In a strategy that is becoming more obvious, Viacom apparently is not targeting to complete with its tech rivals engaged in streaming videos and other content to consumers, but instead develop and provide content software for them. This became evident after Viacom announced that it has entered into a multi-picture deal with Netflix and pledged to create more films and TV shows in the future for offering to other companies and live streamers.
For the quarter ended Sept. 30, Viacom was able to beat market estimates for profits because of this changed strategy and the strength of the Tom Cruise-helmed “Mission: Impossible – Fallout” at the box office.
In the face of potentially very fierce rivalry anticipated between media giants Walt Disney and AT&T, which are already utilizing the vast number of film and TV software that they have, and the video streamers such as the likes of Netflix and Amazon.com’s Prime, smaller players in the market such as Viacom and its sister concern CBS have intensified their efforts to creating and developing original content and offering them to other companies and distributors.
“All of the recent activity around vertical integration only serves the demand for high quality producers,” Viacom Chief Executive Bob Bakish said on a post-earnings conference call. A similar view was earlier by CBS interim CEO Joe Ianniello earlier this month.
Viacom and Netflix earlier worked together and this new film deal is an expansion of that earlier partnership which Viacom had with the largest video streaming service includes the TV series “The Haunting of Hill House” and “Maniac,” which stars Emma Stone and Jonah Hill.
The company has a significant opportunity to expand and grow in terms the film and TV production business of company because buyers’ “appetite continues to increase”, said Jim Gianopulos, CEO of Viacom’s Paramount Pictures. According to the company’s estimate, there would be about 50 per cent increase in the number of TV shows of the company which is expected to be 113 by next year.
Company sources said that in the next two years, the revenues of Viacom from TV production, from the TV channels and cable networks of MTV, Comedy Central and Nickelodeon, should reach about $1 billion which would be double the current number.
The company has also reportedly said that there would be growth in the mid single digit for revenues generated by the company in the fiscal 2019, which began Oct. 1, because of growth in its both TV and films businesses. The company said that adjusted operating income will rise in the low-single digital percentage range, they said.
Viacom also beat analysts’ estimates for earnings per share with declared earnings of 99 cents per share on revenue of $3.49 billion against estimates of 95 cents per share against expected revenue of $3.37 billion.
There was a boost of 2.1 per cent in the shares of the company at the Nasdaq following the upbeat quarterly results and the announcement of the Netflix deal.
(Adapted from EconomicTimes.com)