By Adam R Jacobson
RBR + TVBR
The Redstone family has officially put its trust in the third acting President/CEO of Viacom in under three months’ time and has discontinued the exploration of a recombination of the media company with CBS Corp.
In a letter sent Monday morning (12/12) to the board of directors of both companies, National Amusements Inc. President Shari Redstone and CEO Sumner Redstone stated, “Over the past few months, after careful assessment and meetings with the leadership of both companies, we have concluded that this is not the right time to merge the companies.”
The biggest reason for the decision to nix a reunification of the two companies, which split after New Year’s Day 2006, seems to be the strong leadership seen by Bob Bakish, who received permanent CEO stripes following the Closing Bell on Wall Street Monday.
Bakish is a Viacom International Media Networks veteran who became the division’s President/CEO in January 2011 after a four-year tenure as President of MTV Networks International. He’s been associated with Viacom since 2001, when he exited Booz-Allen & Hamilton as a VP/Partner to become EVP/COO of Ad Sales as MTV Networks.
In just the last few weeks, Bakish has been bullish on Viacom’s brands and has taken decisive action on improving internal culture at the company. This has included the consolidation of duties with MTV and VH1 executives and, after those moves, the promotion last week of Tom Gorke, who will now oversee the company’s media networks distribution strategy and partnerships with all domestic affiliates.
These actions have been far from unnoticed by the Redstones’ National Amusements, the owner of a majority of CBS Corp. and Viacom stock.
“Following the management changes that the Viacom board put in place, we have been very impressed with the forward‐looking thinking and strategic plan being pursued under Bob Bakish’s leadership,” Shari and Sumner Redstone said in a co-signed letter. “We know Viacom has tremendous assets that are currently undervalued, and we are confident that with this new strong management team, the value of these assets can be unleashed.”
At the same time, they confirmed their support of CBS Corp.’s current leadership, saying, “CBS continues to perform exceptionally well under Les Moonves, and we have every reason to believe that momentum will continue on a stand‐alone basis.”
National Amusements is the owner of the Showcase, Cinema de Lux, Multiplex, SuperLux and UCI cinema brands found in the U.S., U.K., and in Latin America.
AN AUTUMN OF DISCONTENT
The belief in Bakish is the culmination of four months of frustration at National Amusements over the highly disappointing Q3 earnings at Viacom.
On August 4, the Redstones said the poor performance at Viacom “continues to highlight the need for changes to leadership at the company,” as National Amusements and many other investors have called for.
The Redstones assailed Viacom senior management for overseeing a company suffering from “a steep erosion of revenue growth, earnings, operating performance, financial capacity and shareholder returns—with Viacom ranking at or near the very bottom of industry peers across many of these critical metrics. At the same time, there has been a significant exodus of creative and business talent.”
The leadership crisis led to the Sept. 29 confirmation that National Amusements was considering a recombination of CBS and Viacom. At the time, the Redstones stated that the reunification might offer substantial synergies that would allow the combined company to respond “even more aggressively and effectively to the challenges of the changing entertainment and media landscape.”
RBR + TVBR