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Viacom Networks Still Play Off of Big Value

After all the upfront presentations are done and cable ad sales
executives start calculating how much of a price increase the market will bear,
their thoughts will eventually turn to Jeff Lucas, head of sales for Viacom's
music and entertainment networks.

Ever since he cut ad prices for USA Network when he headed
sales for Universal back in 2001, Lucas has had a reputation among his
colleagues as a guy who sacrificed CPM growth for volume.

Now, Viacom is coming off a rough 2012, with a plunging
Nickelodeon causing the bulk of the damage. But according to figures from SNL
Kagan, ad revenue was down at MTV, Comedy Central, Spike and CMT as well, so
there may be more pressure on Lucas than usual.

Lucas says he's not concerned with what his competitors
think or how his actions affect the market. "I can't look at what other
people say or do," he says. "We do what's best for Viacom."

While ratings fluctuate, Lucas says Viacom's brands are the
strongest in television and are in demand among advertisers. According to
Kagan, MTV's ad rates are second only to ESPN among cable networks.

"We have very healthy CPMs across our brands, and that
is only because people are willing to pay us what they think the value
is," says Lucas, who is known for getting close to clients and
understanding what media agencies need to get deals done.

"We're offering them new ideas, further association
with our content," Lucas adds. "New content that's coming out, some
of which will be unveiled in the upfront presentation for MTV," to be held
April 25 in New York.

MTV has, for many years, made early deals and is usually
among the first cable programmers done with its upfront. "Our advertisers
demand we do deals earlier because they want the value and they know there's
only so much," Lucas says.

Apps to Help the Cause

Viacom attracts the millennial viewers marketers covet.
"We do more research, we know our audience better than anyone," and
that knowledge benefits clients, according to Lucas.

And since millennials are mobile, Viacom is finally
unveiling a series of apps to make it easier for viewers and marketers to
follow its content. Lucas says MTV's app will come out June 1, followed by the
VH1 app a month later and Comedy Central's due over the summer.

Viacom sells more than spots to its advertisers, making its
revenue a bit tricky to measure. It finds customized ways to have consumers
associate sponsors with content.

"That's why we've beefed up our integrated marketing
group to just about 200 people, because we have to build that association, we
have to create that value from the association with our audience and with our
content," Lucas says.

"And because we spend so much money building the
content based on research and because we own most of our content, we can then
create additional content for clients in the voice of the content creators on
each platform," he adds. "That means much more authenticity, which is
what clients are looking for. They're looking for that authentic voice at
reaching their customer because then it's going to have more impact, there's going
to be more attention, and there's going to be more possibility of a sale."

For Lucas, creating value for clients by helping them move
product off the shelf is job one. "By delivering value to our clients, we
can deliver value to Viacom," he says. "Our ad sales numbers are very
good, and that's because we deliver value for the customer. Customers keep
coming back. Why? Because we're always looking toward that next sale and trying
to over-deliver."

Some of those deals get completed during the upfront, but
they are often the result of staying current with a client's business needs 52
weeks a year, says Lucas.

Sometimes, deals involve more than one network. Lucas says
some advertisers like to find a single place to do some wide-ranging business.

One example Lucas likes to point to is a promotion MTV did
for Universal Pictures' musical comedy Pitch Perfect tied to last year's
Video Music Awards. Viacom's in-house unit created a spot featuring the cast of
the movie doing a "lipdub" to Nicki Minaj's song

"It's all about the value you bring in multiple
brands," Lucas says. It works "if we can fulfill the need and do it
across multiple brands, not just because we have it under one roof. It's a
partnership. We call it Viacom's partnership model. And it works."

The Pitch Perfect spots aired on MTV leading up to
the VMAs, where one of the movie's stars, Rebel Wilson presented an
award. The ad was also put on a page full of Pitch Perfect content and
promoted by MTV's Twitter account. It has been seen 2.3 million times online.

Wilson also hosted the recent MTV Movie Awards. When
it was announced that the film's cast would reunite for a special performance
during the show, MTV reposted the spot. Last week, plans for a sequel were

Lucas says Viacom is constantly looking for new ad formats
and other ways to work with clients who want to engage with the company's

"Technology changes fast, expectations change fast. And
the great thing about having cutting edge content is you can move with
it," Lucas says. "There's a lot of stuff we're working on now that I
can't talk about because it's for individual advertisers but it takes things to
new levels, especially when you start getting out to the tablets and mobile as
extensions of the content you're putting up on the TV screen."

While digital and new devices may fragment viewership, Lucas
sees new opportunities to engage with the audience: "If you have
compelling content, the audience wants engagement. That's just one more place
to do it."

Lucas says Viacom is monetizing its mobile viewership.
"We have the luxury of doing it a couple of different ways," he says.
"The beauty for us is, it's so in demand to reach the audience that we
have through mobile that it really doesn't become a problem for us in terms of
selling it out. So if we have something that's a great solution for an
advertiser's needs and we can play it across all the screens and they want to
be part of it, we'll work it into their deal. There's not one size fits all."

As with most things, better measurement will help.
"We're delivering content across so many screens in so many different ways
that it hasn't all caught up. But I am going to say, as a major publisher of
original content we have to really look at it and we have to look at Nielsen to
say hey, you've got to get with it and you've got to catch up on
measurement," Lucas says. " It's no good to anyone if they're not
measuring it in the correct manner across the screens. I'm sure we have a lot
of audience that isn't even being picked up right now, and when measurement
actually catches up, we know that our product across all the screens is going
to be even more valuable. I'm sure it's undercounted right now."

One new form of measurement Lucas doesn't favor is ratings-plus-seven-days,
or C7, which includes more delayed viewing in the commercial ratings used for
evaluating media buys.

"I will tell you right now you're going to
hear a lot of networks talk about C7; we have a big chunk in terms of the movie
category. We have a big chunk in fast foods, telco, auto, a lot of people with
different offers and shorter term windows. They're more apt to want to go C3
than C7, and we are going to go C3," he says. "The other side of it
is our consumers: We have great content, we have great original content. They
don't wait from C4 to C7 as much as other people. They want to consume it as
much as they can as quick as they can. So [C3] works well for us."