Sumner Redstone, the hardnosed media titan who only recently (2016) relinquished the executive chairman position of National Amusements, the private corporate parent of ViacomCBS, died Aug. 11 at age 97. National Amusements disclosed Redstone’s death on Aug. 12.
Redstone, who had been in declining health for years, only recently (and reluctantly) ceded control of National Amusements to his daughter, Shari Redstone. Last December, Ms. Redstone successfully re-merged Viacom and CBS after a 13-year separation originally pushed for by her father, including installing former Viacom boss Bob Bakish as CEO of the combined companies.
“My father led an extraordinary life that not only shaped entertainment as we know it today, but created an incredible family legacy,” Ms. Redstone said in a statement. “Through it all, we shared a great love for one another and he was a wonderful father, grandfather and great-grandfather. I am so proud to be his daughter and I will miss him always.”
Much media attention has been focused on Sumner Redstone’s rise from lawyer and successful drive-in theater owner/operator, to corporate owner of Paramount Pictures, publisher Simon & Schuster, Nickelodeon, MTV, BET, Showtime, Comedy Central and TV Land.
But he also played a key role in the home entertainment industry. The billionaire saw the promise of Blockbuster Video — and home video’s cash flow — before most.
Viacom acquired Blockbuster in 1994 for $8.4 billion to help finance its bid for Paramount from the studio’s boss and QVC founder Barry Diller.
“The only reason we got into [Blockbuster], we really needed the enormous cash flow [from the movie rental chain] to service the [Paramount] debt,” Redstone said in a media interview. “Strategically it made a lot of sense, and also we thought Blockbuster was a good business.”
Indeed, the brand became synonymous with home video, VHS and DVD — at its peak, operating more than 9,000 stores worldwide.
Redstone said Blockbuster over the years had its fiscal and management issues dealing with competitors, including eventually a small by-mail DVD rental service named Netflix. Redstone said Blockbuster’s issues in the beginning included not having enough hits available to rent, which left consumers with only catalog.
“Every video store was operating the same way,” he said. “Blockbuster tanked at one point [and] I tanked with it. Suddenly, I went from being brilliant to stupid.”
Redstone said he moved to Dallas (Blockbuster’s corporate headquarters), hired Jim Antioco as Blockbuster CEO, and together went to the studios in California to hammer out landmark revenue-sharing agreements for VHS rental titles.
“We buy tapes for $6, instead of $65. We sell them for more than we pay for them. It was a bonanza for Blockbuster and a bonanza for the studios,” he said. “So the Blockbuster story is pretty good.”
Redstone, in the interview, credited Antioco for pushing revenue sharing, which he said saved Blockbuster and Hollywood. Revenue-sharing allowed studios to share in rental revenues in return for discounted product costs.
“Without [home video], the studios don’t exist,” he said.
Redstone would eventually spin off Blockbuster with Antioco in charge, saddling the chain with about $1 billion in debt, from which it never fully recovered. Antioco, in turn, wouldn’t fully realize the rising threat of Netflix, including infamously turning down co-founder Reed Hastings’ offer to buy the upstart service for $100 million.
Netflix would then create (with Roku) the nascent subscription video-on-demand market, which Blockbuster never embraced until it was too late. The chain, along with major competitors Hollywood Video and Movie Gallery, would eventually cease operations.