Viacom Is Sticking to Its Guns


Nov. 30 2018, Updated 7:31 a.m. ET

Viacom is bucking the media reaction to Netflix

AT&T (T), Dish Network (DISH), and the Walt Disney Company (DIS) have responded to cord-cutting by launching their own online video services to compete with the likes of Netflix (NFLX). But Viacom (VIA) has so far bucked the broader media industry’s reaction to cord-cutting. Instead of competing with Netflix or Amazon (AMZN) for online video subscribers, Viacom has chosen to collaborate with them by being their content provider.

On Viacom’s fiscal 2018 fourth-quarter conference call earlier this month, CEO Robert Bakish indicated that the company would continue with this strategy because it was bearing fruit.

In the battle with Netflix, AT&T has DIRECTV Now and Dish has SlingTV. DIRECTV and SlingTV exited the third quarter with 1.9 million and 2.4 million subscribers, respectively.

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Viacom ratchets up production

Viacom has agreements to produce shows for Netflix, Amazon, Snapchat (SNAP), and other online video providers. As it sees demand for its content increase, Viacom plans to increase its production in fiscal 2019, which began on October 1. The company plans to produce 13 shows in fiscal 2019 compared to the nine shows it produced in fiscal 2018. By feeding the strong appetite for digital content, Viacom hopes to double its TV production revenue to ~$1.0 billion in the next few years.

Annual revenue fell

Although Viacom delivered higher adjusted EPS of $4.12 in fiscal 2018 compared to $3.77 in the previous year, the company is still struggling to grow its top line. The company’s fiscal 2018 revenue was down to $12.9 billion from $13.3 billion in the previous year.


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