According to Viacom chairman Sumner Redstone, the big news about Paramount is that Stanley Jaffe will be out, Sherry Lansing will be in, and Redstone has no intention of sweetening his deal with Blockbuster.
Redstone indicated that he would replace Jaffe as president of Paramount Communications with an executive — one who would preside over both the movie andTV divisions and who would be a player from outside the company. He refused to name names.
Some studio execs had hoped Jaffe would not be replaced, but that Viacom Intl. president Frank Biondi would assume direct control over studio operations. Redstone’s comments would indicatethat this wish will not be fulfilled.
Redstone made his remarks in an exclusive interview with Daily Variety during his first overseas trip since winning the $ 10 billion bidding war for Paramount.
“Some of the problems at Paramount are due to the rapidchanges of studio heads. However, I do think that running the studio from New York is not the right thing,” he said.
The 70-year old New Englander also outlined the future for Par chairman and CEO Martin Davis, saying, “Martin Davis will not have anyreal operational responsibility in the merged company but will have a continued relationship with me.” Just how that relationship will work and for how long, Redstone would not say.
As news came to the French capital that a Delaware court judge on Tuesday had ruled out a request by Blockbuster shareholders for a hearing to try to block the merger between the video retail giant and Viacom, Redstone said he remained “totally confident” that the Blockbuster deal will go through. TCI boss John Malone, who got slapped by a Redstone-initiated antitrust lawsuit at the height of the Paramount bidding war, got involved earlier this week by suggesting a possible link between his company and Blockbuster if the Viacom deal falls apart.
Redstone said Wednesday, “I have some big doubts about the extent of John’s interest in Blockbuster. It’s conceivable that it has something to do with the lawsuit.”
Some Blockbuster shareholders are unhappy about the current value of Viacom Class B shares, which they say makes the deal unattractive. Those disgruntled Blockbuster investors say they want to see Viacom stock up over $ 28.
Analysts have speculated that if the Viacom price doesn’t meet those expectations, Redstone may be forced to offer a sweetener. The Viacom chairman categorically ruled out that possibility yesterday, insisting, “we won’t sweeten our offer. We have no intention of doing that.”
Instead, he told entertainment analysts and brokers attending a two-day Donaldson, Lufkin and Jenrette-organized Media and Entertainment Conference in Paris that he remained convinced Viacom stock is undervalued. Coming out of the closed-door presentation, Redstone said, “We have seen seven ‘buy’ reports on Viacom stock recently.”
One challenge facing Redstone and Biondi is how to reduce the new company’s estimated $ 10.7 billion in debt. Redstone aims to combine compatible divisions within Viacom, Paramount and Blockbuster, in the process reducing distribution and corporate overhead costs by “a conservative $ 200 million per year.”
Neither Redstone nor Biondi would say who the winners and losers would be in what is clearly going to be an extensive executive shuffle. “At the moment, we are getting reports on all the various divisions. we’ll study those before making any moves,” said Biondi.
One thing that is now clear, however, is that Redstone would like Blockbuster topper H. Wayne Huizenga to be involved in all aspects of the new company.
“I talk to Wayne two or three times a day. I have said to him that the more he wants to do the better and I’m urging him to take a major role in all sides of the company, to plan the strategy.”
Redstone also has plans for Blockbuster prez Steven R. Berrard. “Steve is intended to have a very active role in Viacom. He is likely to run Blockbuster and assets of both Viacom and Paramount.” Berrard was in Paris attending the Media and Entertainment Conference.
Expectations that Redstone and Biondi will immediately start shedding assets to bring down debt are likely to be proved groundless, but Redstone said he is keen to tweak Paramount’s film production into shape.
Paramount released just 14 pics last year but has some big-budget sequels in the hopper, including “Beverly Hills Cop III” and “Patriot Games” follow-up “Clear and Present Danger.”
“On paper we have a good slate of upcoming films, which clearly we can’t take credit for. But they may be too highly budgeted. We will produce more films at an average cost per film that is significantly lower than at present.”
Redstone said an immediate priority will be to follow the Disney lead and launch a series of retail stores to carry the huge amount of merchandising product generated by the likes of MTV, Nickelodeon and other pistons in the engine of the Par/Viacom media giant. “We’ll also be launching thematic film channels to make use of our huge library,” he said.
Redstone intimated that Martin Davis will be working with him to identify potential partners. “I need to get a better handle on that, although Frank Biondi may already know. We’ll see more relationships with the likes of Canal Plus, Kirch, Berlusconi and maybe Bertelsmann, but essentially we’ll be growing our own business all over the world.”
Redstone said he would be leaving Paris Thursday and would be making trips in the next week to Los Angeles to confer with Par execs, to Las Vegas presumably to meet with select delegates to the NATO ShoWest gathering, and to Denver to meet with TCI’s John Malone.