Media Mogul (and Blockbuster Video Owner) Sumner Redstone Dead at 97

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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“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.

Follow us on Instagram

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.

Viacom, CBS Agree on Merger Price

The expected re-merger between Viacom and CBS has reportedly found common ground on the all-stock transaction’s price at around Viacom’s $12 billion market valuation.

Bloomberg, citing sources familiar with the deal, says the merger, which would re-unite parent Viacom and CBS after 13 years, could be announced as early as today.

Specifically, Viacom would get 0.59625 a share of CBS for each of its own shares. A year ago, Viacom had sought 0.6135 a share of CBS.

The two companies, whose assets include Paramount Pictures, BET, MTV, Comedy Central, Showtime and CBS All Access, among others, are looking to save $500 million in combined synergies — about half of what they originally announced.

The deal was originally delayed after former CBS boss Les Moonves sought the CEO position among the combined companies. Shari Redstone, who runs Viacom/CBS parent company, National Amusements Inc. for her ailing 94-year-old father, Sumner Redstone, wanted Bob Bakish, CEO of Viacom, to hold the position.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Moonves dropped out of discussions when he was forced out at CBS following a series of #MeToo allegations.

Now Bakish is seen inheriting the CEO position, which leaves acting CBS CEO Joe Ianniello’s position unknown.

 

Report: CBS, Viacom to Rekindle Merger Discussions

Media giant Viacom (parent to Paramount Pictures) and CBS reportedly are set to begin in June renewed discussions about a possible merger — nearly 20 years after Viacom created CBS Corp. through a spin-off.

CNBC, citing sources familiar with the situation, say the two companies controlled by Sumner Redstone and his daughter Shari Redstone’s National Amusements corporate umbrella are seeking to “bulk up” the balance sheet in a rapidly evolving media landscape underscored by mergers and acquisitions.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

National Amusements has twice tried unsuccessfully to merge CBS back into the fold — efforts largely rebuked by former CBS CEO Les Moonves, who sought the top position in the merged companies. Sharri Redstone preferred Viacom CEO Bob Bakish in that role.

Moonves was forced out of CBS following multiple allegations of inappropriate workplace behavior toward women.

Scuttlebutt about a possible merger grew after Joseph Ianniello, acting CEO at CBS, had his contract renewed only to the end of the year, and search for a permanent executive was cancelled.

CNBC said the merger would likely be a stepping stone to further M&A activity, including a renewed bid for Lionsgate-owned Starz and SVOD platform Starz Play, and possibly Discovery Communications, home to HGTV, Food Network and DIY Network, among other properties.

CBS Sues Controlling Shareholder for Independence

CBS Corp. May 14 filed a lawsuit in Delaware Court of Chancery alleging breaches of fiduciary duty by majority shareholder National Amusements, which is run by Sumner Redstone and his daughter Shari Redstone.

CBS is seeking to prevent the Redstones from allegedly interfering with a special meeting of its board of directors to consider declaring a dividend of shares that would dilute the value of National Amusements’ voting rights to 17% from 80% — as is permitted under CBS’s charter.

The dividend would not dilute National Amusements’ economic interests, or any other CBS stockholder.

CBS said it took this step because it believes it is in the best interests of all its shareholders, and necessary to unlock significant stockholder value.

If consummated, the dividend would enable CBS to operate as an independent, non-controlled company and more fully evaluate strategic alternatives — including merging with Redstone-controlled Viacom.

CBS contends that without the litigation National Amusements would seek to oust its board members and/or change its bylaws — allegations National Amusements denies.

“National Amusements had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies,” the company said in a statement. “National Amusements’ conduct throughout supports this and reflects its commitment to a well-governed process.”

 

Viacom Asks CBS to Up Merger Bid

Media giant Viacom reportedly has asked CBS Corp. to increase its undisclosed merger bid by $2.8 billion. CBS previously offered an amount (reportedly $11.9 billion) below Viacom’s market capitalization value, according to CNBC, which cited sources familiar with the proceedings.

Viacom, which includes Paramount Pictures and Paramount Home Media Distribution, is majority owned by National Amusements – the corporate shell run by Sumner Redstone and his daughter Shari Redstone that controls Viacom and CBS.

Viacom spun off CBS in 2006 with Les Moonves assuming control of the publicly traded company.

With ongoing media consolidation industrywide, Shari Redstone seeks to consolidate the two companies, putting Moonves in charge. Redstone, however, wants Bob Bakish, current CEO of Viacom, to be president/COO of a combined Viacom/CBS, while Moonves prefers that position go to Joseph Ianiello, current COO at CBS.

Separately, CBS nominated Richard Parsons, the 70-year-old former CEO of Time Warner, to its board of directors. Parsons, who was replaced by Jeff Bewkes in 2008, was an earlier supporter of releasing movies digitally day-and-date with their packaged media debut – a move criticized at the time by video stores seeking exclusivity.

Parsons then enflamed the situation when, in a fiscal call, he said it would be a “cold day in hell” before leaving his Manhattan apartment to go to a video store. His comments came as Warner Home Video ranked #1 in domestic home video disc sales, with an industry-leading 20.2% market share.

 

CBS Forms Viacom Merger Special Committee

CBS Feb. 1 announced that its board has established a special committee of independent directors to evaluate a potential merger with Viacom, which includes Paramount Pictures.

CBS said that despite forming a special committee there is no assurance that it would result in a transaction or on what terms any transaction might occur.

CBS and Viacom were previously legally together until 2006, when Sumner Redstone, founder and controlling shareholder of Viacom, declared that diversified media conglomerates were dinosaurs due to changing market conditions.

Fast-forward to the present and 94-year-old Redstone is still around – with an apparent polar opposite mindset.

His daughter, Shari Redstone, vice chairman of Viacom, is driving reconnecting with CBS, which is headed by Les Moonves. The rationale being that diversified consolidation is mandatory in an increasingly fragmented direct-to-consumer market.

CBS and Viacom are following M&A leads taken by AT&T and Time Warner, and Walt Disney and 20th Century Fox.