Viacom Narrows Focus To Its Top Brands As Media Middle Gets "Skinnier"

Viacom’s now permanent CEO Bob Bakish announced on February 9th that the company would focus its investment and growth strategy around a small group of what it sees as its key brands: Comedy Central, MTV, BET, Nickelodeon (with Nick Jr) and Paramount (which will take over from the former Spike TV). In this action, Viacom reflects a trend of increasing difficulty for middle-market media brands, and may be showing the way forward for more of its media brethren.

Viacom’s announcement certainly cannot be divorced from the last two years of almost unrelenting turmoil for the company. Viacom has been at the center of the Hollywood (literal and figurative) saga of its patriarch Sumner Redstone battling age and illness, a reconciliation inside of the Redstone family with daughter Shari after years of estrangement, a multi-jurisdictional court battle over everything from corporate governance to Redstone’s competency and caregivers, and an ultimately successful if long drawn-out battle to replace former CEO Phillipe Daumann. Unsurprisingly in the face of this has been the challenged business performance of everything from stalwart cable names such as MTV to the Paramount film studio. And yet Viacom’s challenged middle has parallels throughout the business.

Bakish has now forcefully seized the initiative here in shifting focus from the traditional media company strategy of maximizing shelf space in the consumer media supermarket through a proliferation of cable channels. True, Bakish did not indicate the short-term elimination of cable networks (Viacom is also the owner of CMT, VH1, Epix, Logo, and a smorgasbord of other networks from MTVTres to Centric). But as these networks face a future with uncertain to unlikely carriage on skinny bundles and further viewing declines from a hit-seeking public, it only makes sense to invest in its marquee brands, no matter the platform through which they are consumed.

The difficulty for life in the cable middle has hardly been limited to Viacom. NBCUniversal just recently announced the shuttering of its Esquire TV network, which never gained traction despite the link to the iconic men’s lifestyle brand. Last summer, Participant Media closed the millennial-focused cable network Pivot after an investment of more than $200 million.

Viceland entered the cable market smack in the middle last year, taking over what had been A+E’s H2 channel (quick – name a program that ever ran on that network). Yet even this branded beacon for many millennials has struggled to find success, with audiences down by some measurement as much as 50% off what H2 had been drawing. And Al Jazeera America, which took over the place occupied by middle market network Current TV (with a nice payout for Al Gore), shut down a year ago, causing a bare ripple with its absence from the marketplace.

All of this suggests an increasing level of scrutiny for entire publicly traded media companies that reside to some degree in the middle, such as Discovery Communications, Scripps Networks, and AMC Networks. Discovery has finally seen some momentum from Oprah Winfrey’s OWN, but in this environment the company can hardly be comforted by the prospects for networks such as Discovery Family, Science, Velocity, American Heroes, and Destination America. Scripps shut down its own Fine Living Network years ago, and while AMC has scored heavily with hits such as The Walking Dead (perhaps heading towards a zombie-like status), it must demonstrate a growth plan for networks like WE Tv (formerly focused on women), Sundance, IFC and BBC America – middle market inhabitants all.

In the meantime, the cable middle continues to get chipped at from below in the video food chain, which doesn’t have to worry about supporting a network infrastructure at all. YouTube hasn’t proven much of a windfall for any major media companies, but content creators from Pewdie Pie to Randy Rainbow to thousands of influencers can more than thrive without anywhere near the cost structure or financial expectations of major media companies. And the rolling up of these independent operators continues unabated. Even Louie C.K., an establishment media figure by any measure, went entirely outside of the traditional media structure to produce and launch Horace and Pete on his own, claiming to be satisfied with its financial performance via subscriptions (artistically it was an unquestionable triumph).

The need for rethinking the middle of the market is hardly limited to cable. Kevin Tsujihara, Chairman and CEO of Warner Bros., noted this week that “The middle of the market in the theatrical business has gotten extremely tough.” The story of the overwhelming focus of the major motion picture studios on event tentpoles from Marvel’s Avengers to Star Wars to the Hunger Games, is well-entrenched. On the other end of the spectrum, truly independent film market, despite the constant money-making challenges, continues to attract talent from the aspiring to Hollywood’s biggest stars, as it relies more heavily on platforms such as Netflix and VOD and increasingly opens films simultaneously on VOD and in theaters.

Tsujihara and Warner Bros. are in the forefront of trying to revise the long-established model for middle market films of exclusive theatrical releases for up to 90 days prior to their release on other platforms. This is a complicated equation, and undoubtedly much experimentation will likely take place, but some form of a super-premium for early home viewing is clearly under discussion. For those who need a vibrant middle to succeed (and wouldn’t our politics benefit from much the same?), it will take thinking anew in a host of ways.

Howard helps clients manage the dynamically changing media business through his work at MediaLink. He is also at www.homonoffmedia.com; and on Twitter, Facebook, and LinkedIn.