Sumner Redstone on The Huffington Post

Sumner Redstone Sells Shares Of Viacom, CBS

2009-10-14T09:56:41Z

Sumner Redstone Sells Shares Of Viacom, CBS

2009-10-14T07:33:21Z

NEW YORK — Media mogul Sumner Redstone's holding company, National Amusements Inc., is selling some of its stake in CBS Corp. and Viacom Inc. as well as 35 movie theaters to pay off its debts.

The moves will raise around $1 billion in cash and allow National Amusements to meet a $500 million debt payment this month, alleviating concerns that the company could lose control of the media conglomerates or run into trouble with its creditors.

With the asset sales, National Amusements will retain more than 75 percent voting control of both CBS and Viacom while helping pay off some $1.46 billion in debt.

The company ran into problems with its debt late last year as stocks tumbled and the credit markets seized.

It said it did not intend to reduce its stakes further.

"As a result of our actions, National Amusements will be out of debt with its existing creditors and will still control its most important assets," Redstone said in a statement Wednesday.

CBS shares rose 37 cents, or 3.1 percent, to $12.52 in Wednesday trading while Viacom shares climbed 49 cents, or 1.6 percent, to $30.58 as analysts viewed the debt payback positively. CBS and Viacom shares have climbed about 50 percent since the start of the year, amid signs that advertising was recovering with the economy.

CBS reaffirmed its operating profit guidance for the year, expecting between $1.73 billion and $1.93 billion. Viacom stopped providing a specific forecast last year.

"We do not view this sale as a negative read for either stock or our advertising recovery thesis," said Morgan Stanley analyst Benjamin Swinburne.

He said the resolution of National Amusements' debt problems should remove fears of further stock sales.

Besides the share sales, National Amusements will sell 35 theaters it considers noncore assets in the Midwest and "south of New York," according to a person familiar with the company's plans. The person would not elaborate on the locations.

Combined with a tax refund from selling its controlling stake in video game maker Midway Games Inc. last year at a loss, Redstone's company will have just "a small amount" of debt left to refinance, said the person, who was not authorized to speak publicly and spoke on condition of anonymity.

Dedham, Mass.-based National Amusements expects to raise $600 million selling shares of Viacom, which includes the Paramount movie studio as well as cable networks MTV and Comedy Central, and $345 million from shares of CBS, which runs the CBS broadcast network and pay-TV channel Showtime Networks.

It is selling all of its nonvoting shares in both companies and converting some of its voting shares into nonvoting shares, which it will then sell as well. Both transactions are being underwritten by Citigroup Inc. and JPMorgan Chase & Co. Pricing is expected to be set after the market close on Wednesday.

Since last December, National Amusements had been looking for buyers of some 45 multiplex theaters, with 593 movie screens, to help reduce its debt load, a person with detailed knowledge of the offer told The Associated Press at the time.

Redstone and his daughter, Shari, who is National Amusements' president and owns a minority stake in the company, had been personally calling potential buyers in hopes of raising $230 million to $280 million from the U.S. movie screens, according to the person, who spoke on condition of anonymity because the discussions were supposed to be confidential.

National Amusements planned to keep 28 theaters, with 368 screens, located in Massachusetts and New York. Its theaters operate under other brand names, including Showcase, The Bridge and Multiplex Cinemas.

The sale detailed Wednesday suggested it had followed through with its plans. It was unclear how much money the company raised through its sale of the theaters.

National Amusements also owns movie theaters in the U.S., U.K., Latin America and Russia.

The falling value of CBS and Viacom shares pushed the company into violation of its debt terms last year. Its lenders, led by Bank of America, forced the company to sell off $233 million in Viacom and CBS nonvoting shares last October. At the time, Redstone vowed not to sell any more of its stake in the companies to pay off the debt.

Weeks later, with $800 million in payments coming due Dec. 19, he sold his family's controlling stake in Midway Games for less than a penny per share, helping National Amusements offset its taxable gains.

It restructured $1.46 billion of borrowings in May, pushing the debt's maturity to Dec. 31, 2010, with certain payments due this year and next.

___

Ryan Nakashima reported from Los Angeles.

Henry Blodget: Is CBS Really Going Bankrupt?

2009-10-07T15:18:33Z

Two weeks ago, CBS was flagged by Audit Integrity as one of 10 big companies at risk for bankruptcy.

This prompted an outraged denial by CBS.

Now, as the banking collapse illustrated, any time a company denies that it's about to go bankrupt, it makes sense to assume that the company is indeed about to go bankrupt--and then analyze the situation for yourself.

I did that for CBS. Here's the bottom line:

CBS is not on the verge of bankruptcy. The company is, however, highly leveraged, and its cash flows have been deteriorating rapidly. So if current trends continue, the company will be forced to cut more costs or risk violating debt covenants. If CBS's cash flows keep deteriorating after that, it will very much be on the verge of bankruptcy.

CBS has also blown billions in recent years stupidly buying back its own stock at much higher prices--shareholder value destruction at its finest. So the company's weak financial position is very much of its own making.

THE SITUATION

Here's a snapshot of CBS's current financial position:

Cash: $341 million
Debt: $7 billion

That's called leverage!

Meanwhile, CBS's cash flows have been precipitously declining:

2006 Free Cash Flow: $1.5 billion
2007 Free Cash Flow: $1.7 billion
2008 Free Cash Flow: $1.7 billion
2008 Free Cash Flow (through June): $1.4 billion
2009 Free Cash Flow (through June): $250 million

In other words, cash flow for the first six months (operations less capex) dropped from $1.4 billion to $250 million in a single year. CBS had better hope those trends don't continue.

Importantly, right now, the cash flows from CBS's business are still positive. This will make it much easier for CBS to continue to roll over its debt (which it has been doing) and avoid violating its debt convenants, which it may be coming close to doing.

CBS's cash flows have fallen so much, however, that it is running out of cash flow from operations to make its dividend payments. (So far this year, CBS has paid $228 million in dividends, which pretty much wipes out its cash flow.) This is why CBS recently slashed its dividend to $0.05 per share. If CBS's cash flows deteriorate further, the company might have to discontinue its dividend completely.

