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Whither Viacom, CBS and Paramount?

Whither Viacom, CBS and Paramount?

There was a time when I would have bet on billionaire Sumner Redstone–who survived a hotel fire by hanging onto a ledge with his burning hand until he was rescued– to win any game of “Survivor,” well into his 80s. But even this wily media mogul, who started in Boston exhibition and still wields control of two empires, thriving CBS and struggling Viacom–including Paramount Pictures, MTV, Comedy Central and Nickelodeon–can’t outsmart time. His age, 92, is catching up with him, as his handlers try to keep him away from reporters and cameras. He can barely speak at this point; he last participated on a Viacom earnings call last November, and neither attended Viacom’s annual shareholder meeting in March nor the CBS annual shareholders confab in May. 
The problem is that while Redstone has insisted “I am not going to die,” his senior executives, led by CBS CEO Leslie Moonves, 65, and Viacom CEO Philippe Dauman, 61, are waiting for him to let go of the reins. And meanwhile, with Redstone’s successors uncertain, they’re letting the companies he runs stagnate. Poised to get their share of his $5.6 billion fortune are two girlfriends and the eventual seven trustees of his holding company National Amusements, including Dauman, Redstone’s 62-year-old daughter Shari, a veteran exhibitor and digital investor, and her son, 29-year-old lawyer and rabbi Tyler Korff. Shari has said she will have four trustee votes, and will carry a lot of sway going forward, along with Moonves and Dauman, as her father keeps his would-be successors dangling.

Meanwhile studio Paramount, which is run by chairman Brad Grey and vice chairman Rob Moore, has shed key personnel including production chief Adam Goodman, replacing most of them from within. At CinemaCon this year, the studio unveiled a painfully thin lineup led by graying Arnold Schwarzenegger’s return in “Terminator: Genisys,” which went on to disappoint at the summer box office, Tom Cruise in daredevil mode, hanging by his fingernails off an A400 aircraft in Chris McQuarrie’s “Mission: Impossible –Rogue Nation” (July 31), summer comedy “Daddy’s Home,” about a schlub step-dad (Will Ferrell) lamely trying to compete with his new children’s charismatic father (Mark Wahlberg), more “Paranormal Activity” and “Ring” sequels for fall, and Christopher Landon family comedy “Scout’s Guide to the Zombie Apocalypse” for October.

Viacom remains powerful, last year earning $2.4 billion in net income on $13.8 billion of revenue (up from 2013) despite cable network ratings declining 19%–more than double the overall slump in viewers 18-49–including Comedy Central (which is losing Jon Stewart and Stephen Colbert), BET, VH1, Nickelodeon, Spike, TV Land and MTV. The company has been laying off employees. 
Some cable operators wonder if they need to carry Viacom’s channels. This comes at a time when the future of ad-supported TV is not bright and costly cable bundles which support smaller networks at the expense of popular ones are under fire. Consumers have started cutting the cord as they watch more video-on-demand: Netflix, Hulu, Amazon and YouTube. Viacom’s stock has fallen 24 percent in the last year.

While studios like Disney have purchased creative powerhouses like Pixar, Marvel, and Lucasfilm, Paramount has contracted, losing its Marvel movies along with DreamWorks and DreamWorks Animation. Rumors abound that Paramount is staying stripped and lean as it prepares to be sold. That fate could also meet CBS and Viacom after Redstone eventually does meet his maker.

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