Viacom chairman and CEO Sumner Redstone said he was open to the kind of merger announced this week by America Online and Time Warner, but also delivered a strong defense of the enduring value of entertainment producers amid the frenzy of interest in dot-com companies.
“If there’s a smart deal to be done, we will do it,” Redstone said, referring to a possible alliance with a major Internet company. “But we’ll only do it after very careful consideration.”
The Viacom topper did not say that his company had carried on any specific talks with Internet companies. And he said the company already had its own “well-developed” Internet strategy, with subsidiaries MTV and Nickelodeon putting significant efforts into their Web sites.
Redstone made the remarks at Town Hall Los Angeles, a regular speaker’s forum.
Viacom is in the midst of its own merger announced in the fall, in which it is acquiring CBS for about $37 billion.
That alliance puts Viacom — which has Paramount in its stable — in league with Disney and Fox as a top movie studio with a top network attached.
But the AOL Time Warner marriage, with AOL picking up Time Warner for north of $160 billion, dwarfs Redstone’s deal with CBS, spurring speculation that the next big trend will be tie-ups with Internet companies.
Redstone said the AOL Time Warner deal took him by surprise. “I had never thought about a merger like this.” But, he added, “I can see that it makes a great deal of sense.”
One of the big shocks for Hollywood in the AOL deal is that it is upstart AOL, just 15 years old, which is doing the acquiring — with AOL chairman Steve Case to top the merged company — while the history of Time and Warner Brothers reaches back to the 1920s.
The tricky part of alliances with Internet companies, Redstone said, is the astounding market valuations of the dot-coms.
“It’s very tough to value these Internet companies,” he said, which in turn makes it hard to assess how much stock should be swapped in a deal like AOL’s.
Redstone said AOL’s desire to gobble up Time Warner shows “the new media are starting to see they need Hollywood’s creativity.”