Any time a company has as much debt as CBS does relative to its cash balance, it is critical that the company be able to continue to roll its debt over--paying back upcoming bonds by issuing new bonds with later maturities. Fortunately, at least as of this spring, CBS still seems to be able to do this:

On May 13, 2009, CBS Corp. issued $350.0 million of 8.875% senior notes due 2019 and $400.0 million of 8.200% senior notes due 2014. On June 2, 2009, CBS Corp. issued $250.0 million of 8.875% senior notes due 2019. Interest on these senior notes will be paid semi-annually. The senior notes are fully and unconditionally guaranteed by CBS Operations Inc., a wholly owned subsidiary of CBS Corp.

During the six months ended June 30, 2009, the Company repurchased $978.3 million of its 7.70% senior notes due 2010 resulting in a loss on early extinguishment of debt of $29.8 million.

As long as CBS can continue to issue new debt to repay its old debt, it will be fine. What will cause it NOT to be able to issue new debt will be if its cash flows fall so low as to violate its debt convenants (which could technically put it in default), or if the credit markets seize up again. This could make it harder for the company to issue new debt.

Right now, as long as CBS's cash flows don't fall much farther, it has a $3 billion line of credit it can draw down to make interest and other payments. If CBS thinks its cash flows are going to deteriorate further, the company will likely draw down hard on this line to make sure it has enough cash going forward. As of June 30, the company had some clearance left:

At June 30, 2009, the Company had a $3.0 billion revolving credit facility which expires in December 2010 (the "Credit Facility"). The Credit Facility requires the Company to maintain a minimum Consolidated Coverage Ratio, as defined in the Credit Facility, of 3x for the trailing four quarters. At June 30, 2009, the Company's Consolidated Coverage Ratio was approximately 4x. The primary purpose of the Credit Facility is to support commercial paper borrowings. At June 30, 2009, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.80 billion.

So, depending on what happened in Q3, CBS may still be able to draw down on this line. This should allow the company to meet all of its near-term cash needs, even if it suddenly can't roll over its commercial paper or debt.

IMPORTANT: If there is any risk that CBS's trailing cash flow ratio will fall below 3X--which there would appear to be, given the rate of decline over the past year--CBS should draw down hard on the line to give itself some breathing room. Hopefully, it has already done this.

WHAT HAPPENS IF THE ECONOMY CONTINUES TO DETERIORATE?

Assuming ad spending has bottomed, CBS will be fine. If ad spending continues to shrink, however, the company will have to cut costs to keep its cash flows strong enough that it doesn't violate its debt convenants.

CBS says it has the ability to manage programming and other costs, so reducing its cost base modestly shouldn't be a problem:

To the extent that the Company's future operating cash flow is negatively impacted by the continued weakened economy, the Company has the ability to curtail certain non-committed programming, capital and other spending.

So if ad spending continues to shrink, CBS will likely cut the spending referred to above. If spending continues to shrink after that, it will have to cut more. Eventually, it will run out of things it can cut without destroying the value of the business, at which point bankruptcy will be a real risk.

THE BOTTOM LINE:

CBS does not appear to be at risk of near-term bankruptcy. It is in a weak and deteriorating financial position, however. And this condition is in large part due to its own stupidity.

Like other media companies, CBS has blown billions of dollars buying back its own stock in recent years--at prices 2X-3X today's demolished level. This is shareholder-value destruction at its finest. And it has put the company in a far weaker position than it should be today.

See Also:
10 Big Companies Veering Towards Bankruptcy

Charles Warner: Content Is Not King

2009-09-23T13:44:34Z

Content in not king, unless your first name is Stephen.

In an article in the October issue of The Atlantic titled "The Moguls' New Clothes" authors Bruce Greenwald, Jonathan Knee, and Ava Seave write:

Media executives lament what the Web has done to their business. But that complaint conveniently ignores the dismal financial performance of most media conglomerates in the pre-digital era. Until media companies are willing to get back to basics and jettison the flawed thinking that has guided them over the past two decades, they will continue to disappoint their shareholders.

To support their claim, the authors list four myths that have led media moguls such as Rupert Murdoch and Sumner Redstone to disappoint shareholders: 1) Growth Is Good, 2) The Gospel of Going Global, 3) Content Is King, and 4) The Cult of Convergence.

The myth that most resonated with me was that content is king. Here's what Greenwald, Knee, and Seave write about this myth:

But content cannot be king, because the talent required to create it cannot provide a sustainable competitive advantage. Even if the ability to produce compelling content perennially inhered in certain individuals or groups, there is no efficient way to monetize this skill for the benefit of shareholders rather than for the producers themselves. Big media companies may consistently exploit some creative artists, but over time, that exploitation does not produce superior corporate value. For starters, where the media companies have executives clever enough to consistently exploit the talent, these executives are typically clever enough to ensure that they are paid enough to reflect that skill. Furthermore, when particular brands seem like sure things, as in the case of a popular film franchise, more often than not a well-represented creative artist essential to that level of certainty ends up appropriating much of that value.

Furthermore, the explosive growth of the Internet has led to such a proliferation of content out in the long tail that it is now virtually infinite. To say that "content is king" in today's world is like saying "a grain of sand is precious."

There are gems mixed in with the infinite content, but the conundrum is finding those jewels. In the age of the Web, the puzzle has been solved by Google, which has become the largest media company in the world by being an aggregator of content, not an originator, a creator of content.

Content is no longer king, marketing and search are the rulers now. If excellent content ruled, the best movies would be the most popular. But the movies that sell the most tickets are the ones that are marketed the most heavily, regardless of their artistic merit. And as the authors of The Atlantic article point out, established, branded creative artists such as actors and directors end up appropriating much of the value of a hit movie, leaving the corporate conglomerates with barely enough profit to cover the fixed costs of a bloated distribution and marketing bureaucracy.

