While the OTT video bandwagon has captured everybody else in the content industry we have bemoaned as recently as March that Viacom is dragging its heels, and while we don’t plan to repeat all the salacious gossip which has been paraded in the US national newspapers, regarding Sumner Redstone, the man who controls the company – it is worth saying that something at Viacom should shortly give.
His daughter Shari Redstone, a 20% shareholder in the company that controls in Viacom, this week added her voice to others calling for a new way of thinking at Viacom. And a new management team to execute that thinking.
This can go a number of ways. Either, from his virtual deathbed at 93, Redstone will fire the chairman and CEO of Viacom, Philippe Dauman, or Dauman and his associates will convince a US court that Redstone is either incompetent or making decisions under duress from family pressure, in which case they remain in place and do nothing.
But the keenest observations have noted that the shares went up last week, floating in the hope that the board will be kicked out “en masse” and a new dawn will usher in a sane and upbeat management team.
While Redstone leaves a long list of successors, mostly wives, girlfriends and offspring, all insisting their voices are the ones to be heard over what happens to the Redstone estate, no-one in Viacom’s management is going to indulge in the type of “bold” sweeping moves which made Redstone’s fortune. His personal wealth is estimated at around $6.5 billion, but the businesses he controls, including CBS and Viacom, which also takes in Paramount Studios, are worth over $40 billion.
Viacom has tended to take an anti-internet position, partly because it was the most admired content business in the world when YouTube hit, and people began to copy TV programs onto YouTube web pages, resulting in a 1 billion legal action from Viacom. That case faltered when evidence was fabricated on both sides, but the experience has left it anti-internet in nature. So far its only involvement with OTT services has been to allow content onto other OTT services, rather than to launch one its own, which might have the kind of global reach that HBO and Netflix are aspiring to.
Interestingly CBS All Access is one of the OTT services from the cousin company also controlled by Redstone, just launched in the US, and one of the leading contenders to shake up the way content is exploited. While its boss Leslie Moonves is chalk and cheese compared to Philippe Dauman, it proves that Redstone is not the obstacle, since he controls the voting on CBS at the same 79% level he does on Viacom.
In 2005, it was CBS that was seen as the liability in the pairing, and after Redstone had gone to a lot of trouble to merge Viacom with Paramount, CBS and Blockbuster, he reversed much of that in a share swap, just so Viacom would not be seen to be brought down by CBS, as it had been by continuing to own Blockbuster as Netflix rose. There are many calls now to merge CBS and Viacom once again (Blockbuster has gone), and to perhaps put Moonves in charge of the entire shooting match. That would get our vote, but it is unlikely to happen.
If we go back as far as 2006, streaming was ready technologically speaking, to be launched on the world. But while European broadcasters and pay TV operators embraced it, it took another 9 years before major content players in the US showed their hand. If Viacom was to escalate those wars, it would see yet another acceleration of OTT video across the planet as a major source of OTT resistance altered course. And we are nearing the point when cellular operators will want unique video assets with which to shift video from being something that each home signs up for, to a service associated with each individual cellphone. Put Viacom assets in play and MNOs will show a keen and high priced interest.
More importantly if assets from Viacom are sold – remember it owns MTV and comedy Central, as well as Paramount, Nickelodeon, BET and others – then some lucky buyer would have more weaponry with which to fight for OTT video market share. Perhaps Apple could be persuaded to chase Viacom rather than Time Warner, as is currently rumored.
So far the efforts of Viacom in OTT have been cumbersome and partial, with its latest move in May being to announce a targeted advertising deal with TV streaming platform and device provider Roku, where it is a minority shareholder.
It would be safe to say that Viacom is “poised” to dominate OTT revenues, but does not do so yet.
Viacom also recently unveiled its Vantage Target Discovery and Instant Audience data platforms, which enables advertisers to target specific consumers across Viacom’s platforms and services, including linear TV, VoD and OTT. Viacom still uses Nielsen for audience measurements, but Nielsen is hanging on and has been shoved out of the multiplatform side by comScore.
Viacom has done this because its linear ratings have fallen in the last 2 years and has had a hard time this season signing on once again with two of the major pay TV operators in the US – Dish and Cox. The Dish dispute went to the wire with CEO Charlie Ergen not only saying that he might follow in Cable One and Suddenlink’s shoes and permanently drop Viacom, but also saying Viacom is not the force it once was and that he would “rather spend my time with companies who are a bit more forward-thinking” a direct reference to the way that other studios had been quick to embrace Ergen’s own Sling TV, while Viacom has not, only succumbing in April to letting it carry MTV, Comedy Central and Nickelodeon, but tying the deal to its carriage dispute with Dish.
We said last month that Viacom is finally taking some tentative steps towards OTT video, with the announcement of Viacom18, a joint venture between Viacom and the Network 18 Group, which launched a new VoD service called VOOT in India, powered by Kaltura’s OTT TV platform. The free, ad-supported video streaming service offers almost 17,000 hours of content. So it has allowed an OTT service in the only country that has virtually no broadband lines and a high incidence of content piracy. Go figure.
The truth is that if the courts do not intervene, nothing much will happen before the death of Sumner Redstone. He has always refused to deal with the issue of his succession, because he insisted that he would live forever. But in his dotage he, or those lawyers who now interpret his whispered wishes, may decide to take on and excommunicate the current Viacom board, and replace it with a more forward thinking team – then things can start to happen.