BOB BAKISH: Viacom International's CEO explains why he's not worried about cord-cutting

Bob BakishStuart Wilson/Getty ImagesViacom International Media Networks president and CEO Bob Bakish.

Bob Bakish is the president and chief executive officer of Viacom International Media Networks, responsible for all the company’s operations outside of the United States.

The network is home to brands including MTV, Nickelodeon, Comedy Central, BET, and Channel 5.

We caught up with Bakish at Mobile World Congress in Barcelona, where we discussed:

  • Why Bakish believes cord-cutting isn’t a widespread phenomenon and how Viacom is making video apps to grow the total pay-TV audience.
  • The Ibiza government refusing to let MTV film a new season of its “Shore” reality series there, despite its reputation as a party town.
  • How a sneak-peak episode of “Super Shore” earned 3 million views and debuted on linear TV at four-and-a-half-times the audience of the previous season.
  • Viacom being in talks with a messaging app to help promote next year’s MTV EMAs [European Music Awards.]
  • Ad blocking and new advances in online audience measurement.
  • How MTV has started talking about a “total audience number,” that includes linear TV, VOD [video-on-demand,] Facebook, Snapchat, Periscope, and other platforms.
  • What Viacom thinks about Google saying advertisers should shift 24% of their TV budgets to YouTube if they want to reach young people.
  • Why Bakish thinks 5G will grow the total global pay-TV audience.

The interview has been lightly edited for brevity.

Business Insider: What are you doing at Mobile World Congress?

Bob Bakish: This is actually my third Mobile World and we come here because fundamentally mobile phones are the most ubiquitous devices on the planet. If you look at the combination of where network technology is and phone technology or smartphones are,  you’re at the point where it is a viable distribution system. Three years ago when I was here it was a little early to have those conversations, even last year people would say: “Yeah OK, we sort of get it.” But this year it feels like it’s really coming together.

You saw last week as an example in the Netherlands, there was an announcement that Vodafone and Liberty Global’s Ziggo [broadband network] put their businesses together into a joint venture. So it feels like we are entering the era when mobile distribution is going to become very important.

You already have significant video traffic on mobile, it’s growing about 15% a year and it’s predicted to continue to for a while. One of the things we recently did, given that, is we introduced to the market a thing called the Viacom Play Plex: A suite of branded apps, because Viacom’s not a consumer brand — our consumer brands are Nickelodeon, Comedy Central, MTV, etcetera. So we have an MTV Play, Nickelodeon Play, Comedy Central Play. They are video centric apps, although the Nickelodeon one also includes games.

Now we have the flexibility to go to market in a variety of ways. It is a true TV-everywhere solution.

Operators have been slow to embrace TV-everywhere. And that’s one of the reasons — not the only reason — Netflix grew as quickly as it did. One of the representatives from Netflix on the panel yesterday actually said that, because they provided access to consumers with a video product on tablets and the like.

So the first objective of Viacom Play Plex is: Let’s do TV-everywhere right. And we’re getting some traction there.

You’re already seeing the early power of the combination of pay-TV and mobile in the play of quad-play offerings [from mobile carriers.] Probably the best example of it is right here in Spain, where you have a Telefonica company called Movistar, which a couple years ago had something like 900,000 subscribers. They went on to create a quad-play bundle, which in their case — and this is why I think it’s the best example —  also includes access to 80 channels on your mobile. They took their 900,000 to 4 million — and this is in a mature European market, where there, quote-unquote “is no growth.” Well they found a lot of growth. I think they’re on about 5 million subs now because they recently did an acquisition.

MovistarMovistar+/FacebookThe Movistar bundle includes access to dozens of video channels via mobile.

People talk to us: “Oh aren’t you worried about cord cutting or cord shaving?” And we’re like, the answer is: Well, first of all, there isn’t a lot of definitive evidence of any such phenomenon on a large scale, but the more important point is: People have been able to drive significant growth in the category through new approaches to the market and, again, I think the most powerful one is quad-play, initially as a price bundle, but also as a video bundle.

Vodafone in the UK now sells a 13-channel bundle — they’re reselling Sky services on their handsets. They’re said to be introducing a set-top box sometime in 2016. So you’re going to see significant activity in this area and again it’s part of the reason we introduced Play Plex. There’s competition in telecommunication services for consumers. People have choice. In this case, choice is a good thing. So they’re going to look for an easier way to do business. They can buy a bundle instead of paying separate bills. They can pay a better price and, as people are competing for those subscribers, if one of them has better services, where you can get your MTV, or Comedy Central, or CNN, or whatever, on your handset too — well that’s a compelling proposition.

BI: Is it additive? You said that cord-cutting is not a wide-berth phenomenon, but are you just topping up where [linear viewers] dropped off?

