Watching Viacom and CBS seek to sort out the succession mess that is now Sumner Redstone’s legacy, it’s pretty simple to trace much of the drama back to the mogul’s ill-considered, seemingly knee-jerk decision to split up the two companies back in 2005.
Dividing them was intended to unlock value in both, while enabling two prized executives, Viacom’s Tom Freston and CBS’ Leslie Moonves, to each ascend to the CEO slot. But Redstone peevishly dismissed Freston a mere eight months later, and since then both companies have exhausted a lot of time and energy seeking to replicate elements that the other already contained.
On its face, Viacom/CBS possessed a host of complementary assets, including the CBS network and cable channels that ran the gamut from the cradle (Nickelodeon) to the grave (at the time, TV Land). In addition, Viacom’s Paramount made movies that could feed that collective distribution apparatus, while CBS’ power in the TV industry created a platform for showcasing and promoting Paramount product.
Since the division, however, both companies have grappled with efforts to replace what they lost. For CBS, that has entailed an unimpressive foray into the movie business, mostly betting on medium-sized films, at a time when everything seemed to be geared toward blockbusters or small, prestige titles.
Still, CBS has flourished otherwise, especially relative to Viacom, whose once-lucrative TV production division became little more than a shell, while its cable networks have faced the pressures plaguing that entire sector. The separation also created unnecessary friction involving the pay-TV home for Paramount movies — with Paramount joining in the venture that became Epix — which otherwise would have naturally gone to Showtime, a network that has mostly offset that loss through shrewd original-programming choices.
Before his declining health, much of the coverage of Redstone was devoted to his colorful personal life, as evidenced by a 2007 Vanity Fair profile. Yet that same piece also detailed the almost haphazard way the billionaire went about the decision to turn CBS and Viacom into separate entities, after Freston balked at the promotion and then accepted it. “I was in a very difficult position,” Redstone told the magazine. “Tom said no, then yes. I had to do something. So, to make everyone happy, I had to split the company.”
The question is whether making “everyone happy” was in the best interests of the company, then or in the long term, or whether Redstone should have simply bit the bullet at the time and installed Moonves, an executive whose competitive zeal is second to none. So while Viacom and CBS are awash in the inevitable drama that the torch-passing from a titan like Redstone inevitably triggers, in this case, divorce really was hardest on the kids.