M+E Connections

Viacom CEO: OTT Could Be Greater Driver of Pay TV Penetration Outside the U.S.

The increasing number of over-the-top (OTT) “skinny bundles” stand a greater chance of boosting pay TV penetration outside the U.S. than inside the country, according to new Viacom CEO Robert Bakish.

Outside the U.S., “there is a credible case to be made” that OTT services will “continue to help grow pay TV penetration, albeit in an evolving form,” in part because “penetration remains relatively low” compared to the U.S., he said at the Deutsche Bank Media & Telecom Conference in Palm Beach, Fla., March 7.

In the U.S., however, pay TV has 84% penetration, he said. There, OTT instead will be “a catalyst for price decline and segmentation of the market,” he predicted.

One problem is that most of the “skinny bundles” in the U.S. have been very similar so far, costing about $40 a month and featuring a bundle of TV networks “heavy” on broadcast sports, he said. But, he said: “It’s hard to believe that the sports fans will heavily migrate to that offering because, in general, they are very satisfied with the larger bundles of pay TV and they can get more sports product there. The consumers that you want to get there are consumers that are maybe ‘cord-nevers’ or people who are trading down. However, the price point of $40-plus is not well-suited to that.”

He added: “What the country and the world arguably needs is a compelling lower-priced option that we believe can be served through what we’re calling an entertainment pack.” Such a bundle wouldn’t force customers not interested in sports to pay for sports, he explained. “We think that could be a significant part of the market and we believe Viacom is very well-suited to serving that market, and we’re in conversations with a range of people about just that,” he said.

But he added: “I can’t tell you exactly when it’s going to happen. But it feels like an inevitable outcome and that will be a good thing.”

Since taking over as Viacom’s new CEO late last year, significant moves that Bakish has made included the unveiling of a five-point turnaround plan to improve the company’s performance. Key elements of the plan included the creation of a new unit that will focus on developing short-form video content that is increasingly in demand by viewers, a strengthened relationship between its Nickelodeon and Paramount brands in TV and film projects, and the rebranding of its Spike TV network as The Paramount Network in early 2018 (https://www.mesaonline.org/2017/02/09/viacom-unveils-five-point-turnaround-plan-mesa/)

Since that plan was disclosed in February, one “explicit decision we made” was removing “The Daily Show” with new host Trevor Noah from Hulu, Bakish said at the conference. Viacom also started running a second airing of the show on Viacom’s BET network at midnight, he said.

“The Daily Show” was “not at the place it was when” Jon Stewart hosted it, “but it is building and so we want to make more out of it,” Bakish said, adding: “We think there is an opportunity to grow that franchise.”

Improved viewership has already been seen for the show since the changes were made, he said, telling the conference; “Two weeks in, we’re making nice progress,” with linear ratings up about 10% and streams up 50% on Comedy Central alone, he said.