Title : Viacom In “Advanced Discussions” For $20/Month Entertainment TV Bundle
link : Viacom In “Advanced Discussions” For $20/Month Entertainment TV Bundle
Viacom In “Advanced Discussions” For $20/Month Entertainment TV Bundle
Viacom and other entertainment-focused programmers are in “very advanced discussions” with cable and satellite companies to offer a bundle without news and sports costing $20 or less a month — and it will “come to life this calendar year” — Bob Bakish, President and Chief Executive Officer (CEO) of Viacom, told investors this morning at the JPMorgan Tech, Media and Telecom Conference, reports Deadline.
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“That will be a very exciting development in the marketplace, and is a very positive development for Viacom” the CEO says. His networks including Nickelodeon, MTV, Comedy Central and BET “have the largest share of viewing on pay TV for every demographic that we serve.”
But they’re priced low enough so that “you can offer that, and a few of our competitors, and still be at this very low price point.”
AMC Networks and Discovery Communications have also been talking to distributors about a low priced package that would include their channels — but not expensive sports networks such as Disney's ESPN.
Two weeks ago Discovery CEO David Zaslav forecast an entertainment-only bundle that might cost about $10, which he described as “a true skinny bundle in the spirit of what’s working around the world.”
Disney’s Bob Iger scoffed that such a low priced package probably would not include “any channels that were particularly attractive…I don’t see how that would be practical in terms of gaining much penetration.”
But new offerings with broadcast channels and sports that can cost about $40 a month — including Sling TV, DirecTV Now, and Hulu With Live TV — “are not well configured for driving incremental penetration,” Bakish says.
The price is “highly unlikely to bring in a cord never millennial,” he adds. “It might cause someone to churn down in terms of price…So that’s not the transformational opportunity.”
A much lower priced, entry level package could “be a path to bring someone in that wants high quality entertainment” and could either trade up from, or trade down to, “as the household needs change.”
He sees a drop in the number of subscribers paying $100 or more a month for the expanded basic bundle. Although there will be a $40 or so mid-tier offering “that’s not economically sustainable,” Bakish says. Those selling such a package now “say things like, ‘It’s very difficult to make money here’ — which is code for losing money on a variable basis.”
The bigger-than-expected drop in pay TV subscribers in Q1 might have reflected the end of the discounts that Time Warner Cable offered to boost its subscriber numbers while it was preparing for the deal to sell itself to Charter Communications.
“You may have had a situation where there was a larger sub base than there should have been,” Bakish says. “That got churned out as people focused on a quality on-going business.” He expects sub declines to “return to a more modest level.”
More broadly, Bakish says he’s looking to improve Viacom’s relationships with cable and satellite distributors which over the last few years became “a little bit frayed.”
He noted, for example, that under his predecessor, Philippe Dauman, some of “our largest and most important customers had inferior rights grants from a Viacom perspective to smaller [subscription video on demand] players. Think about that for a second. That doesn’t make any sense. But that’s where we were.”
Bakish has been trying to address that by revising carriage deals before they expire. “One of the things we’re focused on is broadening the relationship so it’s not just a brain damaged, zero-sum game negotiation about cost.”
For example, he says, two distributors now use Viacom's Vantage data to help local ad buyers target their sales pitches.
He noted that his company has “noise issues” with Charter — which has moved some Viacom channels to extra-cost tiers for new customers. “That’s something we firmly believe they don’t have the rights to do,” he says. “We’ve got to get that resolved.” But that’s “an outlier.”
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