Viacom’s Dauman Weighs In on NBCU-Comcast

Viacom and other content producers must look at possible challenges that the Comcast-NBC Universal deal could pose, president and CEO Philippe Dauman said here Monday during a luncheon keynote appearance.

He also said Viacom is not for sale and discussed why its content focus makes sense and why his firm doesn’t need to own a broadcast network to have bargaining power with distributors.

Speaking at the 37th annual UBS Global Media & Communications Conference in an interview conducted by former Disney CEO Michael Eisner who is now CEO of his own shingle The Tornante Co., Dauman said he was on vacation when Comcast’s play for a 51 percent stake in NBC Uni was announced last week.

He argued that there are clearly concerns for content producers like any time when “a dominant distributor” adds to its reach. “As long as we have a level playing field, we’ll be fine” though, he argued in a hint that programmers’ fair access to Comcast’s cable systems is one concern.

Asked by UBS media and entertainment banking head Aryeh Bourkoff how Viacom controlling shareholder and chairman Sumner Redstone feels about the Comcast-NBC Uni deal, Eisner said he hasn’t asked him. “His personal life is much more interesting,” he then quipped. Dauman said he was endorsing Eisner’s response.

“We do view Comcast and all our distributors as partners,” Dauman emphasized before also acknowledging about Comcast’s executive team that “they are hard bargainers.”

A broader issue that Viacom faces in its relationship with distributors though is its underperformance in carriage fees compared with its audience share, according to Dauman. “We have 20 percent of the cable viewing audience, yet we only have 8 percent to 9 percent of the affiliate fees paid by distributors,” he told the UBS conference.

The ratio of fees that channels owned by distributors get are, however, much more in line with their viewer reach, according to Dauman.

Still, Viacom is sticking with its focus on the content business, which he said will yield new revenue opportunities amid an economic recovery and the continuing digital revolution.

Does not owning a broadcast network like CBS hurt Viacom in carriage fee talks, Eisner then asked.

“Having ABC as the elephant in the room didn’t hurt us” in getting expanded carriage fees when he ran Disney, Eisner said. “Yeah, we used it.”

But Dauman argued that Viacom has “quite well secured percentage increases” in carriage fees since the CBS-Viacom split a few years ago.

He suggested that Disney likely got good fee hikes for its cable networks not because of ABC, but “because ESPN itself has content that [distributors] couldn’t do without.”

Asked if Viacom could by-pass cable and other giants via Web distribution in the coming years, Dauman said he would like to stay in business with the Comcasts and DirecTVs of the world via windows etc, while limiting the cannibalization of important existing business relationships, such as network carriage fees.

Asked if Viacom could become an acquisition target, Dauman cited chairman and controlling shareholder Sumner Redstone’s control of the firm. The company therefore is currently not available, he quipped.

The advertising market was also a key part of the discussion with Eisner.

Dauman said he feels confident that “we’ll see some nice improvement” in ad trends in 2010. “The scatter market has grown stronger” as the fourth quarter has unfolded, and pricing is up in the double digits, he said.

Asked about Epix, the premium TV service in which Viacom is a partner with MGM and Lionsgate, Dauman said it is

Discussing the global nature of Viacom’s TV business, Dauman said the firm has continued to bring many of its networks to foreign countries, but is about to bring a foreign network back to the U.S. as well.