If creative types such as actors, directors or writers -- Stephen King, for example -- establish a well-known personal brand, they don't need the media moguls' swollen bureaucracies to exploit them: they are in the driver's seat. See Stephen King's slick and robust Web site for a model of effective self-marketing, self-distribution, and an artist capturing the majority of his content's value.

You can see from Stephen's Web site that content is king only if it's capitalized.

Dan Rather's $70 Million Case Against CBS Moves Forward

2009-09-21T23:13:59Z

NEW YORK, Sept 21 (Reuters) - A New York judge on Monday rejected CBS Corp's (CBS.N) bid to dismiss former TV news anchor Dan Rather's $70 million lawsuit claiming he was fired over a controversial election-year report on former President George W. Bush's Vietnam War-era military service.

Charles Warner: A Hippocratic Oath for Media Executives

2009-09-02T09:34:33Z

This week, as I prepare to teach my first graduate class, Media Sales and Sales Management, I'm recording the first two presentations I give to students: "What Is Selling" and "Sales Ethics."

I begin the semester with the ethics presentation/lecture to reinforce the vital importance of being honest with customers (advertisers) and consumers (readers, viewers, users), especially in the current environment in which the media in general has such a bad reputation and low credibility.

The slide of the media into the reputational gutter is greased by the emotional, hateful, and pandering ranting of entertainers, wearing the transparent mask of commentators, such as Glenn Beck, Bill O'Reilly, Keith Olbermann, and Rush Limbaugh. The consistently top-rated program on cable TV is "professional" wrestling, and porn or semi-pornographic content on the Internet continues to thrive.

Julia Angwin's excellent book, Stealing My Space tells a story of greed and unethical business practices in pursuit of personal wealth and individual interests rather than any consideration of the public's interest.

Rupert Murdoch bought the smarmy My Space for strategic reasons -- to make his News Corp. empire more profitable -- which is why he tolerates Beck's and O'Reilly's hateful ranting on Fox News.

I don't want my students at The New School in the Media Management Program to become Rupert Murdochs or Sumner Redstones (Viacom and CBS) -- people who are obsessed with their personal wealth and not in the least bit interested in the public interest. Therefore, in addition to teaching ethics as an integral part of the four courses I teach at The New School, I ask students to take the Hippocratic oath for managers, as proposed by Rakesh Khurana and Nitin Nohria in "It's Time to Make Management a True Profession," (Harvard Business Review, October 2008)

Here's the oath:

A Hippocratic Oath for Managers

As a manager, I serve as society's fiduciary for one of its most important institutions: enterprises that bring people and resources together to create valued products and services that no single individual could produce alone. My purpose is to serve the public's interest by enhancing the value my enterprise creates for society. Sustainable value is created when the enterprise produces an economic, social, and environmental output that is measurably greater than the opportunity cost of all the inputs it consumes. In fulfilling my role:

I recognize that any enterprise is at the nexus of many different constituencies, whose interests can sometimes diverge. While balancing and reconciling these interests, I will seek a course that enhances the value my enterprise can create for society over the long term. This may not always mean growing or preserving the enterprise and may include such painful actions as its restructuring, discontinuation, or sale, if these actions preserve or increase value.

I pledge that considerations of personal benefit will never supersede the interests of the enterprise I am entrusted to manage. The pursuit of self-interest is the vital engine of a capitalist economy, but unbridled greed can be just as harmful. Therefore, I will guard against decisions and behavior that advance my own narrow ambitions but harm the enterprise I manage and the societies it serves.

I promise to understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct, that of my enterprise, and that of the societies in which it operates. My personal behavior will be an example of integrity, consistent with the values I publicly espouse. I will be equally vigilant in ensuring the integrity of others around me and bring to attention the actions of others that represent violations of this shared professional code.

I vow to represent my enterprise's performance accurately and transparently to all relevant parties, ensuring that investors, consumers, and the public at large can make well-informed decisions. I will aim to help people understand how decisions that affect them are made, so that choices do not appear arbitrary or biased.

I will not permit considerations of race, gender, sexual orientation, religion, nationality, party politics, or social status to influence my choices. I will endeavor to protect the interests of those who may not have power, but whose well-being is contingent on my decisions.

I will manage my enterprise by diligently, mindfully, and conscientiously applying judgment based on the best knowledge available. I will consult colleagues and others who can help inform my judgment and will continually invest in staying abreast of the evolving knowledge in the field, always remaining open to innovation. I will do my utmost to develop myself and the next generation of managers so that the profession continues to grow and contribute to the well-being of society.

I recognize that my stature and privileges as a professional stem from the honor and trust that the profession as a whole enjoys, and I accept my responsibility for embodying, protecting, and developing the standards of the management profession, so as to enhance that respect and honor.

Don't you wish we could get executives and managers in the media to take this oath and then to live up to it?

Jasmine Boussem: The Curious Case of Sumner Redstone

2009-05-04T15:20:08Z

Ever since I returned on Wednesday from the Milken Global Conference, I have had the inescapable conviction that I am truly a privileged person. It seems that I have actually been in the presence of history's first immortal human.

With a packed room in attendance, Sumner Redstone was being interviewed by no-less-a- personage than the world's foremost celebrity host, Larry King. Regardless of the question posed by his interviewer, himself no stranger to longevity, Redstone consistently circled back to the topic of his own immortality. "I have no intention of ever retiring, or of dying," he said. "I'm 'The Curious Case of Mr. Redstone.'"

Since nobody swore me to secrecy, here it is: Sumner Redstone's diet tips for anyone who intends, as he clearly does, to live forever.

"I eat all the antioxidants I can get until 12 every day. That includes Goji berries, Green Machine smoothie and tomato juice. I usually skip lunch because I am so full from my breakfast. For dinner I eat fish every night without fail. And to top it off, I drink a shot of vodka every night."

"Why?" you may ask, as did Larry.

"Because it's a wonderful antioxidant" he said, "but they don't want to tell you because they are afraid you will abuse it."

