Viacom is a US$13bn global media conglomerate with a focus on cinema and cable television. Gianluca Gubbini, one of the firm’s Treasury Directors, tells Treasury Today how the company is making the most of some major technological changes. In part one, we learn about challenges and solutions.

When you run a business that keeps the world entertained, it might be easy to forget that some of the hardest work goes on behind the scenes. But for Viacom and its roster of household names like Paramount, Nickelodeon, Comedy Central and MTV, the show must go on. For that to happen, teams such as finance and treasury are just as important as the talent in front of the cameras. For this reason, over the past decade, Viacom has been investing in technology to bring its treasury operations together in a masterclass of centralisation.

Today, treasury operates in a global fashion with centres of expertise supporting US and International (Europe, Asia, LatAm and Canada) operations. With a vast domestic market and reach into 183 countries and territories, treasury professionals are in place in New York, Los Angeles, London and Amsterdam.

Viacom’s global funding, bank relationship management, FX, hedging and intercompany lending activities are centralised at the company’s head office in New York, as is the group’s core technology strategic decision-making and implementation activity (IT2 TMS and SWIFT access). International cash and liquidity for the major business units of Paramount and the Media Networks are handled via teams in Viacom’s London and Amsterdam offices who also function as the key contacts between Viacom and its banks for international cash operations matters. Treasury also supports a shared services centre (handling AP, AR and T&E) in Budapest.

Moving to integration

Paramount and Viacom’s Media Networks had historically been run as separate concerns, each with its own treasury functions. Five years ago, plans for closer integration saw the business unit-based treasury functions at both subsumed into a central global treasury organisation at Viacom Corporate. The sharing of best practices has been taking place ever since, explains London-based Gianluca Gubbini, Director, International Treasury, Viacom. The deeper business knowledge of the combined treasury teams along with an appetite for automation and efficiencies has allowed for the Viacom treasury team to develop a strategic treasury roadmap utilising the latest technologies.

When Gubbini first arrived at Viacom 12 years ago, its treasury operations were spread across roughly 40 banks and the company was using spreadsheets to manage international cash positions. Today the company has concentrated its cash operations with a handful of core banks. “Bank account rationalisation was one of the key steps that allowed us to become so much more efficient,” says Gubbini. Fewer cash management banking relationships have allowed Viacom to benefit from economies of scale in terms of pricing and levels of service. Banking partners are much more engaged with the clients that have 100 plus bank account as opposed to having two.

With the implementation of the IT2 TMS about six years ago, all accounts are now managed on a single platform. The system, managed by a dedicated New York treasury technology team, is the centre of treasury, Gubbini stating that “we now do everything through it.”

With the addition of SWIFT connectivity providing MT940s and 942s directly into IT2, the treasury function has accurate balance positions across the business. This, says Gubbini, aids better decisions on all its investments and redemptions.

The risk of a banking partner leaving a particular region or exiting a line of business has partly informed treasury’s desire to be as bank-agnostic as possible. “For example, if one bank were to reduce its footprint in a country we could leverage our existing payment structure with another banking partner,” says Gubbini. “When SAP was implemented for the Media Networks, ISO 20022 XML coding was incorporated for payments. Rather than having individual bank-formatted files, it now has one standard format for all banks, enabling treasury to switch partners far more easily.”

Thinking on behalf of

In 2015, Viacom’s treasury used SAP to roll out an in-house bank. This enabled it to set up a single entity multi-currency cash pool, sweeping cash from all subsidiaries, based on MT940/942 data imported into IT2. Now, most of the company’s cash is concentrated in pools and can easily be invested in and redeemed from the money markets as required on a daily basis.

One of the benefits of in-house banking was that it could be used to make payments-on-behalf-of (POBO). The team responsible for building this structure is now about to do the same with receivables-on-behalf-of (ROBO) for all entities within the Media Networks and Paramount. Although POBO is quite widely adopted, ROBO is currently a rarity.

Initially, undertaking ROBO was not strongly considered an option by Viacom due to the newness of the product and lack of visibility around all the tax and regulatory implications. During the past few years, however, banks have worked through many of these complexities and successfully on-boarded many multinational companies. With precedents in place and regulators and tax advisors more comfortable with the product and the complexities of a ROBO structure, Viacom is now ready to move ahead. The company’s planned POBO/ROBO set up will be executed through a virtual account management (VAM) structure, with a targeted go-live by the end of 2018.

Next week we explore the VAM technology chosen and the expectations of treasury for this.