Karmazin: I’d have sold Viacom but for Sumner
Sirius XM Satellite Radio chief Mel Karmazin on Tuesday stopped by the annual Reuters Global Media Summit to talk about his company, its future and to occasionally go down memory lane on a range of what if’s.
The 68-year old acknowledged that after roughly 50 years in the business he finally realizes that he’s not a good number two. He also proudly noted that he has no aversion to selling a company he leads if the right offer comes along. His track record backs him up on that claim. Karmazin sold Infinity Broadcasting to CBS in 1997, and then CBS to Viacom in 2000, creating enormous wealth for his shareholders in the process.
But there’s one deal Karmazin seemed to regret not having a chance to get done–selling Viacom. He admitted that given the opportunity and presented with the right price he would have sold Viacom when he was in charge. But Viacom’s 88-year old legendary leader Sumner Redstone, who has majority control over both that company and CBS, stayed at Viacom longer than expected. Indeed, Redstone still serves as Viacom’s chairman, outlasting Karmazin, who decamped to SiriusXM after three years of constant clashes with the octogenarian.
“I would have sold Viacom if Sumner wasn’t around,” Karmazin noted candidly. He then smiled wide before adding, “If he went out to lunch I would have sold it.”
CBS: Get used to growth
CBS put on a big show in yesterday’s quarterly report, blowing out estimates on both profit and revenue. On the call that followed, Sumner Redstone called Les Moonves a “genius,” and Moonves called broadcast TV “the best game in town.”
Here are some notes from last night’s call:
- CBS, which said it would double its dividend, also plans to repurchase $250 million in stock this quarter. A nice bonus for shareholders who have already seen the stock rise by about 35 percent this year.
- Scatter rates, or prices for last-minute commercial buys, are up more than 40 percent in some cases for CBS. That’s a stunning number. Given those sorts of prices, Moonves is talking about “solid” double digit increases in upfront ad market next month.
- CBS is putting together six or seven fewer pilots than normal this year, showing that it’s pretty happy with its schedule right now (So far this season, CBS has declined the least of the big four broadcast networks in total household audience)
- Basically, investors and analysts should get used to these sorts of results, CBS suggested. Moonves said he was “confident” the first quarter’s performance would be “sustainable.”
Hizzoner Roasts Murdoch
Last night, The Wall Street Journal held a party at Gotham Hall for a slew of media, advertisers, bigwigs (Barry Diller, the cast of In the Heights!) to introduce Greater New York, a souped up metro section that debuted on Monday. Perhaps you have heard of it.
Usually at events like these, Mayor Michael Bloomberg is roped into saying some words about how great the Big Apple is followed by a note of thanks for creating new jobs for the city. Last night was no exception.
What made Bloomberg’s speech – really a roast of News Corp Chief Rupert Murdoch – kind of cringe-worthy was the fact that Bloomberg News is a huge competitor of Dow Jones. It’s not entirely clear if Bloomberg was joking when he said that his company had considered purchasing Dow Jones before he held up a mock-up of the Greater New York edition showing the audience how Bloomberg would have gone about things.
Also awkward: apparently Bloomberg isn’t thrilled about another outlet covering his administration. He quipped: “In the media capital of the world the more competition we have, I think the better. Of course that also means we will have a Journal reporter at my press conference every day from now on asking another ridiculous question. Hey, there’s always room for one more.”
To make things even weirder, meanwhile, Bloomberg BusinessWeek reported from the Milken Institute Global Conference in Beverly Hills on Monday that Viacom Chief Sumner Redstone took potshots at Murdoch, predicting that newspapers will be out of business in two years. And then he said this about Murdoch: “He lives in ink, and I live in movies and television. Ink is going to go away, and movies and television will be here forever, like me.”
Huh.
We approached Murdoch last night and asked him how long it will take before the Greater New York edition will be profitable. “It’s already profitable!” he said before the crowd swallowed him up.
Happy Monday, Sumner Redstone
It was a very pleasant start to the week for Sumner Redstone’s Viacom, owner of BET, MTV, Nickelodeon and the Paramount movie studio. A flattering Barron’s story, analyst upgrades… What more can a media company want these days?