Who knew vodka was so good for your health? He also mentioned that his great physique is due to a 90-minute daily workout. "I work out everyday no matter what, I am very disciplined," he bragged.

The conversation was classic Larry King light banter, sharpened slightly by moments of his trademark gentle sarcasm, and punctuated by manifestations of Redstone's profoundly delusional state. When Larry king asked him how old he was, he announced that he was 65. Larry gently persisted. "Come on tell the truth, I am 75 so you can't be 65." Redstone, who is known to be 85, maintained with a straight face that he was 65, to which Larry responded, "Then you don't look that great for your age!"

Like the great interviewer he is, Larry knows when he has a guest who will hang himself over and over, so he kept paying out rope, leading him on with mock innocence "So if I was to do your eulogy, what should I say? Should I simply say: He lied? "

"The people who fear dying are people who are going to die. I'm not going to die. I'm going to live forever," said Redstone." I feel as if I was 20," he said, "in every way, even sexually." I would like to add a personal note here, and just say that I instinctively have some serious doubts about that little piece of braggadocio.

Though Redstone seemed completely serious, there were moments when he may have been indulging in facetious self-mockery. Larry asked him about his relationship with his employees, and his answer is hard to interpret. "I treat everyone like family." Given the state of his family affairs, this might be more admission than self congratulation. In any case, his employees should get used to him, since he is apparently going to be in charge forever. I know what you are thinking: In many religions, that is the definition of God.

During the Q & A part of the discussion, almost every time a woman would ask a question, he would first ask whether or not she was married, and if she was, he would just use it to confirm his stated theory that all the attractive women are married. Perhaps Redstone is one of those people who have used their intellect to create clever mechanisms for believing whatever they want to, and blinding themselves to inconvenient facts pointing to the contrary.

Shelly Palmer: Disney Inks Deal with Hulu: MediaBytes with Shelly Palmer May 1, 2009

2009-05-01T09:52:13Z

Disney has officially become an equity-owning partner in NBCU-Fox venture Hulu. The deal ensures that programming from both ABC and the Disney Channel, amongst other Disney owned networks, will air on the popular streaming site. CEO Robert Iger noted that "Disney and Hulu share a focus on delivering the highest-quality entertainment experience and we look forward to working with Hulu to build value for our consumers, our brands and our shareholders."

While many company's are reporting record loses, Comcast noted a 6% increase in for the first quarter. An increase in subscribers, without much of a discount, helped the cable-telco raise the average revenue per subscriber. Analysts are cheering Comcast for being able to both reduce spending and double its cash flow.

Viacom's profit fell 34% in the last quarter, with its net income falling from $270 million to $177 million year over year. The earnings report was hindered by Paramount, whose loses increased from $63 million to $123 million. In reaction, Chairman Sumner Redstone noted that Viacom is in the preliminary stages of selling its National Amusement chain of movie theaters.

Microsoft released the latest version of Windows yesterday. While it was just a beta release of the new Windows, pundits have noted significant changes to the OS, with Engadget noting that it is "a really cleaned up, streamlined, nicer looking version of Vista." Microsoft certainly has a long way to go in changing public opinion of Windows after the Vista fiasco, its positive to note that the company is taking action in getting its feet back on the ground.

David Zazlov, CEO of Discovery Communications, has inked a deal with Hasbro to transform Discovery Kids into a JV that will relaunch next year with a new name. Zazlov successfully transformed three other Discovery Networks: Discovery Times turned into Investigation Discovery, Discovery Home become Planet Green and Discovery Health will soon emerge as Oprah's OWN.

Shelly Palmer is a consultant and the host of MediaBytes with Shelly Palmer a daily show featuring news you can use about technology, media & entertainment. He is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted: The Transition from Network to Networked TV (2008, York House Press) and the upcoming, Get Digital: Reinventing Yourself and Your Career for the 21st Century Economy (2009, Lake House Press). Shelly is also President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy Awards). You can join the MediaBytes mailing list here. Shelly can be reached at shelly@palmer.net For information about Get Digital Classes, visit www.shellypalmer.com/seminars

Viacom Earnings Fall 34%

2009-04-30T08:35:41Z

NEW YORK — Media conglomerate Viacom Inc. said Thursday its first-quarter profit fell 34 percent, hurt by falling ad and entertainment revenue. But there are signs things may be easing.

Chief Executive Philippe Dauman in a conference call pointed to signs of an advertising turnaround, a critical factor for the company's cable properties.

Malia Andelin: Sumner Redstone Linked To Flight Attendant In Her 20s

2009-03-01T08:57:08Z

Billionaire Sumner Redstone is back in circulation.

With his divorce from second wife Paula Fortunato due to become final shortly, the 85-year-old Viacom chairman has been getting to know a fetching blond about six decades his junior.

Redstone's rep, Carl Folta, confirms he's been seeing a bit of Malia Andelin, who used to work as a flight attendant on one of Viacom's jets.

Sumner Redstone Wins Debt Restructuring Deal, Buys Two Years' Breathing Room

2009-02-27T22:55:16Z

LOS ANGELES — Billionaire media mogul Sumner Redstone's family theater chain, National Amusements Inc., said Friday it has reached an agreement in principle to restructure $1.46 billion worth of debt.

The announcement partially resolves a looming question about the company's finances, and potentially relieves an issue weighing down the shares of Viacom Inc. and CBS Corp., which Redstone controls through National Amusements.

Viacom's Redstone Optimistic As Profit Falls

2009-02-13T21:35:58Z

The various legacies of Sumner M. Redstone, the 85-year-old mogul, were rippling across the media industry on Thursday.

Midway Games, the Chicago video game company in which Mr. Redstone sank hundreds of millions of dollars before selling it for a pittance late last year in the face of personal financial problems, filed for bankruptcy protection. The company, best known for producing the video game Mortal Kombat, was probably the worst investment of his career.

Ed Madison: CBS Can't Die

2009-01-12T10:19:55Z

This article was originally posted on the Engaging Media Blog on January 7, 2009.

