Redstone talks about reasons he tapped Dauman
Redstone dialogue
SepT 6, 2006
After announcing the bombshell news of the CEO shake-up at Viacom Inc., company chairman and controlling shareholder Sumner Redstone spoke Tuesday with The Hollywood Reporter contributing editor Diane Mermigas about his motivation for tapping Philippe Dauman to replace Tom Freston as CEO.
The Hollywood Reporter: You referenced the need for Viacom to be more aggressive in new media. You might have to pay much more for any new-media property such as YouTube or FaceBook today than you would have paid for MySpace 18 months ago -- when you lost it to News Corp. -- because the multiples have gone sky high. Are you prepared to pay those higher prices?
Sumner Redstone: We are not going to make any major acquisitions, not only because we have to be financially disciplined but because there is nothing out there that we would consider a major acquisition for us. Philippe (Dauman) says he wants to grow the company organically, as we have traditionally done, and that he would like to buy some cutting-edge companies at a modest price.
THR: Is there any chance you will take Viacom private?
Redstone: We've been asked that question not only about Viacom but about CBS. Right now, we like the company the way it is. What happens in the future, I can’t speculate.
THR: What about possibly going after the rest of DreamWorks Animation to bring Jeffrey Katzenberg to your overall studio operations as a creative spark?
Redstone: I love Jeffrey Katzenberg, and I consider him a very able executive and a good friend. But if you recall, when we originally were presented with the DreamWorks deal, it was $1.5 billion, and I said that would not fly with me or the board. They were smart enough to find a way to make it feasible by selling the library, which we have a right to buy back in the future, and that brought the deal down to around $500 million. Having done that, I'm not going to go back and do the opposite now. In a way, Jeffrey and the other terrific executives there already are working for us because we acquired DreamWorks.
THR: Does Viacom need more of a creative spark at the head of the company, especially with Freston gone?
Redstone: I think (MTV Networks chair) Judith McGrath is superb. I have faith in her. I know Tom had faith in her. She is doing a great job and has a lot of good people. I talked to her, and she gave me no indication she would leave. She would never leave the network she loves. We have (Paramount Pictures chair) Brad Grey on the studio side. He has assured me he would do his best.
THR: The decision you made about not renewing Paramount’s film deal with Tom Cruise’s Cruise/Wagner Prods. is indicative of the changes in industry economics that you have been talking about for a long time. Going forward, what else would you like to alter in business models or in the way you go about your business?
Redstone: We were underinvested and under-represented in the Internet. I would like to see -- and I know that Philippe and (senior executive vp) Tom Dooley are on the case -- a more aggressive approach to the multiplatform strategy. We should do more to ride our world brands to every possible platform and to the full extent we can in broadband, on cell phones and on the Internet. I am not saying Tom didn’t do that. I’m just saying it was not enough.
THR: How much more involved will you be in Viacom's daily operations, especially during this transition?
Redstone: I will be what I always have been. Tom Freston and (CBS Corp. chief) Les Moonves called me every day to bring me up to date. I never asked for that. I will continue to be just as much involved as I always have been. If Philippe wants me to help in some way, I will do it. I will continue to travel the world for Viacom; I just got back from Turkey, Kuwait and Dubai. I don’t intend to act like a CEO.
THR: When you and the board asked Tom (Dooley) and Philippe back on the new Viacom board after the split, was that done with the notion that you would have two former co-deputies in place to take over should anything ever change with senior management?
Redstone: I don’t go for backup scenarios. If something has to be done, I do it before it's a scenario. So the answer is no.
THR: You have said that your immediate goal is to have Viacom stock trade upward as much as CBS has since the split. Is that still the case?
Redstone: More than that. I still believe it will take at least a year to evaluate the split and the performance of the companies. As far as CBS goes, it worked. If people are patient, they will see in six months Viacom stock really rising, and then they will say, "Sumner was right, the split works." There is no reason it shouldn’t be because MTV and the (Paramount) studio are the best assets of their kind. Viacom was supposed to be the growth company. It will live up to that original expectation.
THR: Is re-creating the former management triage at the top of Viacom enough?
Redstone: (Dauman and Dooley) are the same smart, aggressive, entrepreneurial people they have always been. They won’t let an opportunity get away and have it end up with a competitor.
THR: Tell me about the events leading up to (Tuesday's) announcements.
Redstone: I didn’t sleep one minute last night, with everything going on and worrying about Tom Freston.
THR: What did you say to him?
Redstone: I was almost crying. I met with him at my house right after the board voted at about 5 p.m. Sunday night to do what they wanted to do. Tom was at my house at about 6 p.m., and it was not an easy discussion. Tom said he loved me and loved the company. I expressed my great affection for him and talked about how our friendship would prevail over what took place. He’s a great guy.
THR: How long is he prevented by a noncompete clause from working for a media rival?
