Viacom CEO talks cooperation in international markets, on untested tentpoles
One investor finally had the guts to ask Viacom CEO Philippe Dauman some serious questions about the company’s future after a fall full of talk about “Teenage Mutant Ninja Turtles.”
Mario Gabelli, at his own conference in Gotham, wanted to know if Viacom will sell or merge Paramount with another studio. He also asked for reassurance that Viacom’s controlling shareholder, now Sumner Redstone and eventually his family holding company NAI, will not sell out at a premium and leave minority investors — like Gabelli’s firm Gameco — in the lurch.
Redstone will be 90 this spring. Dauman is on the board of NAI and will be influential in any decision about the company. “As you know, our chairman Sumner said he wants to own Viacom forever. He intends to live forever, and he’ll be watching the rest of us even if he decides to leave us. So we don’t think about that. We are very focused on operating our company well and creating value for all shareholders, including our control shareholder,” Dauman said. So no sale anytime soon.
On the studio, Dauman said he thinks cooperation makes more economic sense than full mergers. “We reduced the output of films in our studio. I think it’s difficult for a studio to be successful releasing too many movies. It takes away marketing focus and the like, so the benefits that you get would be on the cost side, and we can achieve cost savings by working with other studios on a discreet basis.” He said Viacom is doing lots of that in international markets.
“You’ve got a country like Spain or Italy. Do you really need to have two complete infrastructures of two studios? You don’t. So what we’ve been doing is swapping territories. We have said, ‘We’ll run it for you in this country, and you run it for us in that country.’ So we’ve been able to drive some efficiencies and reductions of cost by working with other studios. A full merger gives you one-time cost benefits but it creates a lot of other issues. We like it the way it is and are looking for ways to collaborate where it makes sense.”
“That doesn’t mean some (suitors) will not call,” countered Gabelli.
After recent earnings and during several conferences, including one of the industry’s biggest, held by UBS, last week, analysts lobbed softball questions that were always the same. Ballrooms full of media fund managers followed up with more of the same during Q&A. “It’s like you don’t want to be a rude guest at a party. You want to ask things like, ‘Why does Disney change its head of consumer products every few years? Are there ongoing investigations of anyone in the Murdoch family or News Corp. executives.’ But you might not be invited to their next investor day,” said one investor. Broaching the issue of an aging chief is always delicate.
Dauman described cost cutting at Paramount over the year and how the slate’s come down from 25 pics a year to a target of about 15. He said it will spend big on tested franchises like “Star Trek” or “Transformers” but always use financing partners on untested new ones like “World War Z.”
“We would never have a ‘John Carter,'” he said in a dig at Walt Disney, which took a $200 million writedown after the costly pic flopped.
And, yes, “Ninja Turtles” is helping Nickelodeon’s ratings.