I was blindsided when I read that the future of CBS network might be in jeopardy. Reports surfaced in mid-December that Viacom Chair Sumner Redstone could be forced to sell his controlling interest to pay off massive debts. Then MediaPost analyst Diane Mermigas listed the network among her predicted casualties for 2009. I had to read it twice to make sure I wasn't missing something. Surely, this couldn't be true.

Other analysts predicted there would be plenty of interest in Viacom's attractive portfolio of cable assets that includes MTV and Nickelodeon. But, "few would want CBS, even at bargain prices." Was the sky falling? First the 160 year-old Tribune Company files for bankruptcy protection. Now, nobody would want CBS?

A younger generation may be immune to matters of corporate consolidations and liquidations that seem to take place on a weekly basis. After all, they're not watching CBS anyway. But for "old media" diehards like me, this is a major upset.

CBS was the "Tiffany Network" -- the house of Edward R. Morrow, Walter Cronkite. They wrote the rules of broadcast journalism that informed and inspired several generations. This was the network that pioneered with such series as All in the Family and M*A*S*H, and before them The Honeymooners and I Love Lucy. Of course they also gave us The Dukes of Hazard, and The Beverly Hillbillies, but it all added to a memorable mix of pop culture entertainment.

I partially jest in suggesting that if given the choice between bailing out the American auto industry vs. CBS, I'd pick CBS. Entertainment is arguably America's most significant export. Plus, if you factor in the music legacy left by CBS Records it is something to consider. The "hearts and minds" of our former enemies have been won because they seek to emulate our culture, which they witness through our entertainment.

What many may miss is that the legacy media brands were built by people that shared a unique sense of purpose and passion about their work because of the high level of responsibility that came with it. As one of just two or three networks delivering the news and high quality entertainment the stakes were always extremely high.

That's not meant to diminish the hard work and passion that goes into creating content for cable and other newer platforms. That's a world I know equally well. However, "back in the day," working for one of the "big three" was a true sign of accomplishment.

While in my twenties, I was fortunate to be hired by broadcast veteran Bob Shanks to serve as the west coast producer/director for the CBS Morning Program, featuring Mariette Hartley. It was among the many short-lived and failed attempts to compete with NBC's stalwart Today Show.

I can recall the day I directed my first live Los Angeles feed into the coast-to-coast broadcast. This was from the same control room and studio where Carol Burnett and Sonny & Cher had originated. Could this really be happening to me? That session and many more went off without a hitch -- it was a defining moment in my career.

Years earlier, right out of college, I was hired to join the team that launched CNN. Visionary Ted Turner had this crazy notion that people would want to watch 24 hours of non-stop news. The naysayers questioned whether there was enough going on in given day to warrant such a venture? Today we have three news networks and many still pose that same question.

It didn't help that we were launching an entire network with a budget that was a fraction of what CBS was spending on its half-hour evening news. Often brash and rarely predictable, Ted Turner made an unsuccessful bid to acquire CBS in the mid-1980's. Say what you will about Ted, but he always saw beyond conventional wisdom and was often right.

Many of the old guard at CBS will admit to being envious of CNN and still regret that they were unable to convince their management at the time to make the bold move that Ted did in launching the network. CBS as the brand behind "America's most trusted news network," would have made perfect sense.

But wait. Perhaps it's not too late to ponder the possibilities. Time-Warner, now owner of CNN, is often mentioned as a likely suitor for the troubled CBS assets. Ted Turner was Time Warner's Vice-Chairman and biggest stockholder until he stepped down in 2006. He's a senior statesman in the media business at this point in his career. But perhaps Ted has one more visionary move to orchestrate: the brokering of a deal that would preserve the legacy of CBS News by merging it into the Time-Warner/CNN family. Plus, TBS, TNT and the other Turner networks would certainly benefit from having the CBS entertainment library.

Sumner Redstone's Portfolio Profile: Sex Life, Stallone Battle, Moonves Critique, Shari Sentimentalism

2009-01-07T09:19:11Z

Portfolio features Sumner Redstone on its February cover with a story, titled "Sumner's Discontent," written by Lloyd Grove.

The crux of the article is that while Redstone's assets are crumbling, it's his troubled family life — he famously feuds with his daughter Shari, and he and wife Paula Fortunato recently split — that is "more painful" for the "latter day King Lear."

The full, 4,841-word article, can be read online here at Portfolio.com, but some of the highlights appear below:

Redstone and Fortunato would often talk openly about their active sex life

Their friends talk about their sexual chemistry--and Sumner's libido. "I had a feeling they were always playfully arguing with each other, saying 'Go fuck yourself' and holding hands," says one frequent dinner companion. "Both of them love to talk about sex. Normally, if you make a dinner appointment with Sumner, he shows up on time, but if they show up 15 minutes, half an hour late, they might say, 'We had sex four times today!' "

Redstone reportedly screamed at Fortunato, "Why don't you just fuck him already, so we can go home?" while she was flirting with next-door neighbor Sylvester Stallone

The Redstones' profanity-laced arguments were the talk of the entertainment industry. Sylvester Stallone, their next-door neighbor in Beverly Park, figures in a widely repeated anecdote that Redstone denies. According to two Hollywood insiders who spoke with Stallone and his wife, Jennifer Flavin, Redstone erupted a year ago at one of Arnold and Anne Kopelson's regular Sunday-night movie screenings, when Redstone was anxious to leave and Paula tarried to schmooze with Stallone. "Why don't you just fuck him already, so we can go home?" Redstone allegedly shouted. Stallone--who friends say was outraged by Redstone's remark--declines to comment.

Redstone hopes Fortunato, 47, can still have a baby after they split

She listens, poker-faced, as Redstone tells me, "I would hope she will meet someone nice, who treats her well and isn't after her money--because she'll have a lot of money. And I hope she has a baby. She could still have a baby at her age." In an aside so implausible that it requires suspension of disbelief, Redstone adds, "She is the first lady not just of Viacom, but of Hollywood, and she will continue to be." At one point, Paula excuses herself to retrieve their four dachshunds, and as she leaves the room, she pinches Redstone's left earlobe in a showy display of affection.

