Why Viacom is beefing up Channel 5

Why Viacom is beefing up Channel 5

Philippe Dauman at this year's Cambridge Convention
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Cambridge Convention 2015 Session Two: Viacom chief Philippe Dauman outlines why the US media giant needs to be big in Britain

The digital revolution will be televised,” argued ­Viacom chief Philippe Dauman in an upbeat address to the RTS Convention. Twelve months after the US media giant bought Channel 5 for £450m, Dauman offered a positive “end-of-term report on our first year as a British public service broadcaster”.

“Today, I am pleased to reaffirm our commitment to upholding the rights and responsibilities that entails. We pledged that we would increase investment and original creative content – we have, and will continue to do so.”

During the negotiations to buy the Richard Desmond-owned broadcaster, Viacom had promised to boost Channel 5’s £200m annual programme budget.

Delivering his International Keynote address to the Convention, Dauman claimed that the “programming budget for Channel 5 should see a double-­digit percentage gain in 2015-16”.

“As for our public-service commitments on news and UK-originated content,” he continued, “we have not only met but far exceeded [them]. In fact, we’ve agreed with Ofcom to increase Channel 5’s annual peak news quota by 20% and our UK-originated content quota to 45% from 40%.

“We have also renewed our guarantee to broadcast at least 600 hours of UK-originated children’s programmes every year for the duration of Channel 5’s 2015-24 licence.”

Dauman is both President and CEO of the US media giant, owner of global brands such as MTV and Nickelodeon, as well as Paramount Pictures.

Viacom has had a presence in the UK since the launch of MTV Europe in 1987. “The UK creative industries have always been a font of creativity for us, and our most important source of original content outside the US,” said Dauman. “We employ more than 1,000 people here – 10% of our global workforce – and many more people in production.

“It’s not the journey, it’s the destination that matters – and our programme is the destination.”

“Viacom finds its full voice with young audiences: Nickelodeon, MTV, Comedy Central, even Spike, connect with the kid in all of us, which places us at the leading edge of changing viewer preferences, not only for what is watched, but how it is watched in markets around the world.”

Dauman, who has run Viacom since 2006, was chipper about the future of TV: “Unlike the stark choice presented by our organisers – ‘Happy Valley or House of Cards?’ – what we see is a very solid house in a healthy, if not always happy, valley. What makes television television is the content, which is here to stay. Let’s not confuse medium with message. Whatever the source, people are watching more video content, a lot more than ever before.”

He admitted, however, that the global media industry is in a period of transition. “While some of the specific implications may be less relevant here in the UK, with its strong public service broadcasting culture, the trend is clear: revenue models that are being challenged in the US will also come under increasing pressure here, as the digital revolution continues to transform viewing habits,” he said.

“It is also clear that the way forward is inevitably up,” continued Dauman. “Audiences the world over are hungry for the high-quality content we all produce. Digital technologies provide us and our advertisers with a way of connecting more immersively and directly with our audiences.

“Far from usurping our world, these new digital platforms extend our reach, increase our exposure and place a premium on our production curation.”

“It’s not the journey, it’s the destination that matters – and our programme is the destination.”

To prosper in the digital world, ­Dauman argued, broadcasters would have to “craft new and more accurate methods to measure and monetise that audience engagement with our content across all platforms”.

Viacom, revealed Dauman, has adopted a three-pronged approach to boost business.

“[We will] increase our investment in outstanding creative content and deliver it to consumers when they want it, wherever they want it,” he said. “Our audiences are the pioneers of the digital frontier and, as they venture on to new distribution platforms, the content that fuels their exploration will become even more valuable.

“It’s not the journey, it’s the destination that matters – and our programme is the destination.”

Dauman added that Viacom’s original programmes will extend “from full-length movies to original series of 10-second episodes on [video messaging app] Snapchat and everything in between”.

The second part of the company’s approach was to “continue to build international-scale capabilities”. He said: “The UK is a production and commissioning hub for Viacom globally.”

Third, Dauman pledged to “apply technology-driven innovation to both expand distribution and pioneer new advertising platforms”.

 

International Keynote speaker Philippe Dauman, President and Chief Executive Officer, Viacom, was interviewed by Kamal Ahmed, Business Editor, BBC News. The session was produced by Amber Cobb and Laura Gosling.

 



(Credit: Getty Images)

Could a content glut crash prices?

Viacom, described by BBC Business Editor Kamal Ahmed as a ‘behemoth of the media’, had seemed an unlikely bidder for Channel 5.

‘Some people might have thought, “What is Viacom doing buying a free-to-air, public service broadcaster in linear television at a time when, surely, the future is digital and on-demand?’’ suggested Ahmed.

‘We started by looking at the content opportunity – that’s the lens through which we look at everything,’ said Philippe Dauman. He added that it was Channel 5’s Milkshake! children’s programmes that initially caught the eye: ‘Milkshake! penetrates the entire UK. We saw the potential cross-promotion, cross-marketing and cross-programming opportunities on the kids’ side.’

‘We [then] looked at the [overall] programming budget,’ Dauman continued, ‘and we saw the opportunity to take it to the next level. It also gave us scale in the UK.’

‘Was it an opportunistic buy,’ asked Ahmed, or simply the opening salvo of a campaign to acquire companies in the UK and worldwide?

‘We’re very careful with acquisitions; we prefer to grow organically,’ insisted Dauman. ‘But in the international arena, in particular, we look at opportunities where it fits our portfolio to get scale. [Channel 5] was an opportunity that presented itself.’

Recalling the comments of FX Networks CEO John Landgraf at the Edinburgh International Television Festival in August, Ahmed said: ‘Landgraf has spoken of a tsunami of content, a content glut and [he predicts] a collapse similar to that of the oil price.

‘Do you agree that there is a possible crisis ahead?’

‘There’s never enough good original content,’ Dauman responded. ‘Content is king – there’s always a new use for it.’

He continued: ‘You have to be smart in where you allocate your money, but there’s never enough good television or great movies because you can combine them or disaggregate them and find different ways to make money.’

Referring to the sharp drop in Viacom’s stock price in August, Ahmed asked: ‘How tough is it… [as] CEO to maintain this positive outlook when your share price is going down and down and down?’

‘There’s been a lot of volatility – over the summer there was a big drop and we went to a low,’ admitted Dauman. ‘As of now, we’re up 25% from where we were in the third week of August.

‘We’re still quite down for the year, but you look through that and the important thing for us is to focus on what we do best – which is make great content and figure out how to distribute it. The stockmarket doesn’t always see how you’re going to end up in the long term.’

Turning to local matters, Ahmed asked: ‘Is the BBC a help or a hindrance to your broadcasting ambitions and to the broadcasting ecology of Britain?’

Prefacing his remarks with the ‘respect’ he has for the BBC, Dauman said: ‘The only issue I have – because it is publicly subsidised – is when it ventures into areas where commercial media companies have invested a lot.

‘It’s not that [the BBC] should be prevented from doing [this] but it should be scrutinised.’

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