Lamarwaltersuccess Blog

November 16, 2011

“‘Sumner M. Redstone- CBS Corp., Viacom, MTV Networks, BET, Paramount Pictures”

Filed under: Business, Inspirational, Motivational, Sucessful, Uncategorized — lamarwalter @ 10:37 pm

Sumner M. Redstone

Sumner Redstone (born 1923) built a multi-billion-dollar media empire starting with a string of movie theatres in the Boston area. After fighting successfully for ownership of a little-known cable TV company, Viacom, in 1987, Redstone went on to build Viacom into a personal kingdom that controlled MTV, Nickelodeon, VH1, TV Land, Comedy Central, UPN, TNN, Country Music Television, Showtime/ TMC, CBS, Paramount Pictures, Simon & Schuster, Blockbuster, Infinity Broadcasting, and Paramount Parks. In 2002, Redstone’s personal fortune was valued at $9 billion.

Early Interests

Sumner Murray Redstone was born on May 27, 1923, to Max and Belle Rothstein in Boston, Massachusetts. Redstone’s father got his start selling newspapers on the streets of Boston, then became a linoleum salesman and eventually got into the nightclub business, buying Boston’s Latin Quarter from Lou Walters, the father of Barbara Walters. Max Rothstein, who later changed the family name to Redstone, opened the third drive-in theater in the United States, on New York’s Long Island, and built a small chain of drive-ins that did well in the years after World War II. But Redstone insisted the real driving force in the family was his mother, who used to turn the clock back when he was practicing piano to make him work a little bit longer.

After spending his early years in a tenement which had a bathroom shared with other tenants, Redstone attended the Boston Latin School. There he headed the debating team and graduated at the top of his class. Redstone pursued undergraduate studies at Harvard. During World War II, with classes interrupted, he worked with his professor of Japanese, Edwin Reischauer, on a project aimed at deciphering Japanese military code. After the war, he attended Harvard Law School.

In 1951 Redstone became a partner in the Washington, D.C. law firm of Ford, Bergson, Adams, Borkland & Redstone. But in 1954 he abandoned law and returned to Boston to work with his father in the movie theater business.

National Amusements

At that time his father’s company, National Amusements, was able to attract only second-run movies from Hollywood. But after Redstone brought a lawsuit against the Hollywood studios, National Amusements acquired access to Hollywood’s best films. Under Redstone’s direction, National Amusements would grow from 59 screens in 1964 to 129 in 1974.

In 1972, Redstone, by then reasonably wealthy, served as co-chairman of Senator Edmund Muskie’s presidential campaign. A liberal Democrat, Redstone also became a friend and supporter of Senator Edward M. Kennedy.

During a screening of Star Wars in 1977 Redstone reportedly rushed out of the theatre to place an order for 25,000 shares of stock in Twentieth Century Fox. The investment would bring him $20 million when he sold the stock in 1981. He picked up another $40 million by buying and selling stock in Columbia Pictures and MGM/UA.

Trial By Fire

In 1979, the 55-year-old Redstone checked into Boston’s Copely Plaza Hotel, where he planned to attend a party for a Warner Brothers Pictures branch manager. Sometime after midnight, Redstone awoke to the smell of smoke. After opening the door to his room, he found himself engulfed in flames. Making his way to the window, he climbed out on a tiny ledge and hung on until a hook-and-ladder fire truck rescued him. He suffered third-degree burns on over 45 percent of his body.

Doctors initially feared for his life, then said he’d never walk again, and later expressed concern that he might lose an arm to infection. After five operations, lasting a total of sixty hours, one of his doctors told him, according to an article in Broadcasting, “Listen, everything we know is on your body. Bone grafts, skin grafts, and the reason you’re alive is you.”

In 2001, Redstone wrote in his autobiography, A Passion to Win, “The most exciting things that have happened to me in my professional life have occurred after the fire but not because of it. It doesn’t take near death to bring you to life. Life begins whenever you want it to begin.” He eventually recovered fully except for a right arm that hung limply from his shoulder and a purplish cast to the skin on his hand.

Viacom Acquisition

In 1987, at the age of 63, Redstone set out to buy Viacom, which at that time operated the tenth-largest cable system in the country and owned several cable networks, including MTV, Nickelodeon, and The Movie Channel. Although Redstone had no experience with cable television or rock videos, he saw them as competitors to movie theaters. He was also astute enough to realize that the home entertainment market was poised for tremendous growth.

Acquiring Viacom was easier said than done. Redstone was forced to raise his offer for the cable company three times in a bitter takeover war with Viacom executives before he finally seized control.

Paramount Merger

By 1993, Redstone’s original stake in Viacom was worth $5.5 billion, and he had set his sights on acquiring Paramount Communications, which owned Paramount Pictures, the Paramount television production unit, and a library of nearly 900 films. Also held by Paramount was the publisher Simon & Schuster, which owned Prentice-Hall, Macmillan, Scribner, and Pocket Books; Madison Square Garden; the National Hockey League’s New York Rangers; the National Basketball Association’s New York Knicks; and cable’s MSG Networks. Redstone’s stated goal in acquiring Paramount was to create the leading software-driven media company in the world.

But when Paramount indicated it was willing to be acquired by Viacom, Redstone wondered why. He concluded that Paramount’s CEO Martin Davis trusted and had a genuine affection for him and that Davis preferred to do business with him rather than with others who were also trying to take over Paramount. But Redstone also gave Davis credit for recognizing the combined strength of the company that a merger would create. When Redstone announced Viacom’s acquisition of Paramount and the creation of Paramount Viacom International on September 12, 1993, he said “This is a deal only a nuclear war will tear asunder.”

But with the merger Redstone had on his hands an unwieldy giant burdened by debt. However, by selling off Madison Square Garden and some cable systems and radio stations and a video game company, Redstone slashed his debts from $11 billion to less than half that. He also scored a coup with his sale of Simon & Schuster’s educational division to Pearson for $4.6 billion, far more than industry analysts expected him to get.

New Directions

In the late 1990s, with Viacom’s Blockbuster Video in trouble, it appeared that Redstone’s fortunes would diminish along with those of his company. But Redstone hung on, redesigning Blockbuster’s business mode, patching up marketing and distribution problems, and bringing in a new chief executive. As a result, new life was pumped into the video subsidiary.

Redstone, meanwhile, required that Paramount make movies developed by its Viacom cousins, MTV and Nickelodeon, against initial opposition from the reluctant partners. But the arrangement worked, and Paramount and MTV made a string of profitable movies, while Nickelodeon did very well with its Rugrats movies.

Making movies was the most difficult side of Viacom’s business. Its bread was buttered by its cable networks and their strong brands, low overhead, and high profit margins. Nickelodeon ranked at the top in children’s viewing; MTV received top billing for those between 12 and 24; and VH1 gained popularity among baby boomers with its music offerings. There was also growing interest in TV Land and Comedy Central.

MTV and Nickelodeon began reversing losses overseas as Redstone looked abroad for Viacom’s future. He told Fortune in 1999, “Anybody who ignores the fact that 96% of the world’s eyeballs are outside the U.S. is going to pay for it.”