Start with Barron’s. The financial weekly writes, “After a long dry spell, investors are doing a double take when it comes to the entertainment company controlled by its executive chairman and founder, the savvy and tenacious media mogul Sumner Redstone.” Why? That’s simple. The stock is cheap.
Indeed, that’s the theme of two analyst reports that landed today — one from Miller Tabak and the other from Bernstein — both of which increased their Viacom’s price target to $39 a share. That’s about 16 percent above the current price. Not shabby for a stock that’s already up about 81 percent in the past year.
Over at Bernstein, Michael Nathanson offers 11 reasons for investors to be buying Viacom. “Not one of these mention Jersey Shore,” he adds.
It’s worth taking a look at Nathanson’s 11 reasons — he makes a compelling argument. But most of what he and others like about Viacom can be boiled down to three broad points. (It’s Monday, we’re all about simplification today).
- Financially, Viacom is looking fairly good. The company has only $193 million of debt to worry about in 2011, it has avoided bad acquisitions, and could soon launch a share buyback.
- Business is on the upswing. An improvement in ad spending will no doubt help Viacom, which has has more exposure to the market than Time Warner or Disney; it has renewed affiliate deals at promising rates; Rock Band losses should be less than in 2009; and Paramount seems to be back on track.
Sun Valley: The stars align
Allen & Co’s 27th Sun Valley media and technology conference starts on July 7 and ends on July 12. In the meantime, expect media writers to breathlessly report, blog, tweet, photograph and record the event. Why the fuss? There are literally hundreds of people coming who are known to do nothing else than run the universe when it comes to TV shows, movies, telecoms, the Internet and all sorts of other electronic communications. We have lists of all the people who bankroll them as well, along with a list of other interesting people you will find there.
Here, meanwhile, are the big men and women of media and technology who justify the travel budgets that increasingly hard-up news organizations have to put out for your favorite folks in the press corps to hide behind the hedges and hope for a handout that will break news, move markets and excite our editors. Keep in mind: this list is not a guarantee that these people are showing up; it’s just an invitation list (arranged alphabetically by company). We’ll update it as we learn more. (Our boldface names indicate some general viewpoint that they’re the stars of the stars.)
- James McCann, CEO, 1-800-flowers.com.
- Bobby Kotick, CEO, Activision Blizzard Inc. Also Brian Kelly, co-chairman.
- Jeff Bezos, CEO, Amazon.com Inc.
- Tim Armstrong, chairman and CEO, AOL
- Michael Ovitz, AMSEF LLC, former uber-talent agent at Creative Artists Agency and former Walt Disney Co executive.
- Gerhard Zeiler, CEO, RTL Group, Bertelsmann AG.
- Bill and Melinda Gates, of the foundation of the same name. Bill, of course, co-founded Microsoft Corp.
- Mark Vadon, executive chairman, Blue Nile Inc.
- James Dolan, president, CEO, Cablevision Systems Corp.
- Leslie Moonves, president, CEO, CBS Corp. Also Neil Ashe, president, CBS Interactive. Also Quincy Smith, CEO, CBS Interactive. (And a former Allen & Co man.)
- Charlie Rose, interviewer and anchor on the Charlie Rose Show
- Anthony Bloom, Cineworld plc
- Richard Parsons, chairman, Citigroup Inc. Former CEO, Time Warner Inc.
- Lowry Mays, chairman, Clear Channel Communications Inc.
- Ralph Roberts, founder, chairman emeritus, Comcast Corp. Also Stephen Burke, president and COO, Comcast Cable.
- Patrick Condo, president, CEO, Convera Corp.
- Jimmy Hayes, CEO, Cox Enterprises Inc.
- Richard Lovett, president, Creative Artists Agency Inc. Also Bryan Lourd, managing partner.
- Michael Dell, chairman and CEO, Dell Inc.
- Richard Rosenblatt, chairman and CEO, Demand Media. He used to work at MySpace’s parent company before News Corp bought it.
- Chase Carey, former DirecTV CEO and Rupert Murdoch’s new No. 2 man at News Corp.
- John Hendricks, founder and chairman, Discovery Communications. Also president and CEO David Zaslav.
- Jeffrey Katzenberg, CEO, DreamWorks Animation SKG.
