Redstone: Par ready for comeback

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BERLIN -- Viacom chairman Sumner Redstone sat down with The Hollywood Reporter's German bureau chief Scott Roxborough, in town for the Berlin International Film Festival, for a wide-ranging talk about YouTube, China and the future of comedy in Germany.

THR: What brings you to Germany?
Sumner Redstone: Well, I'm here primarily for the (German) launch of Comedy Central. Of course, Germany has always been very high on our international ambitions because Germany has the most vibrant economy in Europe; it is a big advertising market, No. 5 globally, about $5 billion dollars (a year). As you also know, we originally had five music channels here, (and) we now have two distinct music channels -- MTV and Viva, plus Nickelodeon and now Comedy Central. That gives us some clout in the area, so to speak. And also I'm here to begin to create relationships of friendship and trust between Viacom, myself and members of government, which I did at lunch today when I met with regulators and a member of parliament.

THR: Are you meeting with regulators because you plan to expand in Germany?
Redstone: No, it isn't so much that, although we made it clear we want to see our channels distributed 100%, not just in Berlin but in Bavaria and other places. What they do about it I don't know. But as I say, the more you know us, the more you like us.

THR: You launched Nickelodeon in Germany last year and Comedy Central this year. What has changed from a decade ago, when Nickelodeon was pulled out of this market?
Redstone: Nickelodeon was never really pulled out. At that time, the programming model seemed to be more sensible financially to us than owning a channel. And actually, (German kids channel) Super RTL was built mostly on Nickelodeon programming. Now we have the programming, we have the wherewithal, certainly, and now we have our own channel. Nickelodeon (Germany) ratings have been growing, and our economic aspirations are being exceeded as we talk.

THR: Is being here in Germany an indication that the international business side of Viacom is becoming more important?
Redstone: It is very, very important. When I first acquired Viacom, everyone said I overpaid, that MTV was a fad, that Nickelodeon would never make it. But I saw that MTV was more than just a music channel, it was a cultural channel that would travel. I saw the universal interest in matters relating to children, which to me was obvious, but not to Wall Street. I also saw that only 5% of the world eyeballs were in America. So my vision then was to drive our brands all over the world. Twenty years later, we have 121 international channels. So I think we have pretty much succeeded in proving MTV is not a fad.

THR: Is the international business becoming more important? On the domestic side, you are in the process of eliminating some 250 jobs (at MTV Networks).
Redstone: We found that a lot of the jobs at MTV were redundant, (that) we could operate better, more efficiently, without them. But the same amount of money or more that we are saving we are investing back in programming, which is the name of the game. I have very strong feelings about international. I have been traveling the world consistently, mostly to Asia, which is where the future growth markets will be. Right now, the fastest growing part of MTV is international. It might even be true that someday we will make more money overseas than in North America. We are going to grow, we're going to grow, we're going to grow.

THR: What is Viacom's strategy for Asia, particularly China?
Redstone: Our strategy is simple. I have gone to China on Viacom business at least six or seven times in recent years. And I, as here, spent my time building relationships and friendships and trust. As a result, you will see MTV and Nickelodeon all over China. You won't see any other companies by brand name. In China, we are the only foreign company that has been allowed to have an equity stake in a Chinese media company, namely Shanghai Media, where we are co-producing children's and educational programming. In China, we have the only branded channel (MTV China). So we have made a lot of progress.

THR:
Let's talk about new media. There are some that say Viacom has missed the boat when it comes to the Web 2.0 revolution.
Redstone: Wait a minute, wait a minute. We don't miss boats. Other people miss boats, and they may have missed the Viacom boat. The fact of the matter is, without copyright protection, there is no entertainment business. And so we instructed YouTube to remove 100,000 pieces of video from their site. Why? Because they were using it without paying for it. I don't believe in that. If you want to use us, pay us. Or make a deal with us that is commensurate with the value of our product. We are the only totally content company, and our content has taken years and years to develop, with a lot of hard work. People who want to use it are going to pay us, or good-bye.

