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Viacom’s Bob Bakish: Entertainment-Only Pay TV Option Coming This Year

Viacom is in advanced discussions with at least one MVPD to be part of a low-cost, entertainment-only channel package designed to help bring younger consumers into the pay TV eco-system and to keep others from leaving.

Viacom CEO Bob Bakish spoke of the initiative Monday during his keynote breakfast at the J.P. Morgan Global Technology, Media and Telecom conference in Boston. Bakish referenced the slew of OTT skinny bundle offerings that are hitting the market at around $40. He told J.P. Morgan media analyst Alexia Quadrani that what he called the “entertainment pack” option would probably be priced around $10-$20.

The new breed of digital MVPDs are still not “transformational” opportunities for pay TV because they remain dominated by broadcast signals and sports. He doubted whether new offerings from YouTube, DirecTV Now and Hulu would have much appeal to what he called “cord-never millennials.”

“The transformational opportunity is to bring in a new entry segment at a much lower price point,” Bakish said. The industry needs “a path to bring in someone who wants high-quality entertainment” but doesn’t want to pay for sports channels. With a truly low-cost entertainment option, MVPDs can also offer more flexibility to consumers to “trade up from and trade down as the household needs change.”

Bakish emphasized during the Q&A that Viacom was focused on repairing “frayed” relations with its MVPD partner. Since Bakish took the helm in December, he’s met with leaders of the largest MVPDs and emerging digital MVPDs.

In some cases, Viacom has reached deals to expand on-demand access on traditional MVPDs to Viacom shows — agreements reached outside the context of broader carriage negotiations. “We had gotten to the place where our largest and most important (MVPD) customers had inferior rights grants than smaller SVOD players,” he said.  In another case, Bakish said one large MVPD — he didn’t name names — has extended Viacom’s carriage deal “well into the next decade.”

Bakish quested whether the $40 price-point skinny bundles with sports and broadcast signals are viable products for distributors. He said one distributor of a $40 package acknowledge that the package has an underlying product cost of $46. “It’s unclear how long that can sustain,” he said.

Bakish acknowledged that there has been some “noise” in the marketplace between Viacom and Charter over what Bakish described as Charter putting Viacom channels on a higher service tier for new subscribers. “We firmly don’t believe they have the rights to do that,” he said. “We’ve been in discussions with them. We’ve got to get that resolved.”

On the big picture turnaround strategy at Viacom, Bakish talked up the growth of Nickelodeon and the strategy shift under way at MTV.

After hitting a slump a few years ago, Nickelodeon chief Cyma Zarghami went on a mission to expand its programming development pipeline, which is now bearing fruit. “We’re not the ‘SpongeBob’ network anymore,” he said, noting that it’s top four shows in live-action and animation are newer properties.

Nickelodeon is also key to the plan to revitalize Paramount. Bakish pointed to the animated feature “Amusement Park” set for release by Paramount next year, to be followed in 2019 by a series on Nickelodeon. Paramount and Nickelodeon had collaborated on branded movies in the past but this time around there is a much more defined strategy. “It’s a long-term plan with many properties in the pipeline,” he said.

At MTV, the shift in focus to lighter unscripted programming began rolling out in March under the direction of Chris McCarthy, who took on MTV in addition to VH1 and Logo in November. Bakish expects the next two months to be crucial with new series rollouts.

The goal is to boost numbers with teenagers and young women. MTV saw its ratings in those demos decline about 10% a year for the past five years after it embarked on an ambitious scripted programming push even though “there was no research that anyone was looking for scripted at MTV.”

Among other topics raised during the session:

Upfront: Bakish predicted a solid upfront given the tightness in TV supply and the concerns about the quality of digital advertising options. “It’s not that people are going to flee in mass from (digital) but in the context of going in to the upfront it highlights the quality and credibility of the product we sell,” he said.

Paramount Pictures: The new management team led by former Fox chief Jim Gianopulos is off and running with the goal of working much more closely with Viacom’s cable brands. “It’ll take a little time to build a new slate and bring it to market,” he said. “We’re feeling very good about the direction for Paramount.”

Cord Cutting: Bakish said some of the higher-than-expected pay TV losses recorded in the first quarter can be chalked up to churn resulting from post-M&A integration effort. He didn’t cite specifics but was likely referring to Charter and Time Warner Cable and Altice and Cablevision, and the possibility of weeding up subscribers that had been lured on the basis of heavy promotional offerings to plump up subscriber numbers ahead of a sale. “Some of the churn was around subscribers that were of less value (having) been acquired as one of the selling companies was positioning itself for a sale,” he said.

 

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