Harsh vardhan shridhar

infernodiaz2/Harsh vardhan shridhar

Supply Chain in the Entertainment & Media Industry

Studios

Creation of content GEs Universal Studios, Disneys Pixar, Dreamworks Animation

Market and distribute content Time Warners Warner Brothers, Lionsgate Distributors Entertainment, Viacom

Retailers

Sell and deliver content directly to consumers Best Buy, Blockbuster

infernodiaz2/Harsh vardhan shridhar

Summary
Goal: To be the worlds leading branded entertainment company across television, motion pictures, and digital media platforms. Two main segments Media Networks Filmed Entertainment Ticker: VIA Class A, Voting shares ($27.4 billion) VIA.B Class B, Non-voting shares ($23.7 billion) Targets wide range of age demographics including kids, tweens, teens and adults

infernodiaz2/Harsh vardhan shridhar

Company Overview Business Strategy

Expanding brand through creation of programming, channels, motion pictures, and other entertainments Invest in programming content that will grow ratings across networks Strengthen relationships with advertising, cable, satellite, online, mobile and licensing partners Develop new ways of reaching audiences Maintain cost-savings while executing key tentpole films supplemented by other smaller productions and acquisitions Build international presence through both Media Networks and Filmed Entertainment businesses

infernodiaz2/Harsh vardhan shridhar

Company Overview - History

1971: Viacom spun off from CBS, establishing itself as a public company 1985: Acquired 66% of MTV Networks 1987: National Amusements Inc. acquires 83% of Viacom 1991: Acquired controlling interests of MTV Europe 1994: $9.9 billion merger with Paramount Communications Inc. 1999: Viacom starts trading on NYSE (VIA, VIA.B) 2000: Viacom merges with CBS 2001: Acquired BET Holdings II Inc. 2005: Viacom (new) spun off, remaining company (old Viacom) changes name to CBS Corporation 2006: Acquired several interactive platforms 2010: Announced regular quarterly cash dividend and recommences stock repurchase program

infernodiaz2/Harsh vardhan shridhar

Company Overview Business Segments

Media Networks MTV Networks Approximately 160 Networks worldwide including: MTV, VH1, Nickelodeon, Comedy Central, CMT, Spike TV, Logo, and TV Land,Network 18 Digital Assets that provide interactive entertainment such as videogames and virtual pets include: Neopets, Atom, and Harmonix BET Networks Provides content focused on Black media and entertainment to over 100 million homes including BET, Centric, and BET.com Filmed Entertainment Paramount Pictures Corporation brands include Paramount Pictures, Paramount Vintage, MTV Films, Nickelodeon Movies and Paramount Home Entertainment

infernodiaz2/Harsh vardhan shridhar

Management
Viacom is overhauling its business structure

Viacom: http://www.bsu.edu/web/tsstewart2/profile.html

infernodiaz2/Harsh vardhan shridhar

VIACOM

infernodiaz2/Harsh vardhan shridhar

Ownership of VIACOM
Sister Companies
VIACOM

CBS Corp.
National Amusements Inc. (NAI)

Private Investment Arm

NAI has Voting Rights for both companies

Sumner M. Redstone Exec Chairman and founder of Viacom and CBS Chairman of Board of NAI

NAI is 80% owned by Sumner Redstone, and 20% by his daughter. They both have control over CBS and Viacom through voting shares.
infernodiaz2/Harsh vardhan shridhar

Fading Management
Primary shareholder and Executive Chairman A lifetime of experience / education Considered a visionary and enigmatic Lifelong philosophy is that content, not distribution medium is the key to success. Controlling stock interest is in an irrevocable trust with his grandchildren being the beneficiaries.
Sumner M. Redstone (87)

infernodiaz2/Harsh vardhan shridhar

New Management
Friend and Legal advisor to Redstone Been with Viacom since 1993 Yale undergraduate and Columbia Law graduate Scored a perfect 1600 on SATs at the age of 13 Significant legal and financial experience, but little experience in managing entertainment

Phillippe Dauman, Viacom CEO since 2006

infernodiaz2/Harsh vardhan shridhar

SWOT
Strength: Scale and scope of business Strong brand name & copyrights Weakness: The size of the conglomerate Declining profitability Opportunities: Have a more effectively constructed management team Develop a worldwide strategy The outlook for broadcasting market is very lucrative Threats: Audience Acceptance Global Economic Conditions Competitive Industries Theft of Our Entertainment Content

infernodiaz2/Harsh vardhan shridhar

Industry Analysis Growth Forecast

Movie Production Industry Growth Rate
4% 6.00% 2% 0% -2% 2.00% 0.00% 2007 -2.00% 2008 2009 2010 2011 -4% -6% -8% -10% 1.00% 0.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015