Redstone charges that CBS chief Les Moonves "overpaid" in his acquisition of CNET

As he sits in his living room, his P.R. man scribbling notes, Redstone takes a swipe at Moonves. He tells me that Moonves, a hard-charging, universally respected television programmer, "overpaid" for CNET, a group of internet sites that CBS acquired last summer for $1.8 billion. While that's a commonly held view on Wall Street, it's more than a little alarming to hear it endorsed by Redstone, who, as executive chairman of CBS's board, signed off on the CNET purchase price. He airily brushes off responsibility. "You have to understand the way I operate. I'm extremely nonintrusive," he says with no apparent irony. "I told Les that I and many investors did feel that the price he paid was too high," Redstone adds. "I made no bones about it."

Moonves declines to be drawn into a public spat with his boss. "You'll have to get that from him," he says. "I've talked to him a number of times about [CNET] and went through it." He adds, "There's not a major move I make without checking with him and making sure he's okay with it."

On his tumultuous relationship with daughter Shari

At one point during our conversation at his home, Redstone suddenly waxes sentimental about their filial bond, saying, "We have a very loving relationship--she has been the love of my life. When she was a baby, I was the only one she would let feed her."

Then he hands me a document to demonstrate their continued closeness. Dated last May, it's a fax from Shari's office at National Amusements headquarters in Dedham, Massachusetts, responding to her father's request for a one-on-one meeting in Los Angeles. The note, typed completely in capital letters, is fraught with subtext: i've been giving it a lot of thought and for a variety of reasons i don't think that it makes sense for us to get together next week, it begins. i apologize for any inconvenience to you but i have another idea, she goes on, suggesting that they meet the following week in New York, ...perhaps with the kids (or even my mother) as i would like to keep this strictly social and feel it may be easier to do that here in ny with family. It closes with the word love, but a secretary had signed Shari's name.

These days, Redstone and his daughter communicate almost exclusively in writing or through spokespeople trading statements in the media.

Read the full article here.

Vicky Ward: Spot the Next Madoff is Our New Parlor Game

2008-12-15T09:26:54Z

It began with the names of corporate victims who had lived high on debt, such as Viacom CEO Sumner Redstone, casino king Sheldon Adelson and Lehman president Joe Gregory. They lost houses, planes or boats worth millions. Who knew they financed their mansions with debt?

Now it's our turn. Friday's unveiling of Bernie Madoff's alleged $50 billion pyramid scheme is only the tip of the iceberg of lost fortunes emerging from the depths. Madoff's fall has shaken this town to its core. The 70-year-old financier was lionized here. He gave millions to charity and made himself so hard to get to if you wanted to invest with him that his allure proved too tempting for many. The names of prominent locals whose fortunes have in all likelihood disappeared is long. "How could so many rich, smart people have been taken in?" people are frantically emailing each other. But they were.

So now we're confronted with a new reality. With it comes a new kind of unpleasant gossip. Can they really afford their lifestyle? Is the question being asked about you, about your friends and about your friends' friends?

Everyone is looking for the smallest sign that you might be both a broker and a victim of the credit crunch. In other words, did you fall for a Madoff, did you over-extend? Were you too stupid to see what was clearly a conflict of interest in banks on Wall Street, too stupid to see the whole system was over-leveraged? People look to see if you are wearing the same dress over and over again. Do you entertain less? Has your jewelry changed? Are you drinking more?

As you eat and drink among so-called friends, bare acquaintances ask you baldly if you've heard that so-and-so has lost their house and by the way, how have you financed your own home? The subtext is clear: you might lose yours too.

This schadenfreude is dressed up as a more serious intellectual discussion about the anticipated social leveling or the day of reckoning for the nouveau riche in the wake of the recession. But really, all anyone wants to know is who made sage financial decisions and who didn't. In other words, null points if you were a mini Sheldon Adelson or invested with Madoff; a full 10 if you stayed away from the Vegas of the boom years.

This article was originally published by the London Evening Standard

Sumner Redstone Sells Control Of Video Game Company Midway To Help Ease Debt

2008-12-01T07:57:54Z

In an effort to help resolve his debt problems, Sumner Redstone has sold his controlling stake in videogame company Midway Games Inc. to a private investor.

Mr. Redstone's holding company, National Amusements Inc., is expected to announce Monday that it sold its 87% stake in Midway to investor Mark Thomas, a move that represents a significant loss on the media mogul's investment but secures a hefty tax benefit as he negotiates other asset sales.

National Amusements is in negotiations with its banks to restructure its $1.6 billion debt pile after breaching one of its debt covenants. As part of the restructuring, the Redstone family has been discussing selling some of its assets, including some movie theaters and a holding in slot-machine company WMS Industries.

The sale of the Midway stake, agreed upon Friday, wasn't conducted as part of a deal with the banks but is likely to ease the pressure on the Redstone family and potentially contribute to a final deal.

Sumner Redstone May Sell CBS, Possibly No Longer Billionaire

2008-11-25T07:39:31Z

Sumner Redstone, the controlling shareholder of CBS and Viacom, saw both those stocks hit five-year lows last week, further exacerbating what has already been an incredibly rough autumn. And while he has previously maintained that he will not sell CBS, the New York Times' Tim Arango reports that he is open to the sale — and is more seriously considering selling off his family's 1,500-screen movie theater chain to restructure his $1.6 billion in debt:

In an effort to stave off the dismantling of his media empire, Sumner M. Redstone, the controlling shareholder of Viacom and CBS, recently proposed to sell his family's 1,500-screen theater chain in an effort to restructure his large debt load.

The proposal was made in a plan submitted to his bankers, according to two people briefed on the negotiations who spoke on condition they not be identified. But the proposed sale may not be enough to placate bankers, not least because no one can seem to agree on what the movie theaters are worth.

