Viacom Inc. was a mass media conglomerate operating multi-nationally with primary operations in film and television, a second innings to the original Viacom which was split into Viacom Inc. and CBS Corporation in December 2005. Both of these newly formed companies are currently owned by National Amusements. When National Amusements acquired the first Viacom, the deal was made so that the new Viacom thus formed would be a separate company while CBS Corporation would be the legal successor of the older Viacom. National Amusements is a theatre company previously owned by Sumner Redstone. It is now controlled by Shari Redstone. Let’s know the depth of the topic- Who Owns Viacom?
The name Viacom was formed after joining ‘Video & Audio Communications’ and rightly so as it operated Viacom Media Networks. Through Viacom Media Networks, Viacom Inc. controlled about 170 networks and catered to 700 million subscribers around the globe, reaching 160 countries. Viacom’s studio had numerous assets that comprised a 30% stake of ownership in the Rainbow S.p.A. animation studio, MTV Films, Nickelodeon Animation Studio, and Paramount Pictures. Viacom Inc. had its headquarters located at One Astor Plaza in Midtown Manhattan, New York City, and was the world’s ninth-largest media company in terms of revenue generated.
Viacom had acquired CBS in 2000 and remained the sole owner until National Amusements split the companies into two separate corporations. These companies operated separately until December 4, 2019, when Viacom and CBS corporation merged to form ViacomCBS. ViacomCBS is a publicly owned company even though the majority shareholder is National Amusements.
The First Split
The talks of splitting the company first emerged in March 2005, owing to a stagnating stock price. The option of splitting the company into two publicly traded ones was also somewhat influenced by the rivalry between Tom Freston and Les Moonves, the heads of MTV and CBS networks respectively. Until then, Summer Redstone had been operating as both the chief executive officer and chairman of the company and it was seen as a natural course of action to split the leadership into two by dividing the company itself into two branches.
On the business front, the split would be more appealing to investors as it would provide options for alternative investments options. While one company would be a lower growth but high cash flow company generating a high dividend, the other one would be a growing company allowing for more investment opportunities, not expected to be paying a dividend. The Viacom created after the split was led by Tom Freston and comprised MTC Networks, Paramount Pictures, and BET Networks.
Viacom After The Split
Viacom after the split continued its growth and went on to acquire DreamWorks in February 2006. In the same year, Viacom went on to acquire Xfire in April, Atom Entertainment in August (for $200 million), and Harmonix in September (for $175 million). The following year, Viacom became the co-owner of a joint venture with Network 18, an Indian media company, and formed Viacom 18 which would be responsible for managing all of Viacom’s channels distributed in India and the movies Network 18 distributes. In December 2007, a five-year content sharing and advertisement contract was signed between Vicoma and Microsoft for $500 million. This deal made Viacom a preferred publishing partner for distribution and game development through Windows and MSN. Microsoft in turn could license Viacom’s shows for use on both MSN and Xbox Live. Microsoft also purchased advertising on online and broadcasting networks owned by Viacom.
In 2008, Viacom laid off 7% of their workforce, meaning about 850 employees. In the same year, MTV Networks owned by Viacom and Time Warner Cable could not reach a resolution regarding the renewal of any Viacom channel when the year changed. It would have meant a loss of viewership in major locations like New York City and Los Angeles and was only avoided when a zero-hour deal was reached on the 1st of January, 2009. In December 2019, the stake Viacom had in MTV Brasil was sold to Grupo Abril for an undisclosed sum. Viacom stopped trading on the New York Stock Exchange (NYSE) by the end of 2011. Its securities were then listed on Nasdaq with the same stock ticker symbols in use as were on the NYSE. In 2014, Viacom took over Channel 5, a British broadcaster, and became the first American media company to do so with a public service remit.
