By David B. Wilkerson
WASHINGTON (Dow Jones) -- Viacom Inc. Chief Executive Philippe
Dauman said Thursday that there's unlikely to be significantly
negative consumer backlash against "TV Everywhere," a plan to tie
online TV show viewing to a subscription to a cable, satellite or
telecommunications service.
"People are used to paying for video subscriptions," Dauman said
in an interview at the National Cable & Telecommunications
Association's annual Cable Show in Washington. "They're used to
paying for broadband service, so there's nothing new there."
Dauman said it's important for both cable programmers and
distributors that the existing revenue structure be preserved.
Cable networks have two primary ways of generating revenue:
advertising sales, and fees paid by cable, satellite and telephone
companies that provide video services. Cable operators sell some
advertising, but get the lion's share of their revenue from
subscriber fees.
Lately, there has been concern that, as more popular TV shows
are available for free over the Web, an increasing number of
viewers may eventually stop paying for video service, depriving
cable operators of subscription revenue and curtailing fees paid to
cable networks.
As head of a content provider, Dauman said he supports "TV
Everywhere," which has been spearheaded by Time Warner Cable (TWC),
as long as it can be implemented in a way that makes it easy for
consumers to see their shows. Asked whether viewers might end up
seeing as many commercials during Web-based TV viewing as they do
on traditional television, Dauman said "there will be lots of
testing of different models, and an evolution will take place."
He added that some content will always be available to those who
don't subscribe to a video service because of its promotional
value, and because "there isn't room" for some TV shows and other
material in a television lineup.
Viacom (VIA)(VIA) is a major player in the cable content sector.
The company owns properties such as MTV and Comedy Central, which
is home to popular programs such as "The Daily Show" and "The
Colbert Report." Those two shows alone are big hits online, and
have been a big factor in a billion-dollar lawsuit between Viacom
and Google's (GOOG) YouTube unit, which Viacom has accused of
violating its copyright by hosting clips of the programs.
Dauman would not comment on the case, except to say that the
suit is still pending and is currently in discovery phase.
He did, however, note the rising profile of Comedy Central.
Clips and full episodes of the recent skirmishes between "Daily
Show" host Jon Stewart and the business news channel CNBC have been
racking up heavy traffic across the Web, he said.
Comedy Central's strong performance online underscores Viacom's
ability to reach cross-platform deals with advertisers such as soft
drink manufacturers, telecom companies or movie studios, who market
their products across television, the Web and mobile devices, the
executive said.
Dauman also said ratings are improving at MTV, VH1 and BET so
far this year.
At MTV, where the network had difficulty during 2008 reaching
young male viewers, the category appears to be showing more
interest thanks to a change in the mix of shows. A new block of
Sunday evening programs has performed well so far, he said, "and
we'd like to continue to build on that over the next few
quarters."
On the subject of dwindling sales of DVDs from Paramount's
library - even as big new releases continue to sell well on disc -
Dauman said the issue primarily has to do with the economy, rather
than any fundamental shift in the way people want to see
movies.
"Discretionary spending is down. People are a little tighter in
what they're buying, rather than picking up six or seven DVDs for
family and friends," he said. "We saw that in the fourth
quarter."
Asked about Warner Bros.' decision to make on-demand DVD-Rs of
some of its pre-1986 films available, Dauman said Paramount will
watch that plan and others to see if they work. "At that point, I'm
sure we'd obviously do it ourselves. Overall, it's going to take a
lot of innovation to move forward in our industry."
One of the standout successes for Viacom has been its video game
business, an arena it entered in 2007. Its "Rock Band" game
franchise surpassed the $1 billion mark in just 15 months,
according to the NPD Group.
Dauman said the music-based nature of the game allowed Viacom to
get off to a running start. "Music is a core of several of our
networks, so from a marketing standpoint and a cultural standpoint
inside our company, it was very logical avenue for us to get into
the video game business in a significant way."
In September, MTV Games and Harmonix will release "The Beatles:
Rock Band," marking the first time the iconic band's music will be
made available in the popular music game genre. "We're very excited
about that," Dauman said.