TV Production Demand Growth Rate

4.00%

Cable TV Subscription Growth Rate

4.00%

3.00%
2.00%

Little growth in cinema attendance Mixed growth in Home Media Slow growth in broadcast TV ; Growth in satellite and cable pay or subscription TV bringing in TV license fee At most 2% growth in theater in the next 5 years, 0 growth in TV production and about 1.5% growth in TV subscription
infernodiaz2/Harsh vardhan shridhar

Industry Analysis Market shares

Time Warner, 9.50% Sony Corp of America, 5.80% Fox Entertainment Group, 5.50% Walt Disney, 5.20% Other, 74%

Global Movie Production Viacom (Paramount): 3.5%

Other, 15.40%

Sony Corp, 5.40%

NBC Universal, 7.20% News Corp, 8.50% Time Warner, 9.80%

Walt Disney, 30.40%

Viacom, 23.30%

TV Production Viacom: 23.3%

Cable Networks Viacom: 13.4%

News Corp, 9% Comcast Corp, 10.90% Other, 40.40% Viacom, 13.40% Walt Disney, 15.30% Time Warner, 11%

infernodiaz2/Harsh vardhan shridhar

Data Source: IBIS World

Industry Analysis Characteristics and trends

Rising production cost Tech trend: HD Blu-ray as standard; Smart phones, iPods and iPads; Movie download; Digital broadcasting Medium but growing concentration Vertically integrated industry structure Low barrier of entry High risk in ROI (Piracy issues) Potential Cannibalization of cinema by TV& Digital Distribution
infernodiaz2/Harsh vardhan shridhar

Data Source: IBIS Movie Production Industry Report

Key Competitors
CBS Corporation (CBS) Comcast Corporation (CMCS) Walt Disney Co. (DIS) News Corp. (NWSA) Time Warner Cable Inc. (TWC) Time Warner Inc. (TWX)

infernodiaz2/Harsh vardhan shridhar

Company Analysis Product Introduction

Product Segments:
Media Networks (to advertisers, content distributors, and retailers) Film Entertainment (motion pictures and television programs)

Platforms:
Television, motion picture, Internet, and mobile

infernodiaz2/Harsh vardhan shridhar

Segments Revenue ($ in Millions)

Ancillary-Filmed Entertainment, 121

Company Analysis Revenue Breakdown

TV License Fees, 391

Home Entertainment, 511

Advertising , 1253

Theatrical, 770

Affiliate Fees, 883

Ancillary-Media Networks, 156

Data Source: VIA Results for the Quarter and Year

infernodiaz2/Harsh vardhan shridhar Sept 30, 2011 Ended

Company Analysis Media Network Revenue Drivers

Advertising
Strength of advertising markets and general economic conditions Success of programming, measured by viewership Seasonal variations (highest Sept-Dec)

Affiliate fees
Stable multi-year agreements with operators with set rate increases Program availability and variations

Ancillary
Consumer spending and acceptance of products Popularity of programming and volume of content available
infernodiaz2/Harsh vardhan shridhar

Company Analysis Film Entertainment Revenue Drivers

Theatrical
Audience response (determinant) Seasonal variations (highest Sept-Dec around holidays and summer)

Home Entertainment
Number, timing and mix of home entertainment releases Consumer tastes and consumption habits Prominence given by distributors and retailers Overall economic conditions and trends in discretionary spending

TV and Digital License Fees

Consumer spending and acceptance of products Popularity of programming and volume of content available

Ancillary
Acceptance of theatrical content
infernodiaz2/Harsh vardhan shridhar

Business Strategy
Investment in programming
Content is King! Sumner M. Redstone, Chairman/Founder of Viacom

Grow film entertainment business

Strategically produce smaller slate of movies/year (~20), allocating 3-4 titles to franchise/brand movies

Higher Margin Digital Distributors

Amazon, Hulu, Netflix

Growing internationally Expanding into newer platforms

infernodiaz2/Harsh vardhan shridhar

Company Analysis 2011 Highlights

Key Metrics for this content-driven industry:

Media Networks

Viewership ratings: How many eyeballs network captured

The 2011 Video Music Awards (VMAs) attracted the VMAs largest audience in MTV history MTV Network (Jersey Shore) Comedy Central earned doubledigit ratings growth in September (The Roast of Charlie Sheen) BET Networks achieved another record-breaking year of ratings Centric (Second Year) double-digit viewer gains in the fourth quarter

Film Entertainment
Box office sales
Paramount is 2nd to Disneys Buena Vista with 18 films in the top 100 grossing films (from 1973-2011) Top 5 studio makers (from 20062011)

infernodiaz2/Harsh vardhan shridhar

Total Asset of Viacom(2011)

2% 3% 4%

12%

4% 3%

Cash and cash equivalents Receivables, net

Current Inventory
Prepaid and other assets

5%

Property and equipment, net Fixed Inventory Goodwill

48%

Intangibles, net Other assets 19%

- Goodwill is the Premium the company paid to acquire other companies. - In other word, 48% of its total asset is not used to generate future growth. infernodiaz2/Harsh vardhan shridhar

Source: Viacom 10-K(2011)