Freston
Dolan
Tom Freston pulled the wraps off the new Viacom on Tuesday with an unwavering two-pronged approach: domestic niches and international expansion.
Topper said specialty pics and demographically targeted cable nets -- aided by digital deals -- are cornerstones of his new company.
"We think media fragmentation is good -- it plays to our strengths," he said, speaking in Gotham at what is known as the investor road show.
As for the deal to sell the DreamWorks library, Viacom insiders said it could come as early as next week for a target price of $850 million-$1 billion, with George Soros back in front as a leading bidder.
Company hopes that deals like its pact with Verizon, and international expansion of brands like MTV and Nickelodeon, will insulate it from dips in the traditional U.S. market. Digital and international businesses will account for 40% of the conglom's ad-revenue growth this year, Freston said. He also predicted $500 million in digital revenue over the next three years.
Freston said the studio will be heavily committed to the soon-to-be-renamed Paramount Classics and prestige pics, which he emphasized over tentpoles and mid-range movies. "This is the fastest-growing part of our business," he said, "and we intend to be in it in a big way."
Freston told
Daily Variety afterward that his comments shouldn't be taken as a signal that the company would lessen its focus on the tentpole or mid-range pic. But another exec said privately that the $30 million-$50 million film is not a priority for the studio.
The goal is at least partly financial: Company hopes to increase operating margins at the studio from the mid-single digits to as high as the low double-digits, and producing lower-cost pics could help reach the goal.
Still, even after the DreamWorks purchase and new Par Classics projects from the likes of the Coen brothers, the studio is in some ways still looking for an identity under a regime of execs new to the film biz. Par recently came away empty-handed from Sundance, and last year MTV Films had a disappointment with buzz buy "Hustle & Flow."
Asked about tension between staffers at DreamWorks and Par (
Daily Variety, Feb. 1), Freston said he understood the "unease" but that friction was inevitable with the integration of two companies. He said the situation posed a different challenge than one in which the acquired company had been "totally vanquished."
At the presentation, chief financial officer Michael Dolan said Viacom could eventually sell pieces of the Par library to private investors for at least the first part of its after-market cycle --a move that would give Viacom cash upfront and further involve Wall Street in library stakes.
Also at the studio, Dolan said the company would average 14-16 pics per year and that about one-third of them will be produced by Steven Spielberg, with helmer also directing about one every year, under the terms of the DreamWorks acquisition.
Though the new Viacom is now the only U.S.-based conglom without a broadcast network, Freston said that the company was aided by the demographic niches of cable nets such as Spike, BET, Nickelodeon and MTV.
Overseas, company sees greatest opportunity for ad growth in Mexico, where it predicts an increase of as much as 40%, nearly twice as much as in any Asian country. Italy came in second with a surprising 32%.
On the digital side, episodes of MTV series and other content have racked up about 700,000 sales via iTunes, Freston said.
Presentation impressed investors, who say that its strategy is encouraging despite Viacom's reliance on cable advertising and uncertainty over the Par slate and DreamWorks integration.
"When you look at the business fundamentals of both CBS and Viacom, it's hard not to be excited by Viacom," one analyst said.
While the show featured a slick presentation with MTV-style jumpcuts, Freston took the opposite roadshow tack from Leslie Moonves. The CBS topper offered colorful references to movies like "The Godfather," but Viacom's new chief offered a more sober tone.
Freston, who is regarded as a pop-cultural visionary for co-founding MTV, is now trying to make his mark as an executive visionary as well.
Still, he is serving under the man who built the empire whose pieces helped form Viacom and CBS. After the presentation, when a Viacom exec privately thanked Sumner Redstone for coming, Redstone laughed and said with a shrug, "It's my company."
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