Inside Bob Bakish’s Aggressive Turnaround Plan for Viacom
CREDIT: Celeste Sloman for Variety
Bob Bakish was days into his job as CEO of Viacom in late 2016 when he began convening meetings with senior executives to execute a triage effort to save the media giant.
Paramount Pictures had just posted a $445 million annual loss. Viacom’s cable networks were in danger of being dropped by major distributors amid a long ratings slump and lack of sizzle in its programming. Morale at the company’s creative hubs in New York and Los Angeles had been battered by months of headlines about a nasty fight between Bakish’s predecessor, Philippe Dauman, and Viacom controlling shareholders Sumner Redstone and Shari Redstone. The prospect of a shotgun remarriage of the two halves of the Redstone empire — Viacom and CBS Corp. — hung heavy over the company, leading outsiders to see Bakish as a placeholder until Leslie Moonves and his team could take over.
What’s more, Bakish inherited a debt problem from the Dauman regime that required immediate attention as big payments loomed, complicating Viacom’s financial flexibility at a time when the company desperately needed to invest in fresh content and R&D. All of this bad news was reflected in a stock price that had plunged nearly 50% during the previous two years. Once seen as a company on the cutting edge of the multichannel universe, Viacom became the butt of industry jokes about traditional-media dinosaurs failing to adapt with fast-changing times.
“The biggest issue I saw, as if there weren’t enough problems, was that there was essentially no plan,” Bakish, who turns 55 on Dec. 14,
tells Variety in his first in-depth interview since becoming CEO. “I’m a big believer in having a plan. If you don’t know where you’re trying to get to, how are you going to get there?” Not having a long-term strategic growth plan for the business was anathema to his background as an MBA and engineer.
Two years later, under Bakish’s leadership, Viacom appears to have halted the slide and is positioned for renewed growth. The chief executive has dramatically reshaped the company’s senior management ranks, ousting some of his longtime peers and recruiting industry executive stars such as Jim Gianopulos and
Brian Robbins. He’s focused Viacom’s investments in content and pushed to diversify the company beyond pay TV and movies into digital-programming content and live experiences.
Bakish is routinely described as affable, smart and easy to talk to and is well liked by the rank and file at the company where he has worked since early 1997.
But at a time when the biggest players in media and entertainment are scrambling to fiercely compete on a global scale, Bakish still faces tough questions from the business and creative communities about whether Viacom has the firepower to remain competitive in the new world order for media giants. And there are questions about whether he’s the right person to lead Viacom into battle amid the arms race for content.
“Viacom has shown really strong improvement since Bob took over,” says Jessica Reif Ehrlich, media analyst with Bank of America Merrill Lynch, who has covered Viacom for years. “He doesn’t have to be a programmer to choose great creative executives. I give him a lot of credit for what he’s accomplished in a short time with what he had to work with. Morale at the company has done a 180-degree turn. You can feel it when you walk in the building.”
Bakish’s strengths, colleagues and associates say, include being a natural leader and a sophisticated problem solver. He acknowledges that he has a “nontraditional” background for heading a sizable media company.
“I didn’t grow up on the creative side. I didn’t grow up on the sales side,” Bakish allows. “But what I’ve done for a long time is look at all the information at hand and listen to people. Then, based on your understanding of what’s important and what you’re trying to achieve, you make decisions and hope they’re the right decisions.”
Viacom’s biggest dilemma is that the majority of its earnings are derived from the sector of its business that’s most under siege: traditional basic cable. Viacom felt the pain of cord-cutting and the embrace of streaming early because its channels have always catered to younger viewers, the audience that was quickest to adopt streaming and social media as entertainment platforms.
“For what the company controls, they’ve done a lot of things to put themselves in a much better position than they were two years ago,” says Ben Swinburne, managing director and head of media research for Morgan Stanley. “The countervailing force they’re dealing with is the ecosystem that they exist in.”
Swinburne credits the new regime at Viacom for making sweeping changes in management and “holding executives accountable.” The most dramatic improvement story is at Paramount, where former 20th Century Fox chief Gianopulos has revamped the top management ranks and overhauled the studio’s financial and creative strategies. Paramount Television has been an impressive growth story for the studio.
