SINCE THIS COLUMN regularly dispenses advice to those who neither want it nor need it, herewith some random thoughts about the Paramount deal.
MEMO TO: SUMNER REDSTONE
FROM: PETER BART
First, welcome to The Club — the select circle of entrepreneurs who own a true entertainment colossus. You’ve paid your dues — some $ 2 billion more than you’d originally planned. No new member has stirred more interest or apprehension. Sony’s acquisition of Columbia symbolized the globalization of Hollywood. Rupert Murdoch’s purchase of Fox formalized that the studios were becoming mere cogs in global media machines — side-streets along the information superhighway.
But you, Sumner, represent a throwback to the halcyon days of the studio system when most industry honchos started as theater owners. You know the fables and foibles of The Club as well as its existing members. You know their dirty linen; you’ve booked their movies, hassled over terms and negotiated settlements. That’s probably why you make them a little nervous.
Moreover, the blending of Viacom, Paramount and Blockbuster means that you will not only be able to control the destiny of your own product in the marketplace, but your competitors’ as well. Sure, other studios also own theaters, but you control 2,020 screens, and also nine networks — like Showtime and The Movie Channel — plus 12 TV stations. And then there’s Blockbuster with its 3,500 outlets and myriad side-businesses. You have your hand on the scrotum of the industry.
IF SOME OF YOUR COMPETITORS are uneasy about your ubiquitous presence, there are other pockets of nervousness as well. Some stockholders and analysts fret about the $ 10.2 billion debt, of which $ 3.6 billion comes due in a year. There are those Blockbuster shareholders as well, who have grown skittish watching the price of their stock decline. Given the huge combined overheads of the various entities now under your control, many executives fear loss of employment from cost-cutting and the possible sale of assets.
While you’re a man who enjoys causing ripples, Sumner, some major players in town fear your actions may inadvertently have a ripple effect that far surpasses anything you could have imagined. All the rules were rewritten as a result of the Paramount War. Acquisition fever is in the air.
The scenarios are abundant. Some fantasize about an assault on Time Warner led by Edgar Bronfman, Jr., Barry Diller and possibly Herb Siegel. Others see a renewed Diller-John Malone partnership gobbling up a major company. Still others say it’s hard to imagine that a union of some sort between Sony and a telco would be more than six months away.
Though the Disney mavens are fixated on software, they’re surely circling around a major network and Messrs Tisch and Welch clearly have their ears to the ground. And out there sits the Tribune Company, with its TV stations, cable and syndication holdings. Another question: When will the edgy Japanese decide to offload a TriStar or MCA?
Just because you may have set off some seismic shocks, Sumner, doesn’t mean you have to take responsibility for them. Indeed, you’ve got your hands full just dealing with the reinvention of your new combined entity, whatever it may be named. I’ve got a suggestion about that, too, Sumner. Instead of Paramount Viacom, how about Viable Paramount?
Your friends and associates are unanimous about one thing: That you will surprise the town by being far more “hands on” in terms of the studio operation than anyone suspects. Hollywood does not have a very good memory, but insiders know how closely you’ve monitored the machinations of the studios and how shrewdly you’ve invested. Somehow, whenever a major acquisition took place, such as Columbia and Fox, you always ended up making a bundle. People claim you would truly like to see Sherry Lansing remain as production chief at Paramount, but would Sherry be willing to work under someone who has such sharply defined opinions of how to rebuild a wobbly studio? Or will she do what she always stated — namely follow Stanley Jaffe into a new affiliation?
I GUESS WHAT ALL THIS BOILS DOWN TO, Sumner, is that there are lots of scared people in show business who are trying to figure out how to sustain the good life in the face of massive change. As a throwback to the old-time exhibitor-turned-studio honcho, you represent a link to past glory. As the new proprietor of a gigantic media machine whose fortunes are tied to the information superhighway, you also symbolize both the opportunities and threats of the future.
So my final gratuitous recommendation, Sumner, would be to take a deep breath , let things simmer down, pat as many people as possible on the back, play some tennis and smile a lot (you have a nice smile). The temperature will start returning to normal. The seismic shocks will abate. And hopefully, in a saner climate, you and your associates can set forth upon your new adventure.