ViacomCBS : Credit Suisse - Transcript

Corrected Transcript

14-Jun-2022

Paramount Global (VIAC)

Credit Suisse Communications Conference

	Total Pages: 14
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Paramount Global (VIAC)	Corrected Transcript
Credit Suisse Communications Conference	14-Jun-2022

CORPORATE PARTICIPANTS

Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

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OTHER PARTICIPANTS

Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

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MANAGEMENT DISCUSSION SECTION

Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

All right. Good morning. So, I am Doug Mitchelson, Credit Suisse's media and cable/satellite and wireless analyst. Very pleased to have with us here today, Bob Bakish, Chief Executive Officer of Paramount Global for our second keynote presentation. This will be a fireside chat format with Bob. And my questions are likely to run the full time.

But just in case, we, if by chance, do have some time remaining, feel free to e-mail me questions if you like.

So, Bob, we saw some disclosures up on the screen. Welcome. Thank you very much for coming. I'm not sure if there's any more disclosures commentary.

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

Well, I don't think there's disclosures commentary per se. It's great to be here.

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Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

All right. Great. Thanks again.

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Paramount Global (VIAC)	Corrected Transcript
Credit Suisse Communications Conference	14-Jun-2022

QUESTION AND ANSWER SECTION

Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

Q

So, look, I mean, the February Analyst Day feels like a lifetime ago, Bob. Why don't we start with the state of the union? How is Paramount positioned and how do you believe the management team can create value from here?

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

A

Yeah. So, Doug, look, as I shared with you in the past, our positioning is unique and differentiated. We're really the only major media company with a scale broadcast, cable, pay streaming, free streaming and theatrical offering. And the truth is we have momentum across all those businesses. We start with our TV Media segment. We have the number one broadcast network. We have a leading cable network portfolio. And those deliver a broad range of popular content that consumers love and that I'm talking about FEI, I'm talking about the NFL, I'm talking about Yellowstone.

And there's real resiliency in that business where price increases and cost optimization really offset, largely offset ecosystem declines. And then, there's our theatrical business. That's a market that is strengthening. And again, one where we have real momentum. All five films that Paramount Pictures released this year opened at number one. And that, of course, includes the incredible success of Top Gun: Maverick. And I note that all those titles, the first four already will be available on Paramount+.

And speaking of Paramount+, finally, the Streaming segment, our third segment, is another area where we have real momentum in the business. Our position as a diversified media business fundamentally improves the unit economics of streaming for Paramount+ and our other D2C products. Streaming clearly benefits from our broad, popular content offering which serves the whole household both for Paramount+ and for Pluto TV. We, of course, benefit from a dual revenue stream model, enabling lower cost consumer entry points. That broadens the TAM and is probably helpful during times of slower economic growth.

And finally, we're global. We're truly global operating company. And our international presence adds a lot to our streaming execution. So, look, all those segments create value on a standalone basis and really the combination benefits from synergies. So, I think we're very well positioned for today's marketplace.

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Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

Q

All right. So, let's dig in. I mean, streaming is obviously in focus. So, twice in the last two years, you've taken up streaming investment guidance. You're now, I think, guiding to $6 billion-plus in 2024 content spending. Could you walk us through the dynamics driving the more aggressive posture in streaming? And then, I'd just be interested in any reflections you might have on the streaming news flow since your Analyst Day and whether or not that's been influenced your strategy and how flexible that strategy might be.

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

A

Well, look, our streaming approach, by the way, as with entertainment in general, all starts with content. Our content investments are critical to building our company for the streaming future, and they really support our long-

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Paramount Global (VIAC)	Corrected Transcript
Credit Suisse Communications Conference	14-Jun-2022

term revenue growth and subscriber plans. An advantage that we have is that a lot of our content investments do double duty. They work across platforms and that drives enhanced ROI for us. If you just look in recent times, a few examples, Lost City, the rom-com that we released theatrically played on theatrical and is currently playing on Paramount+; the NCIS, a show on CBS, again, on broadcast TV, also on Paramount+. The Yellowstone franchise on cable TV, also on Paramount+.

I could go on, but what I'd say is that shared approach has proven superior for us to a single platform strategy. And because when you have a single platform strategy, you focus all your spending on - a lot of your spending on exclusive scripted originals only for that platform, we're able to spread it and we see tremendous benefits in that.

And it gives us the confidence to continue to strategically invest in streaming, given the benefits we're seeing across the business. In terms of our level of streaming investment, that you asked in your question, we remain committed to the plan we laid out at Investor Day. Yes, there have been developments in the market. No, they have not impacted our strategy.

