Dauman Stresses Value of Viacom’s Brands

NEW YORK: Philippe Dauman, the president and CEO of Viacom, stated that the company is "well positioned" in the current economy during his session at the Media Summit New York yesterday afternoon, thanks to the strengths of its content and its channel brands.

"We love being a content company," Dauman said. "We are relatively speaking in a tough economy, extremely well positioned, because we have great brands….Nickelodeon, MTV, Comedy Central, Spike, BET and VH1 and so forth. And when you have a portfolio of great brands, you are able to attract viewers, first of all, consumers on online activities, our gaming activities. You know, we’re the number two player in casual games in the world after Yahoo games. And even in the advertising environment, which was generally challenged, since we sell ads nationally and primarily to large branded advertisers themselves, we, along with the rest of the cable network industry, tend to do a lot better than stations or newspapers or magazines…We’re in good shape. And as far as our distributors, they value our brands. And in the toughest of environments, certainly in my career, we recently negotiated extensions of several key affiliate agreements on very good terms."

He continued: "I’m very pleased with the assets we have. We are a pure-play content company. As you’ve mentioned, our assets consist of our cable brands and the great content that we have there, and Paramount Studio. It is a tough environment in the advertising world, but we are fortunate to have good partners. The large part of our advertising consists of very integrated marketing campaigns we do for major companies like Pepsi or Verizon or all the movie studios who really want to reach the young demographics that we serve across our networks. So we’ll hold our own."

Dauman cited as an example the successful Nickelodeon presentation last week. "Extremely well received. Why? Because Nickelodeon is a vibrant brand and has tremendous reach for kids and their families. And we’re already cutting some very attractive deals in the Kids Upfront, which is coming before the Adult Upfront. So we’re feeling pretty good. It’s still very early, so you can’t tell the larger trends. But Nickelodeon is a good example and several of our other networks are good examples of really must-be-places for a lot of advertisers. If you are opening a motion picture [on a] weekend, you have to be on our air on Thursday and Friday and through the weekend. If you are launching a video game, you have to be on our air. So we have a lot of categories that will remain very strong."

He added: "The difficulty is when you have highly stressed companies who need to market but just can’t. They just don’t have any money. There’s no credit out there. You know, that’s where you see people who sell advertising suffering, and there’s a tremendous differentiation. So there’s a lot more focused buy on the part of marketers who want to be with the brands they trust and the outlets they trust. You know, we are fortunate that we’re not so dependent compared to other, say, local stations, for example, on automotive or financial services companies. And one of the reasons local advertising is suffering so much is that there’s a heavy concentration of the most troubled industry sectors in that particular marketplace. So we’re going to be impacted, particularly on the volume side … not so much the pricing side, but the volume side. But we will be less impacted than these other broad categories of advertising."

When asked about the company’s financials, Dauman said: "And as a company, you just have to ride through the tough times. You take the precautions. You contain costs. You continue to build your brands. We have never sacrificed on what we put on air, building our brands, growing our business for the long term. But you have to find a way to be more efficient and take advantage of the economic environment to deal with your suppliers in a different way."

Discussing relationships with cable and satellite platforms, Dauman noted that Viacom’s affiliate fees are growing "at a ten-percent double-digit clip. "We provide a lot of value…compared, for example, to other networks or families that charge a lot more. We have over 20 percent of the ad-supported cable viewing audience. But our affiliate fees … on an overall basis, they are about eight or nine percent of the overall fees they pay. Now, that’s in part because they pay a lot for sports programming…The value we provide is very reasonable. So we demonstrate that. We over index in some of the new things they’re doing. For example, as compared to the 20 plus percent of the on air viewing, in free VOD in cable systems, we have 35 to 40 percent of the free VOD viewing."