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When Bob Met Sumner: How a Crisis at Blockbuster Brought Viacom’s CEO Together With Redstone

Bob Bakish’s entre to Viacom came in the early 1990s when the company’s future CEO was hired as a consultant by what was then Paramount Communications to help restructure its Madison Square Garden division. 

Bakish worked with a range of media, publishing and consumer products clients during his years as a consultant with Booz Allen Hamilton. He once got stuck for nearly a year working on the overhaul of frozen food plant in Solon, Ohio, an assignment that made him appreciate the dynamism of the media biz all the more.

While Bakish’s Booz Allen group was working on the plan for MSG, Paramount Pictures was put up for sale in 1993. That initiated the fierce bidding war between Viacom owner Sumner Redstone and Barry Diller, the ABC, Paramount and 20th Century Fox veteran who at the time was fresh off of launching the fourth broadcast network for Rupert Murdoch.

Booz Allen was tapped to help Paramount Communications analyze its options. When Redstone finally emerged victorious the following year, Paramount Communications CEO Martin Davis urged the studio’s new owners to tap Bakish’s team for the Viacom-Paramount integration plan. That lengthy assignment led to commissions to help with strategic planning for the MTV Networks arm and for Showtime.

Given his many appearances in presentation to the board of directors and high-level management, Bakish was eventually sought out for a breakfast meeting by former Viacom COO Tom Dooley, who offered him a job as a strategic planning executive. Which Bakish turned down because he was about to be made partner at Booz Allen toward the end of 1996.

“Tom said to me ‘If you ever want to play the game on the field rather than calling it from the sidelines, come talk to me,’ ” Bakish recalled. “I said ‘Tom, that’s a good hook.’ I asked him to wait two months. I went and got elected partner and resigned two weeks later.”

Bakish got a quick tutorial in what it meant to work for Viacom chairman Sumner Redstone just as he started his new job in early 1997. His arrival at the company coincided with a big downturn at Viacom’s Blockbuster Entertainment home video retailer. Redstone, Dooley and Bakish spent a few months flying down for several days a week to Blockbuster’s headquarters in Dallas to help steer the company through its trials while it searched for a new CEO.

In an early meeting, a senior Blockbuster executive explained the company’s existential challenge as being in the business of “managed dissatisfaction,” Bakish recalls. The executive’s theory was that Blockbuster employees had to focus on guiding customers to their second- or third-choice movies because the hot title of the moment would inevitably be unavailable. The stores couldn’t afford to stock many copies of new home video releases because they cost about $80 apiece.

“When he said ‘managed dissatisfaction’ I thought Sumner was going to have a stroke and throw the guy through a window,” Bakish recalls. “He really went crazy.”

The incident led Redstone to launch a personal charm offensive with Paramount’s major studio rivals to re-write the rules of the home video business. Bakish never forgot how Redstone succeeded against all odds. He shifted Blockbuster’s business model from one of buying wholesale videos from studios to a revenue-sharing arrangement, which allowed the stores to stock many more copies of hit titles without having to shell out $80 apiece upfront. That shift shored up Blockbuster’s fortunes, for a while.

Having such close exposure to Redstone, who is now 95 and in failing health, in a challenging situation was a good introduction to the company, its quirks and its unique assets.

“Sumner used to say ‘I am Viacom and Viacom is me,’ ” Bakish recalls. It was legend throughout the company how many times a day Sumner called his CEOs to discuss the company’s stock price.

“He was very focused on the company continuing to move forward,” Bakish says of Redstone in that era. “He could get pretty intense.”

Read Variety’s Bob Bakish cover story here

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