Dauman Plays his Cards Right

Philippe Dauman, newly appointed Chief Executive Officer of Viacom, is an avid poker player. And having completed his first few weeks in the head office of the entertainment giant he has concluded he is happy with the hand he has been dealt. Outlining his initial thoughts at the recent Goldman Sachs Communacopia XV Conference, Dauman insisted that Viacom, owner of MTV Networks and Paramount Studios, has “even more potential” than he originally thought. He boasted of its “unbelievable brands”, cooed over its “cutting-edge content” and emphasized that with 37 million unique visitors in August, it is already the number one online entertainment player in aggregate. And most importantly it has, he insists, “a lot of organic growth potential”, particularly in its digital business.

Nonetheless, with Viacom’s stock nearing a 52-week low, and having underperformed its corporate sibling CBS by in excess of 20 percent since their split last year, Dauman knows that this potential needs to begin to be translated into performance – and stock price. As any keen poker player knows, risk and reward need to be measured every second. And the new CEO has wasted no time in making his presence felt since taking up the reins – although he freely admits that it has been a test of his mettle. “I came in with what I thought was a 100-day plan, but with the velocity of the world out there I decided I probably need a 75-day plan – next it will be a 60-day plan!” he jokes.

Part of this plan has involved Dauman holding sessions with some 200 of the company’s management in small groups to start work on substantive issues and begin accelerating change. “We have already started to accelerate certain processes that were already in place and have put in some new ones,” he says. “This is to ensure that we properly integrate our digital assets properly, and also so that we identify opportunities early – planning ahead at an early stage of an acquisition to make sure that we involve the whole marketing power and creative power in those assets that we are bringing in.” Elsewhere, the company is now also rolling out a sales force to aggressively sell its aggregated online reach in an effort to maximize advertising revenue. And following the success of the internet and mobile device service Flux in Japan, the new CEO has talked of moving it into the US.

Dauman’s first decisive action as CEO, however, occurred as early as his inaugural conversation with Viacom Chairman Sumner Redstone, when he requested that he bring long-time cohort Thomas Dooley aboard with him to fill the newly created post of Senior Executive Vice President and Chief Administrative Officer. Both Dauman and Dooley served as Co-Chairs of Viacom from 1996-2000, before stepping aside to form private equity firm DND Capital Partners when Viacom merged with CBS. Both skilled executives with more of a keen eye for financial deals rather than media programming, the appointments immediately put the rumour mill into overdrive. Were they hired as dealmakers?

Dauman concedes that he is interested in making some small acquisitions, although only when they are at the “college draft stage and not when they are free agents.” “A week ago we put in place a process by which when we analyze an acquisition we don’t just look at the financials, we look ahead of time and how it folds in with our other businesses,” he says. “It has to be core and it has to be within the areas that we have a core strength. So I think the acquisitions will be in that smallish category.”

Nevertheless, Dauman has gone to great pains to stress that although there will be a new focus on early stage start-ups, this is a complement to growth through investment in internal projects. And he is expecting big things from existing assets. “We have a large number of solid brands and content. Most of what we can accomplish is just continuing to develop those businesses. In MTV and Nickelodeon, we have very mature and strong businesses that we can develop further, particularly in the digital area. And we have a lot of other really strong brands that are just beginning, like Comedy Central and BET Networks. BET Networks is a company that I think has huge potential going forward.”

Of course, with a Chairman as tough as Sumner Redstone – who fired previous Viacom CEO Tom Freston and terminated Paramount’s 14-year partnership with Tom Cruise in a busy September week – he will be expected to start showing results in the near-term. Asked whether his success will be measured on Viacom’s fundamental performance or its stock price, Dauman stressed his belief that performance leads to stock price eventually. “It has broken my heart as a board member to see what has happened to the stock price year after year,” he says. “I think we have a lot of opportunity to produce results. And the stock price should take care of itself.”

Anything involving Viacom is a high stakes game. But even the casual observer can’t fail to acknowledge Dauman’s confidence in turning the company around. “It’s all about the cards,” he stressed. “And we have got great cards.”

“I came in with what I thought was a 100-day plan, but with the velocity of the world out there I decided I probably need a 75-day plan – next it will be a 60-day plan!”