Viacom CEO Tom Freston Comments on MTV's Acquisitions and Digital

On Viacom's (VIAB) Fiscal 2Q conference call, CEO Tom Freston discusses MTV's "major multi-platform deal" and the company's overall digital strategy.

Tom Freston -President and CEO

To that end, at the start of the upfront, MTV Networks made a major multi-platform deal with OMD. This unprecedented deal encompassed all of our networks, all of our platforms and all of our digital properties, including our newly acquired properties like Xfire, Gametrailers, ifilm, and Neopets. We think multi-platform deals like OMD will become more and more common for us and preferred by advertisers. They're a bull's eye for our strategy and provide great competitive advantage for Viacom...

We continue to identify attractive acquisitions and forge new partnerships to support our digital strategy. Today we announced MTV Networks' acquisition of Atom Entertainment, a best-in-class portfolio of leading online destinations for casual games, short films and animation.

Under the Atom umbrella are Shockwave.com and AddictingGames.com, which offer one of the web's largest collections of free and downloadable casual games, as well as being the leader in the emerging category of user-generated games. In addition, the acquisition brings us AtomFilms.com and AddictingClips.com, two premier film and video sites for short-form comedy, animation, drama and user-generated content.

This acquisition is completely in line with our strategy. It adds considerable scale with more than 20 million unique users, 100 million monthly game plays, and a library of strong wholly-owned content. We're excited to bring them into the Company. Importantly, it's a Company that comes with fantastic management...

Jason Bazinet - Citigroup

If you look at your moves in the digital space, it seems like there have been some moves you've made to acquire companies. Other times you've tried to monetize the existing brands you have online. Other times you've essentially partnered with large existing Internet incumbents to monetize your content.

I was wondering if we could just take a step back, and if you could just provide us with an overarching sort of governing thought in terms of your digital strategy. And then, just provide a bit of specificity in terms of how are you thinking about the market when you elect to choose each one of those paths: monetize organically, partner or acquire? Thanks so much.

Tom Freston

Our overall strategy is we want our content to be on multiple platforms. Unlike a lot of people, we actually own our content. We're not renting it from independent producers. So we have huge libraries of content.

Our primary use for it is going to be on our proprietary web businesses, which we want to continue to embellish and create and make more engaging and so forth. But there are a lot of other options to do that. If you think of our overall focus, which is being on multiple platforms and focusing on these specialized groups that we do, we're always looking for holes that we can fill or scale that we can gather against certain demographics or subsets of the audience.

The example of AtomShockwave is a good one of something we would want to acquire. We already have a great head-start, particularly on our kids business, with Turbo Nick and Nick.com in the casual gaming area. Shockwave and AddictiveGames are two huge game sites in that area. So, they are going to give us what we think of as additional scale advantage.

When we do a deal with Google where we actually can control the distribution, where it goes, and control the sale of the advertising, there's absolutely nothing wrong with that. We think it makes our brands and our products bigger places, and it certainly allows us to monetize it in more and more fashions.

The same would go in the wireless space. We've tended not to do MVNOs. We are involved in a couple of them in Europe, but we tend to do deals with almost every carrier that's out there. We've got some 65 deals in place around the world now. So it's really a blend, and at the heart of it is our owned and operated businesses that we want to make more robust, add more user applications.

Historically this Company has been most effective in terms of its organic initiatives, and it's been a creative-based Company. For that reason, that's sort of always our first choice. But when we don't have it and there's something out there of scale we figure could also bring maybe extra management to us as well, we would go out and buy it. Or if there's a deal like Google, we would do it, in the case of the hyper syndication deal we cut this week.

It may sound confusing because we have so many different properties, but if you look at all these niches that we're are in, it's all about how do we get what we have out there most effectively in as many ways as possible while still maintaining control, particularly over the advertiser relationship.

Related:

Latest Conference Call Transcripts from Seeking Alpha

Why We Publish Transcripts of Earnings Conference Calls