“Paramount is still a few years away from manifesting its full earnings power, but you can see where it’s headed,” Swinburne says. He feels the same process is under way at the Media Networks cable wing (formerly MTV Networks), albeit at a slower pace. “The external manifestation of that from a growth perspective has been harder to discern than at Paramount,” he says.
CREDIT: Celeste Sloman for Variety
Bakish, who previously headed Viacom’s international channels division, has long impressed colleagues with his clear-eyed analysis of complicated situations. He succinctly boils down the obstacle course he faces in the coming months to trying to move the needle in the right direction.
“Can you create enough new business at a high enough margin fast enough to offset the decline in the traditional pay-TV business? That’s really the question,” he says. “When you look at our last couple of quarters, we have made continued progress on that journey.”
Bakish’s road map for revival includes revving up content production for linear and digital platforms, including those outside the Viacom umbrella, to take part in the content licensing gold rush. He has led the company’s efforts to expand its overseas operations with investments in Latin America, India and the U.K. Viacom is moving forward with advanced advertising initiatives that are projected to grow to become 15%-20% of Viacom’s total domestic ad biz next year. Viacom is also making a major push to expand its “experiential business” — aka selling tickets to the public for festivals and other live experiences tied to the company’s brightest brands.
Bakish has spent a good deal of time fence-mending with key MVPDs that had begun to punish the company after years of using its leverage to extract higher subscriber fees. After losing so much market clout as ratings declined for Viacom’s flagships, Bakish traded the stick for the carrot and crafted efforts to partner with MVPDs on targeted advertising sales and co-productions. Late last year, he salvaged Viacom’s carriage deal with Charter Communications, which otherwise would have been a domino-effect disaster for the company. Next up is a big carriage renewal with AT&T’s DirecTV, which will be a test of Bakish’s diplomatic skills.
“The investment community is getting more confidence in him,” says Mario Gabelli, a prominent investor in Viacom and CBS. “He’s got a plan.”
The heightened level of activity at Viacom is a welcome sign to longtime company observers who were deeply saddened by its decline during Dauman’s final years. But some wonder if the rebound might be too little too late.
“They’re diversifying into new areas that have better growth profiles,” Swinburne says. “The challenge is that those diversifications remain in the early stage and the areas of growth are relatively small.”
Bakish is realistic about the company’s uphill road. He’s not holding out for an M&A solution. There is no “transformational deal” on the horizon for Viacom, Bakish says. That includes CBS, even though there’s no doubt that he and Viacom’s board of directors (of which he is a member) have given serious consideration to what a Viacom-CBS combo might look like.
“Have we thought about it? Absolutely,” he says. “When we had discussions with CBS earlier this calendar year, one of the things we did was have a point of view on synergy savings. That’s a mathematical expression of how companies come together,” he says. “So we have thought about it. But at the same time I’ve taken the point of view with my team that we can’t worry about this because we don’t know what’s going to happen.”
Shari Redstone, vice chairman of Viacom and president of holding company National Amusements, was instrumental in picking Bakish for the CEO role after he impressed board members with his vision and planning for the international division. She praises Bakish for “his fast work to address the challenges head-on and transform Viacom for the future by pushing into new growth areas.” Redstone says the company, on Bakish’s watch, has steadily exceeded the board’s expectations. “He is an exceptional leader who has reignited the culture that has always been so important to Viacom’s success and to our position as a leader in the industry,” she says.
Former MTV Networks CEO Judy McGrath is one of the many alumni who were alarmed by the state of their alma mater when Bakish took over. She worked closely with Bakish after he became president of MTV Networks International in 2007 until her exit after 30 years with the company in 2011. The two have kept in touch over the years, particularly of late. The approach he took to cleaning up an unprofitable and bloated operation in the international channels division has proven to be a smaller-scale version of his blueprint for reviving Viacom, McGrath says.
“Bob always had his eye on something that would not exactly be in the company’s playbook but would expand the business in a way that was true to the brands. That wasn’t easy to do a lot of the time at Viacom,” McGrath says. “He always brought a real sense of the landscape of opportunity in his deals and a willingness to be experimental.”