THR: But why hasn't Viacom been as active as some of your competitors in the new-media business?
Redstone: We have. We are. We are going to make hundreds of millions of dollars this year from the digital world. And that is not a secret. We are moving as rapidly as anyone. Do you know that Viacom is the world leader in mobile content? Do you know that in Germany were are the only company that has four mobile television channels, as young as we are here? We are developing our own Web sites in America and all over the world. So anyone who doesn't see that just doesn't get it. Look, right now, with all the conversation, the Internet will provide about 5% (of total revenue). Maybe a little more in the United States, maybe a little more in Germany. So it is a growth opportunity. And we are aware of it and we are doing everything we can to drive it. But it will take time. I think people do a lot of talking without realizing that, at the present time, its economic importance to a company like ours is relatively modest.

THR: Is taking your content off YouTube an indication that you would prefer to do it entirely on your own?
Redstone: I'm ambivalent, but if YouTube would come along and offer us a deal that is commensurate with the value of the programming that we spend so many millions and so much time to create, we would certainly look at that.

THR: So it is not a matter of wanting to maintain full control of how your content is used?
Redstone: No. When we sell our programming to a cable company, we don't have complete control. They pay us, though, unlike YouTube. They pay us and we get advertising revenue. Our affiliate fees have gone up year after year. So while we don't have complete control, our programming is so valuable that we don't lose. I'm satisfied with developing our own Web sites. But like with a cable company, if they pay us something that is commensurate with the value of our programming, we would certainly look at it. But it would have to be a very, very good deal for Viacom before we would look at it seriously.

THR: You say you're ambivalent about the business potential of the Internet. Where do you see the greatest opportunities for growth?
Redstone: We will keep creating and changing the content. MTV is changing all the time. The consumer is king. We will continue to move with the taste of the consumer. We will continue to drive our product around the world. International expansion is one area, but organic growth the creation of channels and offshoots channels will continue to be a major source of growth for Viacom.

THR: Paramount didn't have a great year last year ...
Redstone: Paramount is in a major turnaround right now. "Dreamgirls" has been nominated for eight Academy Awards. "Babel" has been nominated for (seven), including best picture. Steven Spielberg has a picture coming, "Transformers." I've seen part of it, it is fantastic. "Norbit" opened to $34 million on its first weekend. You will see us rising from the bottom to the top or very near the top in the first six months of this year. We have a great leader in (Paramount Pictures CEO) Brad Grey. We think he is doing just about all the right things. Before I came to Germany, I saw him in London at the BAFTAS, where several of our pictures were nominated. He's a great leader. I've always said what makes a difference between the winners and the losers is what management brings to the assets. And I believe we have the best management possible at Viacom, at CBS and at the studio.

THR: Looking to the future, what are the problems that worry you the most? What keeps you up at night?
Redstone: The only thing that keeps me up at night worrying is that I won't be here tomorrow. I don't stay up worrying because everything is really going well at CBS and Viacom and certainly at the studio.

THR: I have to ask about the Tom Cruise incident. Do you think the decision to break off your production agreement with Cruise/Wagner sent a signal to the industry about the power relationship between talent and the studios?
Redstone: Look, I didn't intend to send a signal. I prefer not to talk about Tom Cruise, who is a great actor. It was just his behavior. It was at that time unacceptable. But if there was a message, it was this: We are paying the talent too much. I never talked to anyone at the company about that, I wouldn't. Because it is not the talent that makes the movie, it is the script. The play's the thing, as someone once said. And if you have a great script, the talent rushes to appear in it and not at too heavy a price.

THR: Does that mean you are paying more for your scripts?
Redstone: No comment.

THR: Are you ever going to retire?
Redstone: Of course not. You look very good now, but I hope when I see you again in 15 years you look as good as I do. Ultimately, the boards of each company will determine my successor, but they won't have a chance to do that for a long time. My daughter (Shari) has been mentioned. She is very competent, but she is very busy with National Amusements, and I am not sure how much she wants it. As I said to her, ultimately the decision has to rest with the board to determine who the successor should be. And that is the way it should be.

THR: Are you in control of Viacom?
Redstone: I am in control, but I never operated the companies. I always do what the board says, even with respect to the split (of CBS and Paramount), which we think is working and will continue to work. After telling the board, suggesting it, I said it is your decision, not mine. And the board made the decision. And now we have two very focused, nimble companies, each concerned with their own assets and not the assets of the other companies.
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