Viacom had a tough fiscal second quarter but the profit picture at Paramount Pictures continues to improve thanks to better performance at the box office and growth in television.
Viacom CEO Bob Bakish noted during the company’s earnings call on Friday that the new regime at the studio lead by chairman-CEO Jim Gianopulos has boosted the studio’s profit line by $500 million inside of three years. Second-quarter theatrical revenues more than tripled year-over-year, to $172 million, on the strength of “Bumblebee” and “What Men Want.”
Bakish also talked up the “ton of positive buzz” on upcoming Paramount releases including the Elton John biopic “Rocketman” and “Dora and the Lost City of Gold,” a live-action spin on Nickelodeon’s “Dora the Explorer” kidvid classic.
On the TV side, the studio has 22 series in various phases of production, and landed renewals for Amazon’s “Tom Clancy’s Jack Ryan” and Netflix’s “Haunting of Hill House” in the quarter. Hulu’s “Catch-22,” toplined by George Clooney, is a high-profile debut for the studio in the current quarter.
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“TV is a fast-growth business creating incredible product that has a very bright road ahead,” Bakish told analysts. Viacom affirmed guidance that Paramount will deliver a profit on a full-year basis for Viacom’s fiscal 2019, which ends in September.
Bakish spent a good portion of the call detailing Viacom’s plans for Pluto TV, the ad-supported streaming platform that it acquired in January for $340 million. Bakish talked up the speed of the integration process with Viacom, noting that Pluto TV launched 14 new channels featuring library content from MTV, BET, Comedy Central and other Viacom brands.
Pluto TV, which offers a mix of on-demand content and live channels, has provided a windfall of digital advertising inventory for Viacom’s Advanced Marketing Solutions unit, which sells high-yield targeted ads and has been growing rapidly. Viacom CFO Wade Davis called Pluto TV “a billion dollar opportunity” for the company based on the growth of Pluto TV’s monthly active user base. The platform has seen a 31% jump in its active monthly user base in the past four months, spiking to 16 million in April from 12 million when Viacom completed the acquisition in January.
Pluto TV is planning to launch Pluto TV Latino featuring Spanish-language channels in July. Viacom is also looking to expand its distribution in key European markets and to launch a Latin American version by year’s end. Domestically, Pluto TV is in for a boost after launching as a revenue-share offering with Comcast on its Xfinity Flex service aimed at broadband-only subscribers. The Pluto TV app will soon be integrated into Comcast’s mothership Xfinity X1 platform.
Bakish told analysts that Viacom will plow some more resources into Pluto TV this year “to take advantage of the momentum we’re already seeing.” Viacom “halted” the licensing of library product to outside streaming companies during the second quarter as the company sorted out its plan for funneling programming to Pluto TV, Bakish said.
The investment in Pluto TV is an example of how Viacom is looking to wean itself from dependence on the domestic basic cable sector as the largest driver of the company’s earnings.
“We’re leaning more and more into the evolution of our company,” Bakish said. “We’re extremeley excited about the consumption of our brands we’re seeing off TV.”