Viacom and pals must learn that being on same page is first chapter in success story

Empty

Cool to indifferent. That's the reception the Viacom-MGM-Lionsgate joint venture for a new premium cable network has gotten from many in the industry.

Entertainment folks are wondering whether cable and satellite TV providers will care to sign up another premium film channel. They also highlight that the venture doesn't yet have a name, a CEO or any details on its planned service.

The three studios might very well answer these questions over time, but that alone might not be enough. After all, the history of joint ventures in media and entertainment -- as in other fields -- is littered with failure. Recent management literature often cites the so-called Osborn study that showed that 60% of ventures failed to start or faded away within five years.

"Some ventures work, but there are a lot that don't, especially when you have very different companies and interests," says former Paramount executive Ken Suddleson, chairman of the entertainment and media group at Foley & Lardner in Los Angeles.

I hear him loud and clear after having tried to set up after-work drinks with two old friends for two weeks -- still without success.

In the broader Hollywood sphere, ITV Digital was one of those venture attempts -- from then U.K. broadcasters Granada and Carlton -- that failed amid continued losses and changing strategies. Music venture Sony BMG has struggled with management disagreements, regulatory challenges and calls for a breakup. A venture between Madonna's Maverick Recording and Warner Music Group led to litigation when ownership of WMG changed hands. And just last week, Pivot, a wireless venture between telecom giant Sprint Nextel and cable firms Comcast, Time Warner Cable, Cox and Advance/Newhouse, came to an end. Integrating the products of so many companies was apparently too complex.

Basic clashes of personal and business culture also can be reasons for failure, says business performance expert Pamela Harper, president of Business Advancement. "Often, these issues are overlooked or underestimated in the heat of dealmaking," she says. "This leads to persistent problems once executives begin developing the strategy."

To be sure, there are examples of media ventures that have worked, especially in the cable networks space.

"Comedy Central worked well but got better once Viacom took over control" from Time Warner, Sanford Bernstein analyst Michael Nathanson says. He also cites ESPN, Lifetime and A&E as success stories.

Although that might sound encouraging to the folks behind the Viacom-MGM-Lionsgate deal, those ventures were launched at a time when distributors were much more open to adding channels to their content offerings. And the most successful unions in the industry seem to be those that aren't real joint efforts with equal levels of management control but rather clearly dominated by one company, as is the case with ESPN, which Disney controls.

Viacom and its partners haven't disclosed their respective stakes, but Viacom is understood to be the lead investor.

Expect the three studios to combat the negative early reactions to their venture by pushing hard for distribution deals, naming their CEO and communicating their plans more in the coming months. But behind the scenes, their management teams better spend a lot of time making sure their interests and visions are truly aligned. Otherwise, it will go down in the Hollywood history books as yet another failed marriage.

Georg Szalai can be reached at georg.szalai@THR.com.
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