Bakish did not come up through the creative development, production or marketing ranks, as was the path for most leaders in McGrath’s day. One thing he did have was a fan’s appreciation for Viacom’s brands and their place in pop culture. He’s an avid music buff who has been playing rock and blues guitar since he was a kid growing up in Englewood, N.J. For a few years, Bakish was a member of the MTV Networks house band, dubbed the Unrehearsed, which included then-VH1 chief John Sykes and MTV ad sales executive Hank Close. McGrath put them together to play the company holiday party and other events; at one point the group landed a few gigs at Times Square’s now-shuttered B.B. King Blues Club.
CREDIT: Celeste Sloman for Variety
Playing guitar is “fun and relaxing,” says Bakish, who is married and has two daughters, ages 18 and 23.
Project New Day was Bakish’s pithy name for the strategic brainstorming process that led to the turnaround plan Viacom unveiled to investors on Feb. 17, 2017, the same day it released unimpressive earnings that highlighted the company’s biggest weaknesses.
The meetings, mostly held in Viacom’s Times Square offices, involved the company’s key division heads and one or two members of their staffs at varying ranks. Bakish wanted a lot of input about how the company was operating in the trenches.
The mood among the executives who gathered in conference rooms was anxious and fearful but not grim. Bakish and Redstone were seen as “liberators,” in the words of a longtime Viacom TV executive. The company had been through the ringer during the last days of Dauman as Sumner Redstone’s longtime consigliere battled the ailing mogul’s daughter for control of the company. His ouster was part of a legal settlement reached in August 2016.
Stylistically, Bakish was the polar opposite of his predecessor. He brought the various fiefdoms within Viacom together to attack the company’s issues head on. “Bob engaged with people more in two weeks than Philippe did in 10 years,” says a veteran Viacom executive.
Bakish’s problem-solving approach reflected his early training as an engineer. He graduated from Columbia University in 1985 with a degree in operations research; in 1989 he earned his MBA, also from Columbia.
His first exposure to Viacom came in the early 1990s during his years as a management consultant for Booz Allen Hamilton. He became well liked by Viacom’s brain trust after working on the integration of Paramount with Viacom and long-term planning for MTV and Showtime.
“If you are committed to being a brand and an IP generator, you have to be where your audience is. If 16-year-olds are spending all of their time on Snapchat and Instagram, then we’re going to talk to them [there].”
CREDIT: Celeste Sloman for Variety
“He wasn’t one of those consultants who believes he has all the answers,” says Geoffrey Sands, who worked with Bakish at Booz Allen. “He has no ego, which is unusual in this industry, and he has no problem changing his mind about something if he’s presented with better facts. But you’d better have the facts.”
Even as a Viacom insider, Bakish was surprised at what he learned about the state of Viacom’s two core divisions when he took over. “Things were a little worse than I thought,” he says. Early on he went on a charm offensive with the heads of Hollywood’s major talent agencies. “They were pretty direct that we had a problem,” he says.
The brainstorming on the strategic plan coalesced around a strategy to make better use of Viacom’s resources by funneling most of the investment to six core brands: MTV, Nickelodeon, Nick Jr., Comedy Central, BET and the remodeling of the lagging Spike TV into Paramount Network in January 2018.
“Bob made us all go through an exercise of ‘Who are you?’ — defining what your brand was and creating its mission. When you do that, you begin to realize that we’re not actually a cable company,” says Chris McCarthy, who has expanded his turf during Bakish’s tenure to include MTV, VH1, Logo and, most recently, CMT
(Read a conversation with McCarthy here). “We have to fix cable, absolutely, but while cable is declining, our universe is expanding.”
Bakish says he was gratified by the response to Project New Day. It proved to him that the culture of inventiveness that led America to demand its MTV, and much more, had not died. “I wanted to make sure people understood that our mission was to unlock the real opportunity inside Viacom and that it would take everyone working together to do it,” he says. “It really created a lot of excitement, which is exactly what I wanted.”
One of Viacom’s biggest swings has been the launch of Viacom Digital Studios to help rev up the overall level of content production at the company. Kelly Day, former chief business officer of Awesomeness, joined the company in the fall of 2017 to head the division. A few months later, Day pounced on the chance for Viacom to buy Awesomeness from NBCUniversal, Hearst and Verizon for around $40 million.