In 2016, the leadership of the company changed with the appointment of Bob Bakish as acting CEO. His position was soon made permanent and he was also appointed as the president. In 2017, the opening of Viacom Digital Studios was announced. In the following year, Viacom aimed at expanding its client base to include younger viewers and announced that they would be acquiring VidCon, an online video conference platform. By 2018, Viacom planned to launch an official streaming service. It would support advertisements and would include all the shows and movies owned by Viacom Media Networks that are not available on other streaming platforms. In 2018, Viacom acquired AwesomenessTV for $25 million which was exponentially less than $650 million, the latter’s value in 2016. PlutoTV, an online streaming service, was acquired three years later in 2019 for $340 million.
Re-Merger Deal with CBS
Re-merger of Viacom and CBS which was finalized in 2019 was proposed by National Amusements as early as 2016 but the suggestion was never followed through. By 2018, there were media reports that a re-merger was on the horizon. In March 2018, CBS made an official proposal for the re-merger and strongly suggested that CBS’s CEO Les Moionves oversee the re-merged entity. Viacom demanded an increase of $2.8 billion in the price and made the counteroffer that Bob Bakish remains the president and COO of there-merged company under Moonves.
The involvement of Shari Redstone, the owner of National Amusements, instigated conflict between the two companies which led to CBS Corporation suing National Amusements for abusing her power in the company and forcing both CBS and Viacom to make a deal they weren’t in the favour of. Redstone was also accused of preventing CBS to be taken over by Verizon Communications which would have been advantageous for the company shareholders.
By May 2019, the re-merger discussions were resumed as per reports by CNBC. It was made possible after the resignation of Mooves who opposed the merger with Viacom and with quite a few changes in the company’s board of directors. By August the same year, CBS had acquired Viacom for $15.4 billion as per the re-merger deal. Bakish was appointed as the CEO of the re-merged entity along with Joseph Ianniello serving as the chairman and acting CEO of CBS, responsible for overseeing the assets owned by CBS. Even though the companies delayed the re-merger, it was eventually completed and the combined company came to be called ViacomCBS.
Sahri Redstone fixed herself permanently in the management of the combined company as she was appointed chairwoman. National Amusements approved the deal and it was completed in December 2019. The combined company traded on Nasdaq with the symbols “VIAC” and “VIACA”.
If we go by current ownership and stock holding in ViacomCBS, National Amusements Inc. retains its monopoly on the combined business. The Redstone family thus owns about 80% of ViacomCBS’s Class A voting common stock. Sumner Redstone had in his control over eighty percent of National Amusements Inc.’s voting interest. After Summer Redstone’s passing, the voting interest went to a trust, giving his daughter, Shari Redstone the reins of the company. Along with her, other trustees include her son Tyler Korff, Leonard Lewin, Tad Jankowski, Jill Krutick, Norman Jacobs, and David Andelman. Shari also owns another 20% of it through another separate trust.
Since Shari is now well and truly in charge, she can apply her business plan in different ways. Either she can go on acquiring small businesses which would eventually increase revenue and reduce competition but would take years, or she can build on the assets that the company still owns including Dreamworks and Paramount Pictures. It still seems to be a challenge as ViacomCBS would still have to compete with media giants like Netflix, AT&T Apple, Amazon, Disney, and Comcast.
The Takeaway
Viacom began as a corporation that was multinationally established to be a leading media broadcaster. With expansion and acquisitions, the company grew until the idea of a split was suggested at the time of Sumner Redstone’s retirement who oversaw the entire corporation. While it seemed to be a good solution given the internal feud between Bakish and Moonves and based on investment opportunities that could be taken advantage of, it eventually turned out to be a bad decision.
After the split, CBS and Viacom went under different leaders, namely Moonves and Bakish. CBS gained profit and success under Moonves while Viacom’s owned networks soon lost popularity as the culture changed with the changing times. Even though Viacom kept acquiring other businesses, it still went through a tough time maintaining its older glory. By the end of 2018, both the companies had suffered to an extent that eventually propelled the re-merger in 2019.
Like both Viacom Inc. and CBS Corporation, ViacomCBS is also owned by National Amusements. Shari Redstone now has a challenging feat before her, expanding business and increasing revenue while competing with new platforms in media all around the world.
