The M&A Wars Seem Tame Without Sumner Redstone’s Raids

Peter Bart: M&A Wars Seem Tame
Kevin Winter/Getty Images

MEMO TO SUMNER REDSTONE:

Where are you when we need you, Sumner?

You used to thrive in this sort of chaotic media environment, with takeover rumors rampant and harried bankers shuttling between meetings. But you’ve let Rupert Murdoch, your longtime rival, not only grasp centerstage but also rewrite his dynastic history, which only a year ago was locked in unsavory court battles over phone hacking at his British tabloids.

Indeed, family dynasties seem to dominate the industry today — the Murdochs, the Roberts, the Dolans et al. I can almost visualize the ghosts of patriarchs past emerging from the shadows. They, too, understood loyalty to “the family”; Jack Warner would yell at his brothers, and Darryl Zanuck even once fired his son, but the sense of dynasty survived through that era.

But it’s your empire, Sumner, that seems oddly somnolent at the moment. The Paramount studio is committed to its own version of austerity — an objective of achieving profits without pictures that would have confounded the Warners or Zanucks. Even CBS Films seems to have stalled out, a phenomenon that is inconsistent with Leslie Moonves’ level of hyperactivity. Wall Street dealmakers are reminding Moonves that if he wants to maintain a presence in the movie business, acquisition represents a more promising option.

At your ripe young age of 91, you’ve been working diligently on your philanthropic legacy, Sumner, but I’d welcome some input on your corporate legacy. It was eight years ago that you became so angry about losing a prospective takeover to Rupert that you fired your then president, Tom Freston. Of course, the company in question, MySpace, was dumped by Rupert for $550 million less than he paid for it. Back then you were in a feistier mode, Sumner — you even fired Tom Cruise.

Rupert never seems to worry much about his mistakes, however. He just keeps levitating new deals, defying the laws of gravity. Of course, Brian Roberts doesn’t worry if he’s paying too much for Time Warner Cable or whether federal regulators will reject the deal. And James Dolan has never fretted about a performance review at Cablevision from his father (or from Knicks fans).

And no one ever second-guessed you, Sumner, back in the era when you were crafting your Paramount takeover, leaving Barry Diller and others bobbing in your wake. You were fearless in raising the ante at the crucial time.

That’s now what’s facing your pal, Rupert. He may have to raise his $85-per-share offer for Time Warner to $95 or more, with perhaps a 40% injection of cash. No one can accuse Rupert of running short of capital — he reportedly has lined up a $25 billion loan from Goldman Sachs and JP Morgan, and may also finalize a $9 billion deal to sell his interest in two Euro satcasters (in Germany and Italy). At the same time, Rupert remembers his nightmare in the early ’90s when his appetite so overextended his resources that it looked as though he and his sons would have to find an alternative career path.

Clearly neither you nor Rupert, Sumner, have career worries at the moment, unlike the people who work at your sprawling empires. Hollywood knows that consolidations are in the works and, with them, the inevitable layoffs and management purges. The Hollywood of old was kinder to its families — employees, not just owners — ensuring generations of rewarding jobs. Yes, there have been below-the-line dynasties, too.

I was with you at your home one day, Sumner, as we stared at the giant fish tank in your study. “What I love about this tank is that nothing ever changes,” you observed. “They all just keep swimming upstream.”

That zone of serenity, as you well know, no longer extends to the community at large.

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  1. TheBigBangOf20thCenturyPopCulture says:

    If and when this bold school relic makes another rogue business deal and it makes entertainment news, that’s a sad statement on showbiz if moguls are more fascinating than product or content. But at his age, he’s coasting and delegates to underlings. Standard media is intertwined with the Internet to hang onto the kiddie exodus online, so big deals don’t get made as much anymore. And if you’re a champion of mature demographic quality, the irony is that seniors old enough to understand are too old to care..

    • LOL says:

      You’re so right, BigBang. Though, lest we forget, Paramount does have fifteen first-look pacts with top-tier producers, which, to a layman like me, kind of makes the studio pretty passionate about making deals.

      BigBang, the type of film industry you want is gone. It sucks but that’s the situation.

      Saying that, I do wish people like you and Bart were calling the shots. But the chances of that are depleting every moment. It’s people of my generation who decide on things like that now.

      Just wait and see how much money we make H’wood this weekend. It’s gonna be huge.

      • TheBigBangOf20thCenturyPopCulture says:

        Other than as a modern action figure toy movie studio for kids, Paramount hasn’t been legendary since Charles Bluhdorn spun it off from Guff-Western to produce epics like The Godfather. You don’t want outliers with mature taste running things, because entertainment quality to millennials is like a cross to a vampire. Doesn’t your generation prefer to buy and sell dreck pop culture and make all that money?.

  2. Hans Dieter Ulrich says:

    Fascinating – the press always focuses on Sumner and ignores his management team. CBS, headed by Les Moonves and Viacom, headed by Philippe Dauman are BOTH controlled by Sumner Redstone. One of these companies gets consistent high marks for its dynamism, aggressiveness, outstanding performance and industry leadership and the other is criticized for Sumner Redstone’s leadership. Why do you ignore the apparent ineffectiveness of Philippe Dauman as CEO of Viacom and instead blame Viacom’s lackluster status and Paramount’s gradual de-capitalization on Sumner? Both companies are owned by Redstone and share most of the same Board – the difference is Moonves vs. Dauman. Dauman was a trust and estates lawyer, Redstone’s executor, who was placed in charge of Viacom after the unmitigated fiasco that was Mel Karmazin – a man who believed the future of all media was radio and billboards, that movies and TV were “Hollywood phoniness” and the internet was “a fad,” a leader who reacted to the 2001 recession by saying, “We’re going to sit it out.” But….and this is crucial….the architect of the Blockbuster acquisition, which ended in the complete nuclear meltdown of that company and a $10bn write-off by Viacom, was Dauman. The architect of the CBS merger, a deal so bad it had to be completely undone less than six years later, was Dauman. Thank god for the AOL-Time Warner merger because without it, Viacom-CBS would have been the greatest destruction of corporate wealth in American History…..the planner? Dauman. Don’t get me started on “Mr. Only Work Part Time” Brad Grey. We haven’t sen him at the office since….well, I’ve never seen him at the office. Don’t get me wrong – Dauman keeps buying back Viacom stock and I love it – my share price keeps going up – but if you’re looking to lay the blame for the poor operating performance and lack of leadership don’t look on Mulholland – look to Broadway.

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