ViacomCBS CEO Bob Bakish and the Changing Market for Movies and TV - 7investing
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ViacomCBS CEO Bob Bakish and the Changing Market for Movies and TV

October 21, 2021

Dan Kline: ViacomCBS (NYSE: CBS) has tried to make its Paramount+ streaming service a player in the streaming space. That has been a pretty big challenge as the company lacks the top-tier intellectual property that sone of its rivals own. The company owns some name-brand properties, but they’re not necessarily the major draws that Walt Disney has used to jumpstart its own streaming service.

The company’s CEO, Bob Bakish, understands the tall hill his company has to climb. He spoke about the competitive landscape at the recent Wall Street Journal Technology Conference. Bakish also brought up an issue that came up more than once during the conference — the challenge of dealing with talent in an uncertain media world.

The challenge — and it’s one that has come up every time a new form of distribution gets introduced — is that existing contracts don’t account for new economic realities. That has become a notable problem during the pandemic when many movies were released to streaming either instead of theaters or concurrently with a theatrical release.

In theory, wider availability should be a good thing for movies but it complicates the monetization picture. It’s relatively easy to track box office performance — that’s actually the one part of the entertainment industry that has public transparency —  but understanding how a film performs when it streams for free becomes much more challenging.

Did you join a service just for a certain film? Was it part of the reason you stayed a member? These aren’t easy problems to solve and we’ve already seen lawsuits related to actor compensation. There’s no simple answer here and Simon Erickson weighed in on what Bakish had to say on the Oct. 20 edition of 7investing Now.

A full transcript follows the video.

 

So Bob Bakish, Bob is the CEO of Viacom that identify him as Robert, but everyone calls him Bob. So I don’t think I’m being insulting there. And he had a lot to say about streaming. Simon did he tacitly acknowledge that ViacomCBS has a long way to go in this space? Because you know, I root for them, but I am not a fan.

Simon Erickson  25:28  It’s a tough one. Right. And this was an interesting interview, because the the tone of the questions asked to Bob was almost a little antagonistic, you know, there was kind of thing, aren’t you following behind? Or Shouldn’t you be spending more, Aren’t you concerned about? I mean, it’s kind of the recognition that Netflix now has a larger content budget than Viacom, that CBS does every year in terms of the streaming services, and Viacom has got only 42 million streaming subscribers, which is a fraction of what Netflix has internationally. So I would agree with you, Dan, that, you know, you know, the media space is much, much better than I do.

But it does seem like even though they’ve got several decades of a head start, and they are embracing streaming, they’ve got 42 million, like we said, streaming subscribers, a lot of those from Paramount Plus, there is a need and a question also of how large of a media library should you have? And how much should you charge for that? And do the do the largest players keep getting bigger? Is there some kind of ceiling that they reach, where you can’t charge more than X dollars a month that people just aren’t gonna pay it?

Dan Kline  26:29  The problem is one Mandalorian is worth more than 10 Star Trek’s. And if you really look at the content library, and Bob is aware of this, the problem is when you look at every secondary streaming service, what are they going to do? Are like Peacock and Viacom gonna merge? How would that work? And does that become this confusing array of rights like there’s like Premier League rights are coming up and they might get split between multiple vendors well, that becomes really really tricky so I liked what Baker’s had to say and that touched on and we’ll close with this – there’s also sort of a we’re at a weird tipping point when it comes to talent right because this has happened before when we first had even say DVDs. Movie stars went wait a minute like not as many people are going to the theater because they’re going to buy the DVD? Why don’t I get a cut of the DVD now if you’re Tom Cruise you get a cut of the DVD. If you’re the third assistant grip. You don’t. That’s a strike right now in Hollywood that all has to be negotiated. Baker’s talked about that and so did other people right?

Simon Erickson  27:27  Yeah, this is Scar-Jo with with Black Widow right the Disney controversy is suing Disney over Black Widow in the way that she’s getting paid because the contract was originally like so many other contracts for talent in Hollywood, our structure is based off of box office receipts. Now how many box office receipts to the theater get when this when this movie came out? Its opening weekend, first couple of weekends, whatever it is. And then COVID happens nobody’s able to go to the movie theater and everybody’s watching it on Disney Plus. So okay, all of a sudden throw out the old contracts. And now it’s got a big – it’s this strange convolution of data now of like, how do you assign what the talent is worth? Certainly there’s some kind of – it’s a lot more challenging to figure out you know, the viewership within Disney Plus how many subscribers you get from this, how many people are there just for that show versus everything else? It’s not as easy as Hey, I bought a ticket at the theater. And that’s kind of restructuring a lot of those relationships that have been in place for decades in Hollywood.

Dan Kline  28:21  And there’s always been a lack of transparency but even if you have transparency, so I’m gonna watch Black Widow probably this weekend. It’s free now on Disney Plus. Ostensibly some percentage of my Disney plus membership I keep it because I can watch Black Widow is that two cents, is that $1 it’s all very tricky. Now. Here’s the problem. We’re out of time. Simon has to go back to the show. So I will point out again if you want to get