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Dauman: Actors, Directors ‘Have to Share the Risk’

7 Dec, 2009 By: Chris Tribbey

Viacom CEO Philippe Dauman predicted Dec. 7 that when the fourth quarter ends, Paramount will post one of the best three months of the major studios, thanks to cost-cutting measures and a strong slate of DVD releases.

But the Hollywood way of paying actors and directors ahead of box office receipts has to change, he said, speaking at the UBS Global Media and Communications Conference.

“DVD sales went down dramatically. It’s no longer possible for a studio to make a big budget picture and pay [talent] a huge percentage of gross [box office revenue] before you recoup your costs,” he said, adding that film talent must now take on a “share of the risk.”

“Paramount is going to have a very strong quarter. We had several big DVD releases during the quarter,” he said, pointing to Transformers: Revenge of the Fallen, G.I. Joe: The Rise of Cobra, Star Trek and the upcoming Paranormal Activity (Dec. 29). He added that Paramount has saved money for its parent Viacom by combining marketing efforts for theatrical and home entertainment.

“Download-to-own is a good business,” he said. “The Blu-ray market is also growing.”

Dauman also called mobile video a “small but high-growth area.”

Dauman also fielded questions about Paramount’s revenue-sharing deal with Redbox, which comes up for renewal at the end of the year. “We’re getting data from them,” he said. “We’re going to examine that data and go from there. In [the Redbox] case, we reached an agreement that was interesting to us.”

Under the terms of the deal, Paramount Home Entertainment is making its titles available to Redbox on street date, with the kiosk operator agreeing to destroy used DVDs once the rental life is up. Paramount will have the option of extending the agreement to 2014 at the end of the year.

Dauman also addressed what the proposed Comcast-NBC/Universal merger would mean for Viacom.

“It’s certainly an interesting transaction,” Dauman said. “Comcast is obviously a dominant distributor [and] they’re a big customer of ours. As long as we have a level playing field, we’ll be fine.”

He said Viacom content continues to bring strong returns with distributors, as long as proper windowing is maintained.

“We’d like to continue being in business with the Comcasts and DirecTVs and Verizons of the world, without cannibalizing,” he said.

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