour-long pitch-black comedy anthology set in the present day, based on the 1988 cult classic film of the same name.

“[Paramount] is an iconic brand, known all around the world. It’s on a clear path to return to profitability,” Bakish said.