- John Donahoe, president and CEO, eBay Inc.
- Dara Khosrowshahi, president and CEO, Expedia Inc.
- Facebook CEO Mark Zuckerberg. (We’ve heard conflicting reports about whether he’ll show. Either way, he’s still on our list.)
- Tom Freston, principal, Firefly3 LLC. Former Viacom executive.
- Martin Varsavsky, CEO, FON
- Jeff Immelt, chairman and CEO, General Electric Co.
- Jeff Zucker, CEO, NBC Universal. (GE)
- Ronald Meyer, president and COO, Universal Studios. (GE)
- Eric Schmidt, chairman and CEO, Google. Also co-founders Sergey Brin and Larry Page.
- Juan Luis Cebrian, CEO, Grupo Prisa. Also Ignacio Polanco, chairman.
- Emilio Azcarraga, chairman and president, Grupo Televisa. Also Alfonso de Angoitia, executive vp.
- Christopher Schroeder, CEO, HealthCentral. Also former CEO of Washingtonpost.Newsweek Interactive.
- Cathleen Black, president, Hearst Magazines.
- R. Todd Bradley, executive vp, personal systems group, Hewlett-Packard Co. Also CEO Mark Hurd.
- Barry Diller, chairman, CEO, IAC/InterActiveCorp. Also chairman, Expedia Inc. Also Victor Kaufman, vice chairman, IAC/InterActiveCorp.
- Lachlan Murdoch, executive chairman, Illyria Pty Ltd. Son of News Corp CEO Rupert Murdoch.
- Craig Barrett, former CEO, chairman, Intel Corp. Also Sean Maloney, executive vp, chief sales and marketing officer.
- Jeffrey Berg, chairman and CEO, International Creative Management. Also president Christopher Silbermann.
- Michael Volpi, formerly of Cisco Systems Inc and Joost.
- Eric Eisner, L+E Pictures. Son of former Walt Disney Co. CEO Michael Eisner.
- Kevin Reilly, CEO, Lamar Advertising Co.
- Michael Fries, president and CEO, Liberty Global Inc.
- John Malone, chairman, Liberty Media Corp. Also Greg Maffei, president and CEO.
- Reid Hoffman, chairman, president of products, LinkedIn Corp.
- Sam Altman, co-founder and CEO, Loopt Inc.
- Craig Mundie, chief research and strategy officer, advanced strategies and policy, Microsoft Corp. Also Robbie Bach, president of the entertainment and devices division, and Henry Vigil, senior vp, strategy and partnership.
- Rupert Murdoch, CEO, News Corp. Also with him is his second son, James Murdoch, chairman and CEO of News Corp’s Europe and Asia operations. Also Jonathan Miller, News Corp’s chairman and CEO for its digital media group. Former president and COO Peter Chernin, whose last day was June 30, is coming along too, in tow with CFO David DeVoe and new MySpace CEO Owen Van Natta.
- Gina Bianchini, CEO, Ning Inc.
- Jorma Ollila, chairman, Nokia Corp.
- Greg Wyler, founder, O3B Networks Ltd.
- Jeffrey Jordan, president and CEO, OpenTable Inc.
- Jeffery Boyd, president and CEO, priceline.com Inc.
- Maurice Levy, chairman and CEO, Publicis Groupe.
- Paul Jacobs, chairman and CEO, Qualcomm Inc.
- Robert Johnson, founder and chairman, the RLJ Companies.
- Jay Y. Lee, Samsung Electronics Co. Ltd.
- Kenneth Lowe, chairman, president and CEO. Scripps Networks Interactive.
- Mel Karmazin, CEO, Sirius XM Radio Inc.
- Max Levchin, CEO, Slide Inc.
- Sir Howard Stringer, chairman and CEO, Sony Corp. Also Kazuo Hirai, president of networked products and services group; Robert Wiesenthal, executive vp and CFO, Sony Corporation of America; Michael Lynton, chairman and CEO, Sony Pictures Entertainment; Hiroshi Yoshioka, executive deputy president, president of consumer products and devices group; and Nicole Seligman, top lawyer.
- Nick Grouf, CEO, Spot Runner Inc.
