While Viacom’s fourth-quarter earnings showed some positive signs, edging Wall Street’s estimates and delivering evidence of a turnaround at Paramount, CEO Bob Bakish conceded Nickelodeon has shown “some softness.”
As evidenced by the recent leadership change that saw Brian Robbins succeed Cyma Zarghami as head of Nickelodeon, “we are actively working on it,” Bakish said during a conference call with analysts.
The flagship network, along with MTV, BET, Comedy Central and Paramount Network, is crucial to the longer-term growth of the company. The media networks unit had a stagnant quarter, with revenue slipping 1%, as a 6% downturn in advertising was offset by modest affiliate growth. Kids programming in particular has been under assault for years by YouTube, social media and an array of other rivals for juvenile attention.
“At Nick, we’ve got the playbook,” the CEO maintained. Robbins “is diving in and creating great energy and urgency” at the network. Noting a triple-digit jump in the recent ratings for the season premiere of mainstay Paw Patrol, Bakish said, “A big audience is out there. We just need the product to get ’em.”
During the hour-plus call, Bakish, CFO Wade Davis and Paramount CEO Jim Gianopulos offered a relentlessly upbeat portrait of the company. The appearance on the earnings call by Gianopulos, who took the reins at the studio in March 2017, was unprecedented for the head of Paramount in recent corporate times. During the long tenure of Brad Grey at the studio, relations with Viacom remained fairly icy and arm’s-length. In the pre-Grey era, chairman emeritus Sumner Redstone dominated the quarterly proceedings.
“Viacom is in a fundamentally different — and better — place than it was two years ago,” asserted Bakish, who became CEO in December 2016 after a tumultuous series of years for predecessor Philippe Dauman and controlling shareholder National Amusements. With Viacom on a lower-key frequency lately, at a time when corporate cousin CBS is buffeted by massive changes, none of the questions on the call concerned the M&A fate of Viacom or a possible reunion with CBS, which most analysts expect to eventually happen.
Instead, Paramount’s upswing took up a fair amount of the call, with multiple analysts thanking Gianopulos for sharing his insights. Historically, the studio has taken a beating in the investor community for its lack of profitability. Davis said the studio is now “within striking distance of break-even” on a full-year basis. He joined his colleagues in projecting much healthier margins in 2019 and beyond.
Gianopulos offered an update on several metrics during the call. He said budgets for Paramount’s upcoming slate range from $10 million to $140 million, but “no single film represents more than 12.5%” of the total expected profit for the full slate — “a balanced approach.” Singling out films for which the studio has hopes, he mentioned next month’s Transformers spinoff, Bumblebee, and next spring’s Rocket Man, the Elton John biopic due next spring that aims to ride Bohemian Rhapsody‘s blockbuster coattails. For 2020, the studio is touting James Cameron Terminator entry as well as its Top Gun reboot and director Ang Lee’s Gemini Man, starring Will Smith.
Paramount Players, the synergistic unit steered by Robbins before his move to Nickelodeon, which channels Viacom properties into Paramount film releases, has four of the studio’s 13 releases in 2019, Gianopulos noted. Among them is a live-action Dora the Explorer feature about the teen-aged Dora’s “Indiana Jones-like” adventure. In future years, the unit is expected supply six to eight annual projects, roughly one-third of the overall slate.
In fiscal 2020, Paramount expects to release 19 films and Gianopulos said the longer-term target level is between 15 and 20 titles a year, a more robust output than the latter years of the Grey regime.