Interview: Money & Sports (slow)
>> viacom chairman and c.e.o. sumner redstone talks about competitor c.e.o.’s dick parsons and rupert murdoch and about his former heir apparent mel carm asin. you are the senior statesman of the entertainment --
>> don’t call me senior. i’m junior.
>> the junior statesman across the u.s. i wanted to mention players in the industry who are major players.
>> yes.
>> i’m going to mention their names and maybe you can give two or three lines on them.
>> maybe i can’t.
>> i want to talk about, you know, number one, time warner c.e.o. dick parsons. is he move uing quickly enough to add value to the company?
>> look, i think richard parsons is one of the greatest -- let me tell you why. this guy inherited a calamity. not of his doing. and he’s already made rapid strides. he settled with the s.e.c. he settled some of the litigation. i have a lot of confidence in him.
>> investor carl icahn, a positive or negative force for time warner?
>> better ask karl. i know what rich would say. i think that carl is a very smart guy. i’m sure that some of his ideas are good. and i think if they are, rich parsons is smart enough to recognize them. >> c.e.o. howard stringer. can he turn around sony, and is he making the right moves?
>> i don’t know. i think howard stringer is very capable. however, i wish him luck.
>> rupert murdoch. is he making the right moves in the internet? he’s been doing acquisitions.
>> well, to the extent that he is investing in the internet, i think he’s making the right moves. of course, he will pay more than we would. and he’s always done that. but then on the other hand, he’s always made it succeed.
>> former disney c.e.o. michael eisner. was the board wrong to take away his chairman’s title?
>> i always felt even though world was sort of knocking him, that they underestimated his value. they forgot that he totally transformed disney when he came in. and they have also forgot that before he left, the parks were growing, the network was growing. a competitor to cbs, although, of course cbs remained with number one, but more competitive. their pictures were doing well. so, i think they underrated michael. tooze what the board should or shouldn’t do, i don’t know. but i will say this―eiger is a great replacement.
>> the former c.o.o. of viacom, head of sirius satellite radio. will he make sirius into a formidable competitor?
>> i really don’t think so, but, you know, i have no -- people always overestimated -- let’s say the alleged difficulty between mel and me. we do have a different point of view. ours has been more long range. mel legitimately was always trying to make the numbers. i think in order to grow a company, you have to look a little bit further out, but i’m not saying he was wrong. he is a good leader. i don’t see―we’ll see. i certainly wish him well in this venture. i don’t see it as a major challenge to regular broadcasting like infinity. >> talk-show host and bad boy howard stern. will he make his new sirius radio shows into a major player?
>> i don’t know. but he’s going to get paid a hell of a lot of money. if they can afford to pay him the money alleged, they’ll have to be successful.
>> kirk kerkorian, age 88, six years your senior, stakeholder in general motors.
>> six years my senior? how about 26 years my senior?
>> is that right?
>> i am not going to put up with it. look, kirk i think is very able. i know him not intimately but well. we frequently meet, dine together.
>> did he help save general motors? he’s a big stake holder in that --
>> i know that. well, he did with chrysler. i don’t know. i think it’s a big, major undertaking. we developed a great industry, and it’s the foreign companies that are doing so well. it must be a lesson here, but i’m not sure what it is. stay on the ball, i guess.
>> the 82-year-old sumner redstone talks about why he wants to remain chairman forever and how his daughter, sherry redstone, will succeed him.
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Listen Interview:82-year-old chairman and c.e.o. of Viacom
i’m greg miles. the 82-year-old chairman and c.e.o., sumner redstone, has run entertainment giant viacom with a steel grip for the past 18 years, abd he doesn’t often change his mind. redstone spent more than $80 billion to build an empire with famous brand names such as paramount, mtv, nickelodeon, cbs. kariya come share prices badly trailed the market in the last decade, only a quarter of the pace of the s&p 500. red stone is reversing the strategy and plans to break up the company by year-end. i interviewed redstone about his plans at his estate in california. in march you announced one of the most important decisions of your career. after 18 year of growing viacom through acquisition to the world’s third-largest entertainment company, you decided to split it in two. where and when did this idea first occur to you?