- Thomas Glocer, CEO, Thomson Reuters Corp, along with Niall FitzGerald, deputy chairman.
- Michael Eisner, the Tornante Company LLC. Former Walt Disney Co CEO.
- Lars Buttler, CEO, Trion World Network Inc.
- Evan Williams, co-founder and chairman, Twitter Inc.
- David Levin, CEO, United Business Media plc.
- James Berkus, chairman, United Talent Agency.
- Brad Grey, chairman and CEO, Paramount Pictures Corp (Viacom).
- Sumner Redstone, chairman, Viacom. Also Philippe Dauman, president and CEO.
- Jean-Bernard Levy, CEO, Vivendi.
- Robert Iger, president and CEO, Walt Disney Co. Also Thomas Staggs, CFO.
- Edgar Bronfman Jr, chairman and CEO, Warner Music Group.
- Donald Graham, chairman, CEO, The Washington Post Co.
- Casey Wasserman, chairman and CEO, Wasserman Media Group LLC.
- Harvey Weinstein, co-chairman, The Weinstein Co.
- Shelby Bonnie, CEO, Whiskey Media LLC.
- Jim Wiatt, William Morris Endeavor.
- Terry Semel, chairman and CEO, Windsor Media. Former Yahoo CEO.
- Martin Sorrell, CEO, WPP.
- Anne Mulcahy, chairman, Xerox Corp.
- Jerry Yang, chief Yahoo.
- Mark Pincus, founder, CEO, Zynga Inc.
Nick Grouf can teach on how to screw over your employees and your investors while walking away with several million dollars. maybe he can do a secondary seminar about “pump and dump” schemes. Nick is a fraud
Sumner Redstone cool with Dauman; theaters hot with buyers
As we previously noted in MediaFile the main takeway from Viacom’s earnings call was that advertising is awful, but it’s not getting worse. But there were a few other highlights, too, so here’s a time-saving rundown:
Sumner Redstone is still a gigantic fan of Philippe Dauman. Even after 12-months in which Viacom’s stock price has dropped 50 percent, Redstone introduced Dauman as “my great friend” and “the greatest CEO of all” while crediting him “capable and insightful leadership.”
National Amusement’s movie theaters are a hot ticket. Redstone said the sale of theaters in the United Kingdom and United States has attracted “substantial preliminary interest” from buyers. “”We are very encouraged by both the number of interested bidders and particularly the prices being discussed.”
Dauman isn’t sweating Epix. Asked what happens to the bottom line, worst case, if the movie network isn’t launched on the terms that Viacom wants, Dauman responded that, “There is not a worst case here. We are quite engaged in discussions. You will see the affiliate agreements being announced as we get closer to launch. So we are in good shape and furthermore, in addition to covering the movie costs on the Paramount side, we are creating a great new asset for Viacom and as well as our partners.
(Photo: Reuters)
Redstone swears by fish, vodka…and married women
Media mogul Sumner Redstone credits fish, Grey Goose vodka and plain hard work for giving him “the health of a 20-year-old.”
The octogenarian head of CBS Corp and Viacom Inc told CNN talk show host Larry King at the Milken Institute Global Conference that he made a “miracle recovery” from prostate cancer due to his “highly disciplined” consumption of “every antioxidant known to man” even when he doesn’t feel like it.
“My doctor says that he’s seen a lot of men slow down the aging process but I am the only man who has reversed it,” Redstone crowed at the hour-long interview that packed two conference rooms at the Milken Institute Global Conference on Wednesday in Beverly Hills.
Sumner, also repeatedly insisted, to King’s annoyance, that he is 65 years old.
“Suddenly you don’t look so amazing,” King retorted.
Sumner is 85.
That robust health and need for a challenge extends to every aspect of his life: “The most attractive women are married,” the recently divorced Redstone told King. “Sometimes a husband doesn’t count.”
Outlook grim for media and entertainment deals
Deal-making in the U.S. media and entertainment sectors is going to be down this year, says a new PricewaterhouseCoopers survey (request a copy here). Now, that’s not a new or startling conclusion given the state of the economy, but it’s just another piece of evidence that when consumers and advertisers get thrifty, deal makers can end up become benchwarmers as companies struggle with cost cuts and other exigencies.
