Viacom’s Robert Bakish

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PREMIUM: Robert Bakish, the president and CEO of Viacom International Media Networks (VIMN), tells World Screen about the opportunities he sees in the international pay-TV business.

WS: VIMN played a big role in Viacom’s growth strategy in 2015.
BAKISH: We are thrilled to be such a big part of Viacom’s story, but that makes sense given the continued significant opportunity outside the U.S. We are producing more content than ever, building on the U.S. pipeline. Internationally, we grew audience share in 2015. On the MTV side, we’ve continued to bring more big events to market all around the world. BET had its first BET Experience outside the U.S. It was in Johannesburg and was a big success. We continue to do more and more work on the format side, whether it’s our Shores franchise, our Ridiculousness franchise, or Are You The One or Ex on the Beach, we have compelling versions of all of these all over the world. In fact, the launch of our first multi-country Shores franchise, Super Shore, for Spanish-speaking Latin America and Spain, was a huge multiplatform, multi-territory success for us. The show was number one in its timeslot among all pay-TV channels with our core demos in both Mexico and Spain. MTV Play (our branded TV Everywhere app) became the number one free app in the iOS store in Mexico just 24 hours after the show premiered, and in one week, Super Shore generated 3 million streams on the MTV Play app. And Lip Sync Battle is a global phenomenon. The U.S. version of the program can now be seen in 120 countries and territories worldwide, and the format is also under license in more than 30 territories. It most recently debuted in China, where 30 million people viewed the program online in its first weekend.

Nickelodeon has an incredible pipeline, but for me, even more exciting is the fact that VIMN is producing more and more content internationally. We opened Viacom International Studios in Miami in January and we’ll start shooting our first production for global Nickelodeon audiences from that studio later this year. We’re also developing and airing seven internationally originated shows for global Nickelodeon audiences. We are producing shows in London, including the first co-production with Channel 5, Nella Knightly, where we are benefiting from our ownership of Channel 5 and its children’s block, Milkshake!, and we are producing a show in the Netherlands, The Ludwigs, all for the global Nick pipeline.

Comedy Central is really on a roll. We are doing stand up all over the world, as stand up gets higher ratings than scripted sitcoms, and also [offers] great differentiation. Comedy Central not only has off-net programming, it also has bespoke original programming that connects locally. We’re extending our format plan on Comedy Central with Drunk History, producing really hilarious versions. We have a U.K. version that is in its second season, and a Spanish-speaking Latin American version that just premiered. Our scripted comedy I Live With Models is coming back for a second season, so a lot going on with Comedy Central.

WS: Are you increasing your distribution and launching more channels?
BAKISH: We are expanding our bouquet. Paramount Channel is now the largest ad-supported movie channel in the world. It’s going to continue to grow; it launched in Italy at the end of February, and our first Paramount Channel will be coming to Asia. Spike is expanding as well. Spike has been turbo-charged by Lip Sync Battle and we are also using that as a format all around the world and really getting great traction, including the recently launched U.K. version with Mel B that premiered to fantastic ratings on Channel 5, and will subsequently air on Comedy Central UK.

The second piece is really all about distribution and that goes to how the media landscape is evolving. I would start by saying that the traditional pay-TV business is alive and well and growing for us. We’ve recently struck significant deals with very large operators, including Sky, both in the U.K. and in Italy. Those are mutually beneficial deals that set the stage for great things in 2016 and beyond. Pay TV is on the verge of a quad-play revolution. We are starting to see operators sell mobile with their pay-TV and broadband subscriptions and that’s going to be the next leg of that growth story.

We launched Viacom Play Plex, which is a suite of branded mobile apps for TV Everywhere authentication, now in 40 markets. We have Nickelodeon Play distributed pretty well around the world. We’ve lit up MTV Play in many markets across Northern Europe and in Spanish-speaking Latin America, where we also recently launched Comedy Central Play as well.

Obviously it’s not only about the traditional distribution base; we are seeing an expanded market through telco, both wired and wireless, or mobile and OTT, and that is enabling significantly greater reach. I was in Australia speaking at ASTRA a few months ago, and one of the things I said is, We have about 800 million unique pay-TV subscribers today, I think by 2020 that number will go to at least 2 billion. So this whole distribution revolution is really creating significant opportunity, from which companies like VIMN are going to benefit greatly.

The third thing that is exciting, and arguably more exciting than it has been in the last two years, is ad sales. We have moved to a model where we are partnering with others in many markets and that’s working very well. We announced a joint venture with Axel Springer in Germany on the ad-sales side. The market actually feels strong, which is a great thing. We have a London-based team that we call Viacom Velocity International, responsible for multi-territory ad-sales deals and commercial partnerships for our brands across all platforms. They are driving innovation by offering truly multiplatform advertising solutions for brands, including integrating advertising into third-party social platforms, which drives huge engagement, and we’re seeing very robust growth. So relative to a year or two ago, the ad market is looking pretty good and I like our position in it.

WS: Are any countries showing good potential for growth?
BAKISH: The simple answer, which might be a bit counterintuitive, is that there is potential everywhere. India, which is a high growth market, continues to be a great story for Viacom. We have a 50/50 joint venture there called Viacom 18, which operates MTV, Nickelodeon and Comedy Central. It also operates the number two general-entertainment brand in the country, which is called Colors. It’s a major network brand, all Hindi-language original production. Think of it as an ITV or Channel 5 in the U.K. We are also active in the regional space there. Think of India like Europe and there are distinct languages and countries within it. In Latin America, Mexico continues to be very strong. We actually had good growth in Brazil although the Brazilian economy is a little shakier at the moment and there are some political issues.