We anticipate increased investment in D2C content spend in 2022 and in 2023, after which the growth rate of D2C content and expense will slow. And it's important to note that the revenue side of this thing is really on fire. It'll grow from slightly over $3 billion in 2021 to over $9 billion in 2024. And we're very much on track for that. So, make no mistake, we're excited about our streaming business. We believe it represents an extraordinary value creation opportunity for Paramount. And we're confident in our ability to execute and deliver on that plan.

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Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

Q

So, that leads right into question on content. I'm just curious, Bob, because I feel like content development production for Paramount has shifted a lot the last couple of years. And I think you made all of the management changes. You're focusing more on in-house and on content that works for streaming as well as these other platforms. Of course, the market shifted due to pandemic. Maybe Netflix is cooling off a little bit in some of their Hollywood focus. Any reflections or learnings across either production of content or quality of content, as you sort of think about these last couple years and all the changes you've made?

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

A

So, look, Doug, the Paramount content engine is really firing on all cylinders. And it's the quality and diversity of the popular content that we create that sets us apart from the competition. It sets us apart in linear television, in film, and in streaming. So, look at theatrical. As I said, we're the only US studio, Paramount Pictures, to have five films open at number one in the box office this year.

And that, of course, is Scream, Jackass Forever, Lost City, Sonic 2, and Top Gun: Maverick. And as I said, the

first four of those are on Paramount+ today, use our 45-day fast follow model. And Top Gun: Maverick will get there. In television, we break through in broadcast and in cable. That starts, of course, with CBS. The US' number one network yet again. You have fan favorites like Ghosts, like NCIS, like FBI, they power broadcast ratings and broadcast advertising revenue.

But they're also among the strongest performers on Paramount+. So, again, that dual duty point. And by the way, we have live events, too, like the Grammys. We had Harry and Meghan last year. We had Adele One Night Only. All those were great on CBS broadcast and also come over to Paramount. Then there's our cable networks. As you know, Nickelodeon, leader in kids and family. Comedy Central, South Park and more. MTV Reality and

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Paramount Global (VIAC)	Corrected Transcript
Credit Suisse Communications Conference	14-Jun-2022

Music, really a juggernaut in the space. Showtime hits like Dexter, like Billions and more. And of course, Yellowstone, the most watched show on cable TV. So, a lot going on there with popular content.

And then, there's streaming which is what everyone wants to talk about. All the platforms I just referenced feed our streaming efforts including with our library. And as you know, our library is massive. And then, you add to that new original series like the Yellowstone spin-offs that's powered by a relationship with Taylor Sheridan. He's a really prolific writer and producer of programming that brought us 1883. That will bring us 1932, which the next era, if you will, of Yellowstone, and also a cool show Tulsa King, which I'll come back to in a second.

It brings - you look at the franchise space, we've launched The Challenge: World Championship, leveraging what's going on in broadcast and then bringing it to Paramount+. And we're also doing more sports there on Paramount+ including internationally.

It's important to note that across almost every category we're really leaning into franchises. I like franchises. Example, Sonic, we had the first movie that brought the second movie. We have a series on the way for Paramount+, very exciting. Star Trek, I think you know the Star Trek story. We just expanded again with Strange New Worlds which is off to the fastest start from a viewership perspective of any Star Trek season to-date.

South Park, we brought special movies, multiple movies per year to Paramount+, which coincidentally one is titled The Streaming Wars. That will be available this month. We got a Beavis and Butt-Head Special coming in June and the animated series later. I could go on and on. But what you hear is franchise, franchise, franchise. We really like them, and we have depth of opportunity in that space that we're executing against.

And lastly, remember global, we have more than dozen studios creating compelling original content around the world that has advantages in diversity of ideas, and in fact, the cost for production. So, that's a real hallmark of the company. All of this feeds into our broad and diverse and really irreplaceable content library.

Now, before we go any further, since, hey, we're in the entertainment business, I thought I'd show you a clip from Tulsa King. This is a new show from Taylor Sheridan that we're making for Paramount+. It's the first series that Sly Stallone has ever done. And I think you'll see from this clip why I'm so excited about it. Play the clip.

[Video Presentation] (00:10:46-00:11:36)

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

A

I, for one, can't wait. I mean, you can think of almost like a new incarnation of The Sopranos. And again, Sly's first episodic TV series, and he's great in it. I think it's going to be a lot of fun. So, that'll come this fall to Paramount+.

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Douglas Mitchelson

Analyst, Credit Suisse Securities (USA) LLC

Q

You talked about television a lot and film a bit. And obviously, Top Gun: Maverick, quite the success. How does the film slate look 2023, 2024? Are we going through just an unusually strong period for Paramount and there's always volatility in the film business, or do you think the slate continues from strength to strength?

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Robert M. Bakish

President, Chief Executive Officer & Director, Paramount Global

A

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