Here are some industry trends for 2009 from the PWC survey:
- Declining consumer spending is hitting many media and entertainment companies. What’s more, these declines were exacerbated by technological convergence, as these firms adapt to and look for ways to make money off new Internet technologies.
- Overall U.S. advertising market is going to shrink as sponsors cut ad budgets across retail, consumer goods, automotive, financial and other sectors.
- Companies will continue to divest their non-core assets, but those that don’t get a good price will prefer to hold on rather than sell at bargain prices.
- Bolt-on deals will likely be popular for risk-averse companies, so deals below $1 billion — mostly small and mid-market companies — will be a rising trend.
- Private equity will remain quiet since the debt markets aren’t really healthy yet.
- Deal structures will change this year, given the difficulty of getting debt financing. The strategic rationale for doing a deal will be more important than getting a favorable capital structure.
But all hope is not lost, according to PWC’s Transaction Services Entertainment & Media Leader Thomas Rooney:
With M&A activity ingrained in the DNA of so many companies and the ever growing presence of private equity, E&M deal activity might not be as quiet as many expect in 2009… History has shown the E&M industry to be one of the more active M&A sectors irrespective of market and economic conditions.
And there have been a couple of deals already this year, although no mega-transactions, as the PWC report suggests. Live Nation wants Ticketmaster and Sumner Redstone’s National Amusements theater chain is being shopped to potential buyers. Could Lions Gate be next?
(Photo: Viacom chairman Sumner Redstone/REUTERS)
Redstone debt crunch could be easing, despite income loss
Here’s the latest on Sumner Redstone: On CBS’s earnings call he reiterated that negotiations with lenders regarding National Amusements’ debt situation were moving forward.
“We are making very good progress with our creditors, and as I have also said before, we have not, since our original sale, sold a single share of CBS or Viacom, and our lenders are not urging us to do so,” he said.
He also told investors that the CBS dividend cut — they slashed it by 82 percent to 5 cents — wouldn’t mean a thing as far as National Amusements’ debt talks go (How the dividend cut will impact Redstone himself is another matter. Last year, he took home more than $80 million in dividend payments).
“Now with respect to the CBS dividend, I can tell you that the topic has been discussed with the lenders, and it will not impact the successful conclusion of the discussions. So that’s the update, and again, because of the ongoing nature of the discussions, I must decline to further comment,” he said.
Redstone may not be commenting further, but there is certainly some chatter about what’s happening with National Amusements. People familiar with the matter tell us that National Amusements is close to putting several hundred movie theaters up for sale.
Here’s the upshot:
An official sales prospectus on the theater chain is expected to go out any day now and bankers are reaching out to potential buyers to get them to sign confidentiality agreements, the sources said.
All U.S. theaters except those in the New England region are expected to go on sale, along with theaters in Latin America and possibly those in the United Kingdom. The theaters in Russia will be excluded from the sale, the sources said.
National Amusements operates more than 1,500 movie screens in these countries. The New England region and Russia account for roughly 300 screens. Citigroup Inc will handle the sale, the people said.
Throwing an orgy of pessimism? Well, don’t invite Viacom
How bad is the advertising market? Pretty bad, says Viacom Chief Executive Philippe Dauman. And it’s only going to get uglier.
“It is clear that while as cable network owners we are in a more favorable media segment than most, advertising comps are likely to get worse before they get better,” he said on a conference call today.
This comment may seem dry, but we’re totally ready to cut him some slack since it came shortly after this poetic gem: “And despite the orgy of pessimism prevalent of the late, the economic tide in our economy and our industry will rise again.”
Dauman, whose job means he oversees MTV, VH-1, Comedy Central and so on, assessed the situation this way: Advertisers who committed dollars during the upfront for the first quarter are holding solid, but are getting shaky for the second quarter.
Viacom finance whiz Tom Dooley expanded on that. “In terms of second-quarter option exercises, many of the moves have been shifting dollars from quarter-to-quarter. Some advertisers have done so but come back later in the quarter to make smaller buys in the scatter market. It is this activity combined with the overall economic trends which leads us to believe that ad market will get worse before it gets better.”
Not exactly an orgy of optimism, guys.
