Freston
Viacom prexy-CEO Tom Freston reiterated Monday that the company was "very close" to a deal for the 59-title DreamWorks library of live-action movies, adding he was "amazed" by the amount of interest in those pics from prospective buyers.
He declined to specify the likely purchaser (a group led by George Soros is reportedly the heavy favorite) but intimated the price would be at the high end of the $850 million-$1 billion range the company had projected.
"I'm confident we'll have a very good deal very shortly," he told participants at an investor conference Monday in Florida.
Freston didn't mention -- and none of the investors present asked -- about the latest wrinkle at the film studio, which sees Universal's Stacey Snider taking over DreamWorks' live-action slate. Snider confirmed her new job over the weekend; her title will be co-chair and CEO of DreamWorks.
Freston is among several new-generation Hollywood managers who are presenting at Bear Stearns' 19th annual media confab, along with CBS' Leslie Moonves, Disney's Robert Iger and News Corp.'s Peter Chernin.
As for the DreamWorks deal purchase, Freston described it as "a great fit for us, a perfect fit."
Among other advantages of the $1.5 billion purchase, he pointed to the fact that Viacom would be able to distribute for seven years the DreamWorks animation titles -- which he said travel beautifully abroad and in all windows.
And he mentioned the benefit of having DreamWorks distribution topper Hal Richardson aboard at Viacom to oversee the licensing of film product worldwide for all of the company's labels.
The DreamWorks deal "gets us much more quickly to what we want to be," he said.
The topper of the newly hived-off Viacom was generally upbeat in his 35-minute assessment of the company's overall financial and creative prospects even as the company is scrambling from losses at Paramount Pictures, which led to a noticeable dip in the company's fourth-quarter profits. Viacom saw a drop of 5% in film revenue to $788 million, with worldwide theatrical revenue sliding an eyebrow-raising 42%.
Overall, Viacom's entertainment unit, which includes the studio and homevid biz, swung to a $94 million loss in the fourth quarter from a $46 million profit a year earlier. Loss led to a drop of 70% in earnings to $130 million.
Since that quarterly earnings report was released last week, Viacom stock has slumped to $40.12 a share -- its lowest point since the company went solo on Jan. 3. (Sister conglom CBS also reported losses last week. Its stock closed Monday at $24.83, down from its Jan. 3 start of $26.10 per share.)
Freston did make a point of explaining his vision of the new film-studio model at Viacom, which is, sans CBS, no longer tied to a network production entity. Instead, Freston sees the company's 124 branded channels around the world as the inspiration for specific, targeted film labels -- MTV Films, Nick, BET, Paramount, DreamWorks, Paramount Classics and so on.
And these, he said, should all be staffed by people who know their targeted audience and will develop material, attract talent and create marketing campaigns that reflect those different potential audiences.
Despite the digression on the film front, most of the questions pitched by the Bear Stearns moderator, who did not introduce himself on the Webcast, were centered on how Viacom plans to position itself in the multiplatform digital era.
Will technology be helpful or disruptive to the biz? That, in a nutshell, is the question on Wall Street's mind, he said, especially since the stock-market performance of most media congloms has been so disappointing.
Without once mentioning the stock, Freston painted a consistent and rosy picture, putting the emphasis on the brands the company manages, its relentless consumer focus and the ease with which advertisers relate to this rifle-shot narrowcasting approach.
In short, Freston, argued, "New technology brings unbelievable advantages. You can create new content and monetize it in new ways. The whole focus of this company is on the multiplatform notion."
He also said the company has tremendous efficiencies of scale in launching spinoff channels and foresaw high margins in newfangled digital/mobile outlets, with advertisers paying premium rates to reach what he called "alpha demos."
While baby boomers are qualitatively different from their predecessors and hence more attractive to advertisers, Freston said he still believes the so-called Generation Y would remain the "sweet spot" for Madison Avenue. The advantage of Viacom brands is that a generation could actually "pass through" the various channels as they age and their tastes change.
As for future opportunities, Freston said he thinks the company's healthy cash flow will be utilized in several different ways: It will be plowed back into content creation, used to make small-scale selective acquisitions here and there and tapped for share buybacks. (The board approved a $3 billion buyback for this year, of which Freston said $700 million had already been utilized.)
On other issues, Freston had mixed opinions.
- About competing DVD formats, he sounded a pessimistic note. "We're looking at another VHS-Betamax disaster, and the person who gets burned is the consumer; I wish I had the answer. There's no movement," he said.
- As for piracy, aside from all the obvious MPAA-inspired initiatives, Freston said the big push at Viacom is "to get out into the marketplace so that people can get content easily at reasonable prices."
- And when it comes to programming for fickle teens, another concern of both advertisers and Wall Street, Freston suggested his company has made that its specialty: Contrary to popular belief, teen viewing actually went up 5% last year, and in any case, young people tend to be "more deeply involved with brands."
And, Freston concluded, "We've been programming for 25 years for those with short attention spans."
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