Bob Bakish, the longtime head of Viacom's international networks unit, on Tuesday started his new role as acting president and CEO of Viacom, and he kicked things off with the $345 million acquisition of TV network Telefe in Argentina.
In a conversation with The Hollywood Reporter, Bakish discussed the rationale behind the deal and its benefits, as well as his early focus now that he is in charge of the entertainment company's day-to-day operations.
Asked about what the acquisition means for another potential deal that Wall Street has been focusing on, a possible recombination with CBS Corp., which the two media giants have been exploring, Bakish tells THR: "This [Telefe] deal was put together [in the context of] Viacom. The question of the potential CBS merger is one that the special committee [of Viacom's board] is focused on. The two are not related."
And he emphasizes: "I have been chartered by the board to focus on running Viacom as a strong independent company and putting in place a strategy, which will grow the company over time. This move clearly fits with our international strategy, which is an integral component of the overall Viacom growth strategy."
Bakish adds: "It's strong and exciting evidence that we're doing exactly what I said we would do on [last week's] earnings conference call, which is moving forward aggressively and continuing to work to grow our company as a strong and independent company."
Asked about his other early focus and interests now that he is in charge of the company, the exec says he is "immersing myself in the domestic business, because I have been focused on the business outside the U.S. for a while and I want to get up to speed." He adds: "That is all about working with the team that is running the various network assets and spending some time getting up to speed on Paramount and working with [Paramount chairman and CEO] Brad [Grey]."
Bakish also says he is focused on "building a plan," which includes "both short-term opportunities, as well as longer-term strategy and vision." The acting CEO shares: "Last week, actually before my job officially started, I pulled together a task force from across the company and met in New York all day Thursday and most of the day Friday to kick off that process."
While it is too early to share major decisions, he says "people are very excited about it, I am excited about it, and I think there is a lot of opportunity." The goal is to "unlock opportunity," he adds.
"We figured, we may as well get going," Bakish jokes when asked about announcing the big Latin America deal on his first day as acting president and CEO.
Discussing the reasons for buying Telefe, Bakish says "one of the primary objectives on the international side of the business is continuing to grow our scale, because scale has great value." He explains that the company has global scale with its pay TV brands, but has been adding "true local scale" in key markets like it already has in the U.S. "We have the highest audience share of any major media company on pay television for every core demographic we serve," he says. "But outside the U.S., we don't have that same scale position."
Viacom has built that kind of scale in the U.K. via the acquisition of Channel 5 and in India via a joint venture. "Both of those significantly increased our ability to benefit from the markets," Bakish tells THR. "We wanted to have a local cornerstone in Latin America given it is a relatively high-growth market and we also wanted to have a Spanish-language cornerstone."
In Mexico, Viacom has a strong relationship with Televisa, while in Brazil there are ownership restrictions. "The third-largest market in Latin America is Argentina. You can own an asset like this there, and there was an asset available," Bakish explains. Plus, "if you look at the economy of Argentina, there is a strong case to be made that with the new government in power, you are really at the beginning of an economic up cycle there." Viacom doesn't need that to be the case though "for our acquisition to work."
And he emphasizes the financial benefits of the deal, which is accretive in fiscal year 2017. "The company is not taking on any incremental debt to finance this transaction," Bakish explains. "It's a very sound financial transaction for Viacom."
Bakish tells THR that the deal benefits will include the opportunity to improve Telefe's content and increase content investment and cross-promote the company's networks in Argentina, similarly to what Channel 5 and other Viacom networks have done in Britain.
"One of the reasons why we are attracted to local cornerstones is the ability of them to advance our general original content strategy," Bakish explains. "That clearly has been our experience with Channel 5 when it increased original production, which was designed primarily for Channel 5, but also used on our other U.K. networks and, in some cases, more broadly. We view Telefe as the same story, just applied to Spanish-language." That means "we will be producing more content in Spanish in Argentina for use in Argentina and in other Spanish-language speaking parts of Latin America, and potentially beyond," he adds.
Asked about the advertising and other revenue benefits of the deal, the exec says: "It gives us significant audience share in the market, which benefits our commercial relationships."
And Telefe comes with "a great team," Bakish says. "I was down in Buenos Aires a month and a half ago and met with that team and am very excited about what they are going to do in Argentina and beyond. It's a great transaction for the company."