>> the fact of the matter is no conglomerate has been working. and as i said, the age of a conglomerate is over. in this case, being bigger is not the name of the game. here we had mtv, for example, growing from $400 million to a billion subscribers. here we have cbs leading the way have more viewers than anyone else for years, the number-one drama, you know what it is, “c.s.i.,” number-one comedy, not reflected in the stock.
>> how will splitting up the company create more value for shareholders than this larger company?
>> each will be able to focus on growing their own businesses and unleashing the value within those businesses.
>> what do you think viacom should be valued at in the stock market today? some analysts say―what do you think?
>> most analysts have put a number on 43-50, as you say. i’m not going to project the stock price.
>> i’m not asking you to project the stock price. i i’m asking you personally what you think it’s actually worth, though, in the market .
>> well, i’d rather put it this way―a hell of a lot more than it’s selling for now.
>> if the trade is somewhere between $40, $50 a share, postsplit you wouldn’t be unhappy.
>> i wouldn’t be unhappy, although i would hope it would grow from there.
>> ¾ of the analyst who is cover the company, about 73%, rate it a buy.
>> yes.
>> yet the stock is down and there are a number of skeptics? academia on the credit side.
>> look, there are always skeptics. if i listened to the skeptics, i’d still be operating free drive-in.
>> rupert murdoch, one of your --
>> i know. he doesn’t know why i’m breaking up the company.
>> not stronger separated than together and i don’t get it at all. sumner is frustrated with the share price, but the stock still won’t move despite his plan. what is your reaction to that?
>> i like rupert. i like his wife. we are social friends. we’re business friends. he’s just damn wrong. and he is content, apparently, to sit where he is. and he will sit there forever because the age is over. maybe he doesn’t have any value . i don’t know. do it that. because i think he does.
>> your argument is rupert’s kind of the c.e.o. of a dinosaur.
>> i never said that. i would not say anything that tended to denigrate a great leader like rupert. i just disagree with him.
>> goldman sachs very well-respected company had a recent report. they also were a bit skeptical saying we do not believe the shares will outperform given continued subpar growth in revenues. goldman forecasted viacom’s earnings growth will be lower than its major rivals this year for the third straight year and says that will continue next year postsplit. do those numbers sound right?
>> i’m not going to give you numbers. i disagree with glax. • goldman sachs. even goldman sachs can be wrong. i’m talking about the future, not the past. we’re not content to live in the past. whatever the―four, five, six, seven, that’s not important. what’s important is how these companies grow in the future.
>> let’s talk about the new c.d.s., which is the focus of concern of some people, because it’s going to have slower growth and more debt. moody’s investor services downgraded the debt.
>> i know. i know.
>> let me finish their argument. they argued after the split, the new cbs would have ¾ of the debt with only 65% of the revenues and only 55% of the ebitda, or cash flow. is there a chance this could burden the company’s growth?
>> first, you have to remember, and i think it’s very important, that regardless of the allocation of the debt, which i don’t want to get into in great detail now, for obvious reasons, both companies will have investment grade. not only the new viacom but cbs. will be investment grade.
>> but potentially decelerating economy, cbs dependent on advertising and the high dividends it has to pay, couldn’t that make it difficult for them to --
>> all i can tell you is maybe a decelerating advertising world for some but it is not for either mtv or cbs. cbs had the highest volume of any company of its―you know, in its world in the last up-front. and the highest volume they have ever had. so, why should i be weighed down by the naysayers? there are always naysayers. and there are always risk takers. i’d rather be a risk taker than a naysayer.
>> sthri logic at all to say we’ll keep the broadcast business but sell off infiy books and outdoor advertising and have a more focused, smaller company?
>> no. first, you have to remember that, yes, infinity does not have the growth that it had before, but it gives us about a billion dollars a year of free cash flow. and it’s cbs that will be declaring pretty hefty dividends.
