New Viacom CEO Philippe Dauman used the 3Q earnings call for a thorough rundown of the company’s digital moves — most in place or in the works before he came along — with an emphasis on acceleration and cohesive strategy. He even said that based on what has been done in the last 8 weeks — ie since CEO Tom Freston was shown the door and he was tapped as saviour — Viacom has a “good chance” to make $500 million in digital revenue a year ahead of schedule. Why is that number so important? Could it be the need to equal or top News Corp.’s FIM?
Dauman describes online as one piece of the equation needed to transform Viacom. Careful Viacom watchers will want to listen to the webcast or read the transcript from SeekingAlpha. Between the formal presentation and the q-and-a, a few items stood out:
— Dauman said the company sees digital ad sales continuing “to expand at high double-digit growth rates,” adding that “based on what we have been able to put in place over the last eight weeks, the reorganization I just mentioned, and some exciting new opportunities we are pursuing, I believe that there is a good chance we could reach $500 million in annual digital sales by as early as next year. That would be a significant acceleration from where we were historically and a full year ahead of our earlier projection of when we would hit the $500 million mark. You can expect us to continue to move up from there.” Digital ad sales were up 73 percent for the quarter.
— “A significant amount of the rapid growth of some of the recent stars of the web was driven by content from Viacom’s networks. Our job is to ensure that Viacom is appropriately rewarded for that success.”
— He offered Nickelodeon as an example of how to build digital on top of maturing networks: TurboNick 2.0 had 53 million “video content streams” in one month; the various gaming sites — Nick.com, Neopets and recently acquired Quizilla, Shockwave and Addicting Games are serving over 100 million games plays per month; Parents Connect targets the first Nick generation of parents. (The conference call wait music came from Nickelodeon.)
— Viacom’s internation strategy includes a mix of partnerships and licensing deals but, Dauman said, ‘in larger markets we are deepening our positions by taking either full ownership or control which gives us more flexibility to capture long-term growth potential.” The launch of mobile and broadband Flux in Japan is an example of that, he said. Later, he said, “We now have access to a lot of territories without regulatory impediment, because through the internet we can go wherever we want.”
— Also on the digital front, Dauman said he will be working closely the chiefs of MTVN, BET and Paramount and their teams “to make sure we are taking full advantage of our strengths and we are not missing any opportunities; and that we cross-pollinate best practices to take full advantage of our most innovative functionality, capability and user experiences.” (Yes, he really promised to cross-pollinate best practices.” Couldn’t make that up.)
— Dauman sees “real upside” for BET.com “particularly considering the fact that African Americans are over-consumers in the digital area as well as many other forms of entertainment and have disproportionately high access to broadband networks.”
— Acquisitions: Dauman is looking for “unique digital properties” that extend reach and deliever new capabilities promises ‘selective acquisitons, He wants to reach properties earlier and promises to a “selective” approach. Just in case the message hasn’t come across already, despite Chairman Sumner Redstone’s frustration at losing MySpace, Dauman said: “Let me repeat an important point that you have heard me say before: we do not see the need for any large-scale deals.” He came at the subject again later: “I think the main focus ought to be on taking what we have … We just have to be very, very focused; very disciplined. I will not authorize an acquisition unless I see a clear, very strong, return on capital. The ones we’ve made have a very strong internal rate of return.”
— Dauman spoke of investing in content and in multi-platform networks but said the latter investments will be “modest.” “Some of the ideas had focused on linear channels, we think there was a better opportunity to reach people through these multi-platform networks at a very modest cost on both the programming side and overhead. So these will be modest costs and if they work or some of them work then they could have very, very high returns for us.”
Our earnings coverage is here.
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