Here is what just about everyone, including those in Mr. Redstone's inner circle, agrees on: if it gets bad enough, Mr. Redstone has indicated he would be willing to part with CBS, but not Viacom, according to three people briefed on the talks who, like the others involved, spoke on condition of anonymity.

On the personal level, Redstone's debt and the tanking stock price calls into question his net worth, which may now be below $1 biillion:

In the swirl of these discussions is the question of Mr. Redstone's personal wealth. Just three months ago, Mr. Redstone was listed by Forbes magazine as the 66th-richest American with a net worth of $5.1 billion.

But now much of his wealth -- at least that which is tied to the stock prices of Viacom and CBS -- has evaporated, and it is unclear if Mr. Redstone remains a billionaire because it is unclear how much money he has outside of National Amusements, other than personal holdings in Viacom and CBS that together are worth around $10 million.

Half the debt, or $800 million, comes due on Dec. 19. Mr. Redstone recently said publicly that the talks with banks had been going smoothly and that the value of the assets held by National Amusements "well exceeds its debt."

The underlying value of those assets may be much greater than the debt, but the amount they could fetch on the market is unclear. Based on Monday's closing prices of Viacom and CBS, the value of National Amusements' stake in the two companies is about $1.4 billion.

Previously in Redstone's Rough Fall:
Redstone Assures Investors, Can Cover $1.6B Debt [November 14, 2008]
Sumner Redstone Struggling To Get Agreement On Refinancing [October 28, 2008]
Sumner Redstone May Have To Sell More Viacom, CBS [October 23, 2008]
Sumner Redstone Divorces Wife Paula Fortunato [October 21, 2008]
Sumner vs. Shari: Redstone Family Feud Continues Over Share Sell-Off [October 15, 2008]
Sumner Redstone's Credit Crisis Hits CBS And Viacom [October 11, 2008]

Shelly Palmer: Google, Yahoo Revise Search Deal: MediaBytes With Shelly Palmer

2008-11-04T09:31:23Z

Google and Yahoo will narrow the focus of their search ads deal in order to win approval from the Department of Justice. The revised plans have a two-year limit on the deal, which was expected to last ten, while revenue Yahoo can earn from Google ads place next to search queries has been capped at 25%. Under the original deal, Yahoo could have used as many Google ads on their search page as it wanted.

FCC chairman Kevin Martin canceled a vote on whether or not to revamp the system in which phone companies pay each other to transfer calls. After Martin canceled the vote, four commissioners criticized his decision. Analysts believe the proposed plan would have meant millions of dollars in increased revenue for large communications companies and would have seriously damaged small to midsize carriers.

Viacom earnings barely beat expectations for the third quarter but net income was down 37% compared with last years 3Q, which included profits from the megahit Transformers. CEO Phillipe Dauman noted that the media conglomerate was feeling the effects of weak ad budgets from the auto, beverage and gaming industries.

Brightcove is getting rid of its free, ad supported hosting service. The company is also shutting down its Brightcove.Tv site, which acts as a gallery for videos. Brightcove, which makes 99% of its money from corporate subscription clients like WSJ and HBO, said free, ad supported hosting didn't generate enough revenue to keep the service going.

Plus, today's consulting question, "What is P4P and does it work?" Shelly has the answer on today's MediaBytes.

Shelly Palmer is a consultant and the host of MediaBytes a daily show featuring news you can use about technology, media & entertainment. He is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted: The Transition from Network to Networked TV (2008, York House Press). Shelly is also President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy® Awards). You can join the MediaBytes mailing list here. Shelly can be reached at shelly@palmer.net

Sumner Redstone Struggling To Get Agreement On Refinancing

2008-10-28T11:40:50Z

National Amusements, the movie-theater chain that controls Sumner Redstone's interests in Viacom and CBS, faces the difficult task of getting more than 50 institutions to unanimously agree on revised terms to refinance $800 million of the company's debt, The Post has learned.

The $1.6 billion debt load that National Amusements is carrying is divided into two $800 million pieces - one a bank loan and the other a private placement. The company is trying to refinance both simultaneously.

Sumner Redstone May Have To Sell More Viacom, CBS

2008-10-23T23:38:37Z

But he may still have to sell them. This will create an overhang that won't do wonders for their already demolished stock prices.

CNBC's Charlie Gasparino reports:

Media investor Sumner Redstone, hoping to avoid having to sell Viacom and CBS, will first try to sell other assets of his holding company, National Amusements, if efforts to renegotiate a $1.6 billion loan fall through, people close to the company told CNBC.

Sumner Redstone Divorces Wife Paula Fortunato

2008-10-21T20:01:00Z

LOS ANGELES -- Court documents show that entertainment mogul Sumner Redstone has filed for divorce from his wife of five years.

The 85-year-old executive chairman of CBS and Viacom petitioned for divorce Friday. The documents say Redstone and his wife, 46-year-old Paula Fortunato Redstone, already have a settlement agreement.

Sumner vs. Shari: Redstone Family Feud Continues Over Share Sell-Off

2008-10-15T07:11:47Z

Shari Redstone and her father, Sumner M. Redstone, appear to be battling in public again -- this time over the reason for a large sell-off of shares by the family company, National Amusements.

On Monday, National Amusements, the privately held company that is run by Ms. Redstone, was forced to sell $233 million worth of stock in Viacom and CBS. On Tuesday, the company issued a statement saying that the sale of shares was prompted by market conditions and not by the operation and expansion of the company's theater business.

An article in The Wall Street Journal on Monday said that National Amusements had sold the shares to back a $1.6 billion loan that was used in part to help expand its movie theater chain. While the statement was not attributed to Mr. Redstone, Ms. Redstone apparently felt it was necessary to issue a statement saying that was not the case. Ms. Redstone declined to comment.

Sumner Redstone's Credit Crisis Hits CBS And Viacom

2008-10-11T09:54:19Z

Billionaire Sumner Redstone got caught in the credit crunch Friday.