Bakish realized the advertising market on the cable channels wasn’t likely to grow much, so the only way to expand the company’s inventory of commercial time was to move into fresh programming formats on new platforms. Day’s group is producing advertising-supported short-form programs — branded with MTV and other cablers — for Snap, YouTube and Facebook. Awesomeness was the production banner behind Netflix’s recent young-adult smash movie
To All the Boys I’ve Loved Before.
“If you are committed to being a brand and an IP generator, you have to be where your audience is,” Day says. “If 16-year-olds are spending all of their time on Snapchat and Instagram, then we’re going to talk to them on Snapchat and Instagram.”
The profits generated from these efforts so far, through licensing and advertising revenues, have been modest but highly promising.
“It’s not television dollars yet, but it’s growing very quickly, and it’s material to the company,” Day says.
His new direct reports credit Bakish as a supportive manager who affords the division lots of autonomy and is a great sounding board for ideas and problems.
Gianopulos, who signed on as chairman-CEO of Paramount in April 2017, has been off to a hot start with the sleeper success of
A Quiet Place and
Book Club and the worldwide engine of
Mission: Impossible — Fallout.
“It became evident early on that he has all the elements of a great leader,” Gianopulos says of Bakish. “He’s innovative; he’s strategic. He has created this culture of collaboration inside of Viacom. And he recognized this wasn’t going to be an overnight effort.”
Robbins, director-producer and founder of Awesomeness, set up shop with Paramount in June 2017 to launch the Paramount Players division for branded films tied to MTV, Nickelodeon, BET and Comedy Central. After some persuasion by Bakish, Robbins shifted in October from Paramount Players to heading Nickelodeon, the cable channel that has continued to struggle during the past year even as viewership and digital activity has improved at MTV, Comedy Central and BET. Taking on a linear channel was an unexpected move for Robbins after leading one of the most successful digital-content start-ups of recent years.
What changed Robbins’ mind was the idea of running Nickelodeon not as a cable channel group but as a consumer brand. “It’s six linear networks, the largest animation studio in the world, a movie studio — it’s a brand,” he says. “It’s one of the few media brands in the world that actually matters. ” Also, Bakish “finally convinced me that they needed me,” Robbins admits.
Wall Street will be closely watching the progress of Nickelodeon under Robbins in the coming months, given that the brand had been the company’s single biggest earnings driver during its 1990s and 2000s heyday.
“The crown jewel at Viacom is Nickelodeon,” says Morgan Stanley’s Swinburne. “I’m interested to see what they do with Nickelodeon in the three- to five-year [term] in an unbundled, OTT world.”
As he begins his third year at the helm, Bakish has become more comfortable with the spotlight and the pressure that comes with leading a company of about 10,400 employees worldwide.
Amid the Shakespearean public battles surrounding Sumner Redstone’s empire, Bakish has not always been painted in the most flattering light as media-biz watchers obsess over the fate of Viacom and CBS Corp. The discord between Shari Redstone and former CBS chairman-CEO Moonves over her desire to bring Viacom and CBS together spurred industry gossip that she favored Bakish for the job of leading the combined companies because he would be more subservient than Moonves. That dynamic changed for good in September, when Moonves was forced out in the face of a cascade of sexual-misconduct claims dating back decades.
“You begin to read a lot about yourself in the press, which is kind of a strange thing,” Bakish says when asked about adjusting to a much more public job. “After a while you realize the press is going to write what the press writes. I’ve got thick skin.”
Bakish insists that the unknowns about Viacom’s future, and his own, cannot become excuses for inactivity.
“The easiest thing to do is to be distracted by this, but if we get distracted by this, we’re not going to be able to move as far along as we planned to had we been focused,” he says. “I said to the management team, ‘The only thing I know at the end of this fiscal year is you’re going to be talking to one of two people — you’re going to be talking to me or you’re going to be talking to someone else. In either case, what you don’t want to do is to say, “Well, we were planning on doing X, but we were kind of distracted.”’
“I said, ‘Let’s not worry about [CBS]. Let’s stay focused. We just gotta keep putting points on the board and let whatever happens happen.’”
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