Scandalized Moonves Gone, Would Scale Prevail In Fused CBS & Viacom?

With Les Moonves having self-immolated, the intriguing question about CBS and Viacom comes down to this: Can a corporation successfully re-invent itself when its merger status is still unresolved and its management still up in the air? Shari Redstone has won her battles with her father and now with the old CBS board — a formidable triumph of dynastic empowerment –but the pressure is now on every segment of the company to prove its post-revolution viability.

The new CBS board, which hasn’t even met yet, now confronts not only a Moonves succession battle but also growing disarray within CBS News, signaled by the angry departure of its 60 Minutes boss Jeff Fager. Fager succeeded the brilliant and famously petulant Don Hewitt, who invented 60 Minutes; his demise stems from a toughly worded internal memo to a staff reporter — an incident which many CBS staffers feel has been mishandled at the corporate and news division levels. The internal battles within various divisions of CBS have stoked rumors of a potential buyout by the world’s richest man, Jeff Bezos, whose earlier fascination with the news world triggered his acquisition of the Washington Post.

While the CBS battles have held center stage, hovering on the sidelines through all this is once-fabled Paramount Studios, now tabbed by some as the “quiet place.” I don’t think that’s the way Paramount wants to define itself, but A Quiet Place was its biggest surprise hit this year and its title seems to describe how the creative community perceives it. Jim Gianopulos may be a revered studio leader, but it’s still unclear whether he’ll have the resources or the freedom to rebuild his sector of the company, or whether he may find himself stalled by still further coups d’etat.

Consider the Redstonian history: In assembling his media empire 30 years ago, the fierce-tempered Sumner Redstone first acquired a scattershot syndicator called Viacom (he called it “Vee-a-com”), then went on to confiscate Paramount in 1993, and CBS seven years later, only to spin off the network in 2005. The old curmudgeon proudly declared himself a media mogul, but he was basically a movie guy — he totally treasured his funky movie theaters in places like Sekonk, MA.

While a superb negotiator, Redstone’s taste in executive talent was, at best, erratic. He impulsively fired the talented Tom Freston as CEO of Viacom, turning it over to his estate lawyer, Philippe Dauman, whose reign at Viacom culminated in fiscal fiasco. Redstone brought down the curtain on the studio’s immensely productive Sherry Lansing-Jonathan Dolgen regime, shifting into the ultimately disastrous Brad Grey mode, with write-offs surpassing $450 million.

With the CBS traumas occupying center stage, the studio has been able to retool its slate amid relative calm, reflecting Gianopulos’ low-profile style. A Quiet Place was arguably the biggest sleeper hit of the year ($330 million worldwide), The Book Club ($68.6 million) yielded a profit, and the newest Mission: Impossible ($735 million) surpassed recent Tom Cruise franchises, but the studio still ranked last among majors and, significantly, had no entries in this fall’s festival derby.

Paramount has closed several high-profile talent deals and is scheduling promising features such as a new Top Gun, with Cruise, of course, and Gemini Man from director Ang Lee and producer Jerry Bruckheimer. While the studio announced a modest boost in its August results, film revenues were down 9% and TV down 8%. Hence the slightly higher profit increases stemmed mainly from cost-cutting.

“There’s a lot of noise around consolidation and scale, but we’re focused on operating the assets we already have,” said Bob Bakish, the Viacom CEO who may, or may not, finally become boss of a combined film and TV empire — if, that is, a merger finally occurs after a promised two-year “hold.” A new CBS board, however, may vote to push forward a consolidation, with synergy revenues reaching an optimistic $500 million.

For its contribution, Paramount hopes to release as many as 19 films in the coming year, but its franchises, from Star Trek to Transformers, seem marginally geriatric. China failed to step forward with co-financing slate money, but the studio has co-funding deals with Hasbro and David Ellison and hopes to launch a diverse and eclectic slate of relatively low- to mid-budget films.

To be sure, competition for new properties and release dates is fierce especially from the looming Disney-Fox giant and a newly merged Warner Bros. AT&T last week was rumored to be shifting considerable resources from its Warners division to HBO to step up competition with the voracious Netflix. The leaders of the corporate world, it seems, have emulated the old Sumner Redstone formula: scale will prevail. Unless, that is, history is rewritten by dynastic revolution.