Redstone: I don’t know what's in his contract, but speaking for myself, I would waive it. I can’t say that for the company, but I think I would prevail on the company to waive such a contract provision, if it exists.
The Hollywood Reporter: You referenced the need for Viacom to be more aggressive in new media. You might have to pay much more for any new-media property such as YouTube or FaceBook today than you would have paid for MySpace 18 months ago -- when you lost it to News Corp. -- because the multiples have gone sky high. Are you prepared to pay those higher prices?
Sumner Redstone: We are not going to make any major acquisitions, not only because we have to be financially disciplined but because there is nothing out there that we would consider a major acquisition for us. Philippe (Dauman) says he wants to grow the company organically, as we have traditionally done, and that he would like to buy some cutting-edge companies at a modest price.
THR: Is there any chance you will take Viacom private?
Redstone: We've been asked that question not only about Viacom but about CBS. Right now, we like the company the way it is. What happens in the future, I can’t speculate.
THR: What about possibly going after the rest of DreamWorks Animation to bring Jeffrey Katzenberg to your overall studio operations as a creative spark?
Redstone: I love Jeffrey Katzenberg, and I consider him a very able executive and a good friend. But if you recall, when we originally were presented with the DreamWorks deal, it was $1.5 billion, and I said that would not fly with me or the board. They were smart enough to find a way to make it feasible by selling the library, which we have a right to buy back in the future, and that brought the deal down to around $500 million. Having done that, I'm not going to go back and do the opposite now. In a way, Jeffrey and the other terrific executives there already are working for us because we acquired DreamWorks.
THR: Does Viacom need more of a creative spark at the head of the company, especially with Freston gone?
Redstone: I think (MTV Networks chair) Judith McGrath is superb. I have faith in her. I know Tom had faith in her. She is doing a great job and has a lot of good people. I talked to her, and she gave me no indication she would leave. She would never leave the network she loves. We have (Paramount Pictures chair) Brad Grey on the studio side. He has assured me he would do his best.
THR: The decision you made about not renewing Paramount’s film deal with Tom Cruise’s Cruise/Wagner Prods. is indicative of the changes in industry economics that you have been talking about for a long time. Going forward, what else would you like to alter in business models or in the way you go about your business?
Redstone: We were underinvested and under-represented in the Internet. I would like to see -- and I know that Philippe and (senior executive vp) Tom Dooley are on the case -- a more aggressive approach to the multiplatform strategy. We should do more to ride our world brands to every possible platform and to the full extent we can in broadband, on cell phones and on the Internet. I am not saying Tom didn’t do that. I’m just saying it was not enough.
THR: How much more involved will you be in Viacom's daily operations, especially during this transition?
Redstone: I will be what I always have been. Tom Freston and (CBS Corp. chief) Les Moonves called me every day to bring me up to date. I never asked for that. I will continue to be just as much involved as I always have been. If Philippe wants me to help in some way, I will do it. I will continue to travel the world for Viacom; I just got back from Turkey, Kuwait and Dubai. I don’t intend to act like a CEO.
THR: When you and the board asked Tom (Dooley) and Philippe back on the new Viacom board after the split, was that done with the notion that you would have two former co-deputies in place to take over should anything ever change with senior management?
Redstone: I don’t go for backup scenarios. If something has to be done, I do it before it's a scenario. So the answer is no.
THR: You have said that your immediate goal is to have Viacom stock trade upward as much as CBS has since the split. Is that still the case?
Redstone: More than that. I still believe it will take at least a year to evaluate the split and the performance of the companies. As far as CBS goes, it worked. If people are patient, they will see in six months Viacom stock really rising, and then they will say, "Sumner was right, the split works." There is no reason it shouldn’t be because MTV and the (Paramount) studio are the best assets of their kind. Viacom was supposed to be the growth company. It will live up to that original expectation.
THR: Is re-creating the former management triage at the top of Viacom enough?
Redstone: (Dauman and Dooley) are the same smart, aggressive, entrepreneurial people they have always been. They won’t let an opportunity get away and have it end up with a competitor.
THR: Tell me about the events leading up to (Tuesday's) announcements.
Redstone: I didn’t sleep one minute last night, with everything going on and worrying about Tom Freston.
THR: What did you say to him?
Redstone: I was almost crying. I met with him at my house right after the board voted at about 5 p.m. Sunday night to do what they wanted to do. Tom was at my house at about 6 p.m., and it was not an easy discussion. Tom said he loved me and loved the company. I expressed my great affection for him and talked about how our friendship would prevail over what took place. He’s a great guy.
THR: How long is he prevented by a noncompete clause from working for a media rival?
Redstone: I don’t know what's in his contract, but speaking for myself, I would waive it. I can’t say that for the company, but I think I would prevail on the company to waive such a contract provision, if it exists.
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