Media mogul Shari Redstone on Wednesday acknowledged the media landscape is increasingly challenged — but she believes she made the right call late last year when she decided not to merge the two media companies her family controls: Viacom Inc. and CBS Corp.
Instead, she wanted to give Viacom Chief Executive Bob Bakish a chance to turn around the struggling media company, which owns Paramount Pictures and TV networks including MTV, Nickelodeon and BET.
“What I saw very quickly was the energy that existed at Viacom,” Redstone told reporter Peter Kafka during an on-stage interview at the Code Conference in Rancho Palos Verdes.
She recalled spending considerable time with Bakish, formerly head of Viacom’s international efforts, as each company’s officials debated whether a merger would be in their respective side’s best interests.
“What I didn’t understand was the significant upside that existed if we had good management in place and the culture came back,” Redstone said.
Under Bakish, who was permanently installed as CEO in December, Viacom has a vision, a strategy and people giving their “hearts and souls to making this company great again” — none of which existed before, Redstone said.
A merger could have worked, with CBS Chairman and Chief Executive Les Moonves leading the new entity. But she feared that would have stifled the momentum at Viacom just as it was returning.
“The change for me was, ‘Oh my gosh, there is potential here. We can do this,’ ” she said.
Wall Street hasn’t shared her enthusiasm. Viacom’s stock is flat from when merger plans were scuttled in December, and shares are down nearly 25% since late March amid investor fears that the bulk of its TV channels were no longer must-haves for TV distributors.
“Sure, this industry is being challenged, but it’s still a really big business,” Redstone said during the Code Conference, a gathering of technology and media executives and investors. “We have to create brands. We have to create great content on multiple platforms.”
Last week, Viacom announced that it had negotiated a multiyear carriage agreement with pay-TV provider Altice USA for Viacom's premium networks, including Comedy Central, Nickelodeon, BET, MTV and VH1. The deal was important because it demonstrated that there was a market for Viacom's programming.
Viacom's movie studio, Paramount Pictures, has struggled. The company fired its long time studio chairman, Brad Grey, in February, and he died of cancer this month, catching many at Viacom by surprise. Paramount lost $445 million in fiscal year 2016 amid a string of box-office misfires. Its latest flick, lifeguards-starring “Baywatch,” had a lackluster debut last week.
The Redstone family, including ailing patriarch Sumner Redstone, controls nearly 80% of the voting shares of both CBS and Viacom. Last year, Shari Redstone consolidated power over Viacom by ushering in a new board.
