Viacom's New Chief Wants to Get Paid for Content

Tells Analysts at Credit Suisse Bulk of Digital Revenue to Come From Ad Sales

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NEW YORK ( -- Philippe Dauman wants to get paid -- for Viacom's content at least. The president-CEO of Viacom, only three months into the job,
Viacom President-CEO Philippe Dauman
Viacom President-CEO Philippe Dauman
addressed investors today at a Credit Suisse First Boston media conference as to how he feels about copyrighted content on video-sharing sites and gave guidance -- a little bit, at least -- as to what exactly is included in the $500 million in digital revenue he's projecting for 2007.
"The bulk of digital revenue now and, I suspect, in the future is advertising sales," he said. "We are experiencing very significant growth. For us, it's the issue of creating inventory."

'Enforce our rights'
Mr. Dauman didn't indicate whether he foresaw an increase in inventory coming from licensing and distribution deals with non-Viacom-owned sites such as YouTube, but, he said, "we expect to see the use of our content paid for one way or the other. Preference is to enter into mutually beneficial business deals to do so. If not, we will enforce our rights." He didn't indicate whether he would like to retain ad sales rights or cede such responsibilities in such a deal.

He's excited for the potential of mobile, and noted that in the U.K. Viacom's share of the mobile-content market (ringtones and video, for example) is greater than its share of the TV market, thanks to Europe's more advanced mobile market. He believes once Viacom hits that $500 million digital-revenue mark that he projected for next year, the company will also start "enjoying the benefits of high margins" associated with digital ad sales. Right now, the company is incurring higher expenses in the digital space as it bulks up an on an ad sales staff.

Consistent digital offering
Viacom's recently appointed chief global digital officer -- and former CEO of Atom Entertainment -- Mika Salmi will coordinate and implement digital innovations the company makes across its web properties. Nada Stirrat, meanwhile, will develop a digital ad sales force that can monetize the full scope of the digital properties for on-air as well as online-only advertisers. When Mr. Dauman came into the company, he said he looked at the sites from a cost-per-thousand-viewers basis and found "tremendous disparities among our family," something he intends to fix.

Other highlights from the lunchtime chat: Mr. Dauman said he is personally getting involved with the international businesses and expects that in the next couple years the company will see 10 to 15 percentage points of margin improvement overseas.

He told investors he was happy with the programming on Viacom's cable networks, and bragged that MTV and MTV2, when combined, have achieved their greatest reach ever; that Nickelodeon "Kids Choice Awards" is the only awards show that has grown every year in its nearly 20-year existence; and that he's looking to grow BET, Comedy Central and VH1 into networks that can rival the presence of Viacom's largest properties, MTV and Nickelodeon.
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