Conglom targeted by new round of biz buzz
Viacom has plenty to be pleased about lately, notably its robust stock price and the upside surprise of DreamWorks-Paramount’s “Transformers.”
But two negative news reports clouded the picture Thursday and raised questions about the conglom’s stability.
One, in BusinessWeek, resurrected the notion of ongoing tension between DreamWorks and Brad Grey’s Par, suggesting that Steven Spielberg, in particular, is unhappy and prepared to depart at the end of the troika’s three-year pact.
The other, in Fortune and later echoed in the Wall Street Journal, had Shari Redstone ankling the Viacom board due to a dispute with her father, Sumner Redstone. As Shari Redstone has a minority stake in Viacom and was thought by some to be in the running to succeed her father someday, the news prompted speculation that some or all of Viacom could therefore be in play.
The Redstone news sent the company’s shares up 3% to $42.50 amid a broad market rally that saw the Dow close above 14,000 for the first time.
There is a catch, however: While Fortune and the Journal each cited multiple sources, a spokesman for Shari Redstone denied she was leaving the board. And Sumner Redstone told Daily Variety that he was unaware of any request that she leave.
“I can’t pick a successor,” he said. “It’s up to the boards of the two companies to pick a successor according to the rules of good governance.”
Also, even if reports are true that she is negotiating a separation from Viacom, who would buy part or all of the company? No other media conglom is looking to acquire, and private-equity funds are less interested in media properties of late. That leaves the likely result that Sumner Redstone would simply buy back his daughter’s shares and maintain control of the company. A more likely scenario is that Redstone would allow his daughter to walk away with National Amusements, the exhibition chain she runs.
The Paramount story left a lot of people scratching their heads as well, though there is a stubbornly persistent belief in the media and financial communities that the tension is real.
Grey, for his part, insists he has done everything possible to mollify DreamWorks, and Par has maintained all along that everything is copacetic. DreamWorks now has greenlight authority on projects costing up to $100 million and a larger production budget.
DreamWorks has delivered four straight box office hits to Par this year, including robot actioner “Transformers,” which bowed over the July Fourth holiday and has already made nearly $400 million worldwide. Because of DreamWorks, Par is No. 1 in market share, crossing the $1 billion mark at the domestic box office earlier in the calendar year than any other studio. On the other hand, a slate of more commercially challenging award-season fare is in the offing, such as “Things We Lost in the Fire,” “The Kite Runner” and “Sweeney Todd.”
It was unclear what agenda was served by the BusinessWeek article, which the mag emailed to outside journos, following up with a call.
Whenever there are rumors about DreamWorks, of course, speculation tends to focus on notorious deep throat David Geffen. While he is not quoted in the BusinessWeek article, it does position Geffen as a shaman-like figure advising Spielberg and his confreres.
(Pamela McClintock and Anne Thompson in Los Angeles contributed to this report.)