The thing that is probably more counterintuitive is that countries that are perceived as more mature are growing very nicely. We had our best year in our history in the U.K. last year. Italy, we’re doing great. Spain, we’re seeing great growth. That tells us that you can drive growth across a whole variety of different economic situations provided you have great content, you fine-tune your distribution strategy and you are focused on execution. To me growth is not about the BRIC countries, it’s empowering the teams to find opportunities all around the world, which was certainly our story in 2015.

WS: You mentioned Channel 5. How does it fit into the Viacom portfolio?
BAKISH: Channel 5 has been a home run. When we looked at Channel 5 we liked it for a couple of reasons. One, it gets us access to more households and a larger potential audience in the U.K. because it is not just one free-to-air service; it has two companion services in 5star and 5USA. We also believed that because of that there was an opportunity to increase the level of original programming we produced not only for the U.K. but also for our broader portfolio of networks. The most obvious example of that was for Nickelodeon through Milkshake!. That has turned out to be fantastic not only in terms of broadening access to select Nick properties through carriage on Milkshake! but also, by virtue of that, driving our consumer-products business and strengthening our relationship with key licensees and retailers in that market.

Channel 5 hasn’t only helped Nickelodeon. We aired the MTV European Music Awards on Channel 5, helping that event drive its largest audience in that market. 10,000 BC, a collaboration between MTV and Channel 5, is returning for its second season. Lip Sync Battle is another show that is going to cross networks. Once we really studied it we found that Channel 5 was also a fantastic opportunity to accelerate the launch of our international Spike network. So from a brand and content perspective we thought Channel 5 would be good; it’s been even better.

WS: How are your viewers watching programming and in what different ways are you offering it to them?
BAKISH: We spend a lot of time doing research. In general, a lot of the things you see around the world are similar. Some economies might not have the infrastructure yet nor the same level of household income, so they might be a little behind, but in general, things like people viewing content on tablets is a worldwide phenomenon. We have been very active in providing content on alternative platforms, sometimes on a complementary basis. One of the big mistakes that the pay-TV industry made was not embracing TV Everywhere more intensely and faster, because that actually left the door open for OTT providers, like Netflix, to swoop in and get a lot of subscribers. Fortunately, we haven’t seen a lot of cord cutting and cord shaving, instead we are seeing the emergence of these super users who like to consume content in lots of different ways, including through OTT. But there is no question people want to consume content on their tablets, that’s one of the reasons why we rolled out this next-generation TV Everywhere solution with Viacom Play Plex.

Secondly, we are providing product outside that ecosystem. We launched our first direct-to-consumer preschool app, Noggin, in Spanish-speaking Latin America in November. The U.S. launched it in 2014. We also license products to other providers who are more focused on those types of devices. We supply to Netflix, and local variants like DLA in the Americas where the local OTT category is very active. We are increasingly talking to mobile operators. We have a significant deal with Telefonica in Germany where viewers can access content, particularly on the MTV side, through the MTV Play app.

Yes, we are very focused on viewing habits and how they are changing, and we see that as something we have to deal with. It’s becoming much more on demand than linear when you get outside of TV Everywhere, but at the same time we are already seeing that as an opportunity, a substantial reach extender, which means we can get a return on investment on our original content.

WS: I often hear that Millennials don’t watch linear television anymore. Are you seeing this?
BAKISH: We do a lot of research and the data definitely doesn’t show that. Geordie Shore in the U.K. would not be the highest-rated show in MTV U.K. history if that were true. Is it true that they are consuming a lot of media on many platforms? Definitely. Are there some that may rely more on [tablets or online] than on linear television? Absolutely. But is that generation no longer consuming linear television? That is categorically not true.

WS: You are also growing your non-media businesses?
BAKISH: Looking at the world beyond media, 24 months ago we said we needed to unlock this opportunity. Today we have eight Nickelodeon stores that our partner SRI runs, including a flagship store in London that opened last year and a similar one in Dubai planned for later this year. By the end of 2016 that will be well in the double digits. On the hotel side we are going to open our first Nickelodeon hotel in the Dominican Republic in May with our partner Karisma Hotel & Resorts. I was down at one of their resorts in Mexico. They run great hotels and they already have the Nick experience in that resort. We just opened our first theme park in Asia, the Lost Lagoon at Sunway Lagoon in Kuala Lumpur, Malaysia. We have deals for multiple parks in China. We did a deal for a small Turtles indoor park in Russia. So a lot of activity that reinforces the brand, offers great consumer experience, and quite frankly, will drive economic growth for us.

WS: Are there issues in international pay TV that don’t get talked about enough?
BAKISH: I think there are very powerful examples of what can be done to drive growth if you look outside the U.S. For example, one is Movistar in Spain. Roughly 18 months ago, Movistar decided to move to quadplay packaging and went on to dramatically—in multiples—expand its subscriber base despite Spain’s pay-TV business being stuck for at least five years. That is a case study in how it’s possible to drive pay-TV growth in a mature market that is in a recession. Also, outside the U.S. you are seeing traditional companies looking to expand their business outside their footprint, take Sky as an example, through Now TV, their OTT platform. That’s interesting. There is an example of a company that knows the pay-TV business and sees an opportunity to broaden its subscribers.

A lot of people are focused on the challenge and the drama of the pay-TV business, not the data that says things are actually continuing to move forward. As I look at it, the story is actually pretty exciting. We are growing our share of television viewing outside the U.S, and seeing huge numbers on the digital side. That suggests a bright future ahead.