BB: It, it certainly will grow pay-TV. I mean the reality is that pay-TV, ex-US — US is probably 85% penetration ish — but the rest of the world it’s 40%, so there’s significant household growth ahead of it.

It varies by country. Somewhere like Indonesia there’s something like 9% penetration, and certainly the Netherlands would be closer to the US level. But fundamentally there is category growth in what’s ahead and what needs to be done is you’ve got to create a compelling consumer proposition.

What does Play Plex give you? It’s video centric, gives you access to a live video feed, and it also gives you access to on-demand content. It’s almost certain that viewership will continue to transition to more on-demand on these platforms. Pay-TV will evolve, but it will absolutely grow as these things come to pass. We’re in the early days of this, but we’re thrilled with the traction we have with Play Plex.

BI: Can you give any numbers at all?

BB: I’ll give you an example: Two weeks ago, in Latin America, we previewed the latest version of our Shores franchise.

So, background, it all started with ‘Jersey Shore,’ this is MTV, it went on to ‘Geordie Shore’ in the UK which you might be familiar with, ‘Gandía Shore’ in Spain, ‘Warsaw Shore’ in Poland and no, there’s no shore in Poland, but it doesn’t matter.

Anyway, so the current one, what we decided to do was bring some characters from the Spanish speaking countries. So we had cast members from Latin America, including one from Brazil, cast members from Southern Europe, principally Spain, but also one Italian, and brought them together.

Originally we’d got a shoot in Ibiza and then the Ibiza Government decided — I thought it was a great party town — but they thought that was too much.

BI: Bizarre.

BB: Yeah that one really caught me off-guard. They don’t understand. Anyway, that’s not really part of the story. We create ‘Super Shore.’ We debut it in Spanish-speaking Latin America. What we decided to do was give a sneak peak on MTV Play. You could download from the App Store for free.

We had, in less than a week, over 3 million streams. And the streams are over 20 minutes, so people watched the episode, not like someone for 30 seconds.

BI: Sure, that was going to be my next question: how does [the mobile audience] differ.

BB: The show went on to linear and went on to debut to the number one on pay-tv [show] in the demo[graphic] on the day, which is pretty good for a first episode of this kind. That was true in Mexico. That was actually also true in Spain and Portugal — we didn’t do the MTV Play thing there, so stick with Latin America.

By the way, the first episode of ‘Super Shore’ debuted at four-and-a-half times the number of ‘Acapulco Shore’ season one, which was the prior series in Spanish-speaking Latin America, and double the first episode of season two.

So there you have an example of using a mobile app to get pretty strong viewership in terms of 3 million views. Good. And then we went on to create essentially a great hit in linear. So there’s an example of some statistics that show that these platforms can work together and, really, yes, I think we’re on the dawn of a very interesting age.

BI:  Do you think “Super Shore” would have performed fantastically anyway because it’s a dream team of reality shows? So it’s obviously difficult to say, because you couldn’t A/B test?

BB: Here’s what I would say. I fundamentally believed it would work and I pushed everyone in the geographies, [saying] ‘you’ve got to do it’ because I believed it was a compelling idea.

I don’t know in an A/B test how it would have done else, without the sneak peak in digital. But I can tell you that the viewing at double the prior season is very strong. For example the UK version, ‘Geordie Shore’ has grown each time, but double? It doesn’t double. This has contributed to the strength of the franchise, because logically it should.

BI: Do you think this will change your approach to program marketing going forward as well? Do you think you might over-index on mobile now?

BB: I don’t think it’s about over-indexing on mobile per se. But it’s about viewing mobile as an integral part of the distribution strategy. You’ve got to think of distribution as two pieces: There’s a free piece and a paid piece to overly simplify.

The pay piece is a model we all know. You pay your bill to Sky and you get your pay-TV. On the free side, you have the open internet and maybe it’s your websites, or, you know, we run really a virtual model which combines a whole series of platforms.

Bob bakish lady gagaKoki Nagahama/Getty ImagesTOKYO, JAPAN – JUNE 23: (L-R) Hiroshi Mizohata, John V. Roos, Lady Gaga and Robert Bakish attend the MTV Video Music Aid Japan Press Conference at Billboard Live Tokyo on June 23, 2011.

You look at the MTV VMA and EMAs [award shows] as an example and there we of course have the linear feed, we of course have websites, but we also have Twitter feeds all in real-time, MTV Snapchat Discover content, we’ve got Facebook pages around the world, we have a Periscope backstage channel, and all this stuff is simultaneously running.

And if you look at how people are active in that open internet part, mobile is now the majority of traffic going to it. On average, when I look at the EMAs, it’s something like 55%, but if you look at the last round of the voting, it was somewhere over 90%.