>> sumner redstone challenges his critics who say the split won’t work.
>> viacom chairman c.e.o. sumner redstone talks about his voting control of both his companies and answers his critics. after the split-up, les moonves becomes c.e.o. of cbs, tom preston, c.e.o. of viacom, you will become chairman of both companies. imented to ask you, will les and tom be free to make major decisions on acquisition strategy, asset sales, unhindered by zow
>> well, let’s put it this this way, while i am not c.e.o., i will still be the controlling stockholder of both companies.
>> you’ve been c.e.o. for decades. c.e.o. of a company. first of all national amusement, then viacom.
>> yes.
>> it be hard for sumner redstone to take his hands off the wheel and let les moonves and tom preston drive it?
>> in the first place, i never said i was taking my hands off the wheel. it’s i will share the wheel with tom and les.
>> since you do have voting control of viacom, you can hire and fire c.e.o.’s and change strategy at will.
>> what i can do and what i would do are two very different things. my management style has always been pick great leaders and for the most part, let them make their decisions.
>> say les moonves in charge of the slower growth cbs wants to make a fast-growth acquisition, let’s say into cable, can you --
>> no. there are only certain limitations, and those limitations are ones that would virtually put the other side out of business. other than that, they can -- they’re toe toolly―totally free to compete with each other.
>> not do a fast growth into acquisition cable?
>> i think les is smart enough to realize that mtv is the pre-eminent company in the cable industry. it far beats every other cable network. so, i would think that les would recognize that.
>> if you split viacom into two companies, people like legg mason’s, you know, managing director blare levanon may argue that time warner or comcast might be interested in buys some of the broadcast or pieces.
>> that would depend on primarily―of course i would be consulted as i should be but that would depend on tom and les. if they wanted to sell something, i would say that they would make the final decision.
>> in other words, let’s say if --
>> look, they’re great leaders: i respect them. i have affection for them. they wouldn’t have their jobs if i didn’t. and they’re good enough to be able to make those decisions.
>> let’s say if that acquirer came in and offered a certain very attractive price for all of mftmft or all of cbs, mtv, the broadcast business --
>> that would be my decision, basically, wouldn’t it? right now, i have no intention of selling viacom or a hefty prt of it.
>> that’s not in the cards now.
>> no. that’s not in the cards.
>> one thing you pointed out that is important, that is part of a split, is a continuation. you will have control of 70% of the voting stock.
>> yes.
>> in each of the two companies. and also there will be four directors who will be common on each board of directors.
>> well, well, first, that could change. that’s the way it is now as we filed it.
>> what might change is, in other words, the fact it would be four directors common to each board, that might change?
>> that could. i’m not saying it will.
>> some investors now look at the pa two companies and they see the four directors and thing interest you have, and they go, are these two companies lail going to be independent?
>> let’s assume hypothetically that you did have four directors in common on both companies, which, as i say, is the way it is now. we have a right to change. you’ll have six, seven, or eight independent directors thafmentse don’t know who they are. so, the boards will not at all look alike. only a few people in common.
>> you obviously have voting control of the stock now.
>> yes.
>> if voting control was spread throughout all the shareds, shares in the company, do you think that would help the share price at all?
>> no. look, when our stock was 70, we had two classes of stock. when it was 70. so, obviously, having two classes of stock and controlling stock did not harm the company.
>> do you think more media companies will split off assets over the next five years?
>> i really don’t know. i do think that every company, whatever they’re saying publicly, will look at what we’re doing. i have very good reason to believe that. i know, in fact, that compleans look, at least look at what we’re doing.
>> you don’t think time warner or news corp. should split up their assets?
>> i didn’t say. that you said it.
>> which corporations would benefit from splitting up assets, do you think?
>> well, i have a couple clearly, absolutely in mind. but i’m not going to mention them.
>> sumner redstone talks about rival c.e.o.’s dick parsons, rupert murdoch and michael eisner and about the man who would be king of viacom but wasn’t, mell comer sin.