The 85-year-old mogul, who has long bragged about his financial savvy and competitive drive, was forced to sell a fifth of his family's stake in his two media companies -- Viacom Inc. and CBS Corp. -- on a day when the companies' shares were trading at record lows. It shows that even the wealthiest people are not immune to the meltdown in the markets and are being thrust into once-unimaginable situations.

Jason Notte: The VMAs Need To Call It A Day

2008-09-09T17:43:21Z

Each Labor Day weekend during the late '80s and early '90s, my family would pack up a cargo trailer, hitch it to my stepfather's Firebird, Bronco or Aries K (we didn't believe in keeping cars for great lengths of time) and drive down to a three-bedroom bungalow in a small town along the Jersey Shore.

Though it was acceptable to make the place reek of Old Bay seasoning when crabs were boiled or for extended family -- despite a 10-to-1 people-to-bathroom ratio -- to ignore the packaging on sugar-free salt water taffy that warned of a "potential laxative effect," turning on the television was greeted with derision usually reserved for unshowered subway riders and war criminals. However, a loophole opened for one family-oriented, values-conscious staple of wholesome American programming: the MTV Video Music Awards.

For reasons that remain unknown, our entire weekend ground to a halt once Poison's Brett Michaels and C.C. Deville had a Rock of Love-style catfight and Pee Wee Herman asked us if we had heard any good jokes lately. I swear I saw tears in my stepfather's eyes when Axl not only joined Tom Petty on stage for "Free Fallin'", but made the whole experience less comedic than it sounds.

Like November rain and Axl's hairline, though, nothing lasts forever.

This year's VMA's were MTV's 25th, and should be its last. The Moon Man saw VMA traffic skid to a little over 5 million viewers back in 2006 before Chris Crocker, Perez Hilton and seven million others slowed down last year to look at the train wreck named Britney Spears. That MTV went to the Britney well again this year, and has abandoned any hope for compelling performances or plot lines, makes one long for the days of Eminem battering plastic dog puppets.

Forget that perhaps only Sarah Palin was less qualified to run the festivities than this year's host, Forgetting Sarah Marshall secondary character, British C-lister and Barack Obama cringe-inducer Russell Brand. We're talking about an event that went without a host in 2004, which was still a step up from Buckethead aficionado and comedic dirtnap Jimmy Fallon in 2002. Besides, who even remembers who was hosting in 2001 (we're looking at you, Jaime Foxx), when Spears singlehandedly struck back at al-Qaeda by threatening Osama bin Laden with a large albino python?

The problem is in the performances. This year, Katy Perry took it upon herself to fill Madonna's white lace and garters by reenacting her 1984 "Like A Virgin" performance. Surprisingly, she didn't just sing a song about it. You see, unlike Madonna, who macked on both Spears and Christina Aguilera at the awards five years ago, Perry and her team of "I Kissed A Girl" songwriters only pay lip service to such notions.

That's what the VMAs are missing: the danger, the spontaneity and the solid week of reruns to bring it all back home again. At any moment, Madonna should be prepared to dodge Courtney Love's compact, Izzy Stradlin's face should be ready to absorb Vince Neil's fist and David Lee Roth should brace for the awkwardness when Eddie kicks him out of the band again. Sadly, with the advent of antidepressants and the rise of Disney on the Billboard charts, Kid Rock and Tommy Lee's slap fight last year may have provided the show's last unscripted punch.

Unless Mickey's minions free the Jonas Brothers and Miley Cyrus to go on the same Judy Garland-style benders as some of their Disney pop predecessors, they probably won't be smoking stogies and swinging haymakers anytime soon. Their presence, as well as the presence of the High School Musical 3 cast and Jordin Sparks' "good girls don't" freakout, made this year's awards show a direct reflection of the softer, studio controlled state of modern pop music: a sagging industry banking on troubled artists and propped up by a giant set of mouse ears. Don't worry about Diana Ross playing tetherball with Lil' Kim's breast or both Prince and and the King of All Media showing up bare-assed: MTV's newest generation of artists get all bothered when Annie Leibovitz photographs its back.

Not that bungalows full of viewers have been clinging so tightly to the VMAs, or being wooed by MTV's concessions. Attempts to placate older viewers by consistently nominating the Foo Fighters (quality be damned!), relocating John Norris' hairline each year and keeping Kurt Loder frozen in carbonite between VMAs seem forced. Placing the awards show immediately after a new episode of The Hills and promising no nomination's for Heidi Montag's waterboarding of a video, "Higher," is just patronizing.

Maybe Lauren Conrad can whisper in Sumner Redstone's ear and convince him to throw a farewell party the whole sad affair next year to make way for a two-hour The Hills Go To Hawaiispecial. If Axl can finish A Chinese Democracy before then and Madge could attend the festivities with A-Rod as her kabbalah bracelet, it would be a fitting end to a program intended to honor music videos on a channel that never plays them.

Dan Rather Trial: Les Moonves, Andrew Heyward Scheduled To Testify, Sumner Redstone Also Expected

2008-07-17T12:52:35Z

The chief executive of CBS and the former president of CBS News have agreed to answer questions from lawyers for Dan Rather, who has accused the network of violating his contract by giving him little to do after forcing him off the "CBS Evening News" in 2005.

Lawyers in the case told a New York State Supreme Court judge, Ira Gammerman, late Wednesday, that Andrew Heyward, the former president of CBS News, will give a deposition in late July, and Leslie Moonves, the chief of CBS, would do so in September. Mr. Rather is also seeking to depose Sumner Redstone, the executive chairman of CBS.

Among other claims Mr. Rather is seeking to prove is that CBS mishandled his removal from the anchor chair he had held for nearly a quarter century in the fallout over a September 2004 report for the weeknight edition of "60 Minutes." The report, for which Mr. Rather had served as a correspondent, sought to raise new questions about whether President Bush had received preferential treatment during his Vietnam-era service in the National Guard. After bloggers in particular raised questions about the veracity of the documents that had been used to support the report, CBS said it could not verify their authenticity.