It’s a way to grant access where consumers want product any time any place, not really of free, because at the end of the day we believe in pay-tv.

We are doing a variety of short form, which is ideal for mobile. Some of which will be for free, some will be behind various paywalls. Like our MTV ‘It Girls,’ which is an Australian model expanding to other markets. That’s a short form. It takes a DJ and a fashion blogger and they go and see talent and look at what they wear. That’s ideal for short form. But it’s part of the puzzle.

BI: For publishers, there’s a big dichotomy with using these distribution channels. On the one hand things like Facebook Instant Articles or Google AMP are an opportunity [to grow your audience,] but on the other hand they’re taking away. Obviously you want people coming back into the MTV home, you don’t just want people sitting there watching your content on Twitter. How do you make those calls? .

Justin bieber MTV EMABrian Rasic/Getty Images for MTVMILAN, ITALY – OCTOBER 25: Justin Bieber accepts the award for Best Collaboration from on stage during the MTV EMA’s 2015 at the Mediolanum Forum on October 25, 2015.

BB: I gave you that example of the EMAs. The portfolio of platforms we used for the Milan EMA in 2015 was different to the portfolio of platforms we used for the prior year in Glasgow. In the case of Milan, we added Periscope and we added Snapchat. So by the time we get to 2016 in Rotterdam, my guess is, I don’t know this yet, we will probably add some other components.

The intent always is to use them on some integrated platform to drive consumer awareness and ultimately to get viewership of the property either real-time, on-demand, or a repeat. But that equation is moving, so we have people constantly looking at the landscape and saying “Hey, this is a platform we should be using for the following reasons.”

I just came out of a meeting with a company that operates some messaging apps and, you know, they operate on a pretty big scale, so the conversation was pretty multi-faceted, but it included: How can we use these apps as part of an integrated strategy to drive awareness? I think maybe we’re going to use one of their products for next year’s EMAs, or maybe we’ll use it for a particular part of the world because we’re in 70 markets in 40 languages and some of the platforms are very centric for specific groups of people.

BI: I want to ask you about another hot topic, I think there’s even a keynote happening right now about it: Ad blocking. It’s something that broadcasters have been dealing with as soon as you started putting content online, you already had a strategy as to how to monetise that and to ensure that people weren’t getting that content without some kind of transaction taking place.

Obviously conversations around ad blocking have heightened in the last year or so. Where do you sit with regards to ad blocking?  Do you take preventative measures to make sure that people can’t access your content with ad blockers on and what are you going to do going forward, especially considering mobile ad blocking, which is a new phenomenon?

BB: So advertising is our second largest revenue stream, distribution, broadly speaking, is our largest revenue stream. Advertising is an important revenue stream to us. It’s why we spend a lot of time working on topics like measurement, where you still have a situation where the universe of consumption is not fully measured and, in fact, particularly on the younger end of the demo[graphic,] that hurts us maybe more than some of the other folks. That’s something we want to work on.

Bob bakishKoki Nagahama/Getty ImagesTOKYO, JAPAN – JUNE 23: CEO of Viacom International Media Networks Robert Bakish attends the MTV Video Music Aid Japan Press Conference at Billboard Live Tokyo on June 23, 2011.

Some of the traditional — dare I say — mediums like television remain very healthy and very attractive for advertisers because they’re not subject to the whims of adblocking.


BB: If someone has a DVR and they are fast-forwarding, it shows up in the measurement. So advertisers know what they’re getting. On the digital side, yeah there’s a set of issues that people are concerned about and working to address and that includes ad blocking. We certainly pay attention and look for ways to ensure that we are engaged. Advertisers are, in fact, clever. It’s just one of a sea of issues that we’re all managing in this changing world

BI: You spoke above measurement and, again, it’s been quite a hot topic in the last year — not least with the merger of [online measurement company] comScore and video measurement specialist Rentrack. Is that positive for Viacom and the wider TV industry?

BB: I think the tension on the measurement topic is positive for Viacom. As you probably know, Viacom was early in talking about measurement issues and has simultaneously built some measures of our own, that are more proprietary and designed to capture or express the value that we’re delivering to our promotional partners.

We will be pro-active in calling for the industry to demand better measurement, particularly cross-platform measurement. You know we work with our distribution partners, marketing agencies, and third-party companies like comScore, and in parallel we’ll continue to work on building proprietary measurement systems, which reflect the value delivered and also are credible enough that advertisers will respect them.  I think we made enormous progress in that in area and that continues.

BI: And how does that fit in what we were just talking about with Periscope or Twitter? Do you have a total audience number for something like the MTV EMAs?

Funny how @Edsheeran won Best Live while hosting the #MTVEMA…live.
— MTV EMA (@mtvema) October 25, 2015

BB: We do. So if you look at the Milan EMA, we got over 300 million social interactions around that property. If you talk to our sponsors, they knew that was an important part of what that franchise delivers because it reflects the value the customer receives and they may participate in it and they may respond. Maybe not all of those interactions, but certainly a significant subset of them.

We think of it as an important component of the reach of the reach of the franchise and we talk about it in addition to the more traditional television reach.

BI: Do you talk about it as a kind of rating point, like how BuzzFeed talks about its total audience number? 

BB: Yeah we talked about a total consumer number on the VMAs — 73 million views across all platforms —  but ultimately people want to know the components.

Just to be clear, it’s not apples for apples, because the view time varies by platform dramatically and the content varies. What people saw on Snapchat Discover is different to what they saw on Periscope, it’s different to watching the live show, etcetera. I think ultimately that’s the way the industry goes now.

Snapchat Discover SnapchatViacom brands Comedy Central and MTV feature on Snapchat Discover.

BI: Do you have a kind of inverted pyramid, with linear TV at the top being your most valuable, then to VOD, then Facebook, perhaps, Periscope — how do you kind of rank them?

BB: The best way to really answer that question is we look at windows. There’s no question that we provide substantial windowing advantages to our pay-TV platforms because there’s a lot of value there and we have a lot of consumption there.

I gave you an example where we actually put something out, which was the first episode of ‘Super Shore’ in play first, but that doesn’t mean that all the episodes will be there. That’s not the way it works.

I wouldn’t necessarily describe it as a pyramid. We focus on having an integrated strategy which looks to maximise the consumer connection while balancing certain business considerations. Remember the business pays for the production. So if you don’t have a revenue stream, there’s not going to be more content. So there would be no Super Shore if it wasn’t for our windowing strategy.

BI: Google has been quite aggressive in going after TV budgets. Last year, Eileen Naughton, the head of Google in the UK, said if advertisers want to reach young people they should move 24% of their budgets to YouTube, which was a talking point afterwards, let’s say. What would you say if an advertiser came to you and said:”Sorry, Bob I have to move 24% of my budget to YouTube because they told me to?”

Eileen NaughtonJon CartwrightGoogle UK and Ireland managing director Eileen Naughton.

BB: We’ve always lived in a competitive world and the world is certainly competitive today. Consumers have a lot of things on which they can spend their time and their money. We can compete and these days we compete with people we’ve always competed with and some new folks —  that’s not going to change.

In the context of advertiser relationships, you know I would actually say, right now, the ad market is very healthy, we’re seeing nice growth on our business. We bought an asset, Channel 5 in the UK, which is a free-to-air television service. That business is extremely healthy and growing very strongly.

So the television ad business is certainly alive and well and arguably better than it’s been for the last couple of years, at least. When we engage with advertisers, what we talk about is the unique value that we can bring. That unique value might be something we can broadcast on Channel 5, or it might be a multi-platform solution around the MTV EMA. 

Am I surprised YouTube said that? No. They’re trying to figure out an angle. Do I think that’s accurate? No. But I don’t doubt that they said it, because they’re just trying to sell the ads. Also there’s adblocking. There’s a lot of issues in the digital space, which certainly would be a counter point to anyone wanting to spend anywhere near that. And ultimately, people in ad agencies are smart and they’re looking for ways to effectively connect with their clients. I  am very comfortable with the hand we hold right now and in fact again we’ve been seeing great traction in the ad market. I wish them the best of luck.

BI: 5G has been a big topic of conversation at Mobile World Congress this year. What does it mean for a company like Viacom?

BB:  I believe open distribution is the single largest incremental opportunity we are facing outside the US. I don’t speak for the US, that’s my caveat on that. And 5G. We can do it in 3G, 4G, LTE, but really 5G would be more like phase 4-and-a-half G. I was having a long conversation yesterday with one of the manufacturers here. But anyway, without that minor point, what it will do is continue to usher in this age where consumers will have access to the content they want — as evidenced by ‘Super Shore’ — platforms that they currently don’t have access to.

If you’re Indonesian, 90% of the homes don’t have access to television. That’s a huge incremental opportunity. I believe that it will be unlocked either in commercial partnerships or equi-partnership, where pay-tv people and mobile come together and offer a combined solution for consumers. I believe that because that’s the way commodified, competitive businesses work. They need great content to differentiate them and they will have it.

Is it significant in 2016? No. But if you get to 2018, 2020, it’s going to be part of what unlocks this great opportunity that we see ahead of us. The definition of pay-TV will evolve, but pay-TV will absolutely grow. There will be more pay-tv subscribers in 2018 by a significant number than there are today. And that will continue and 5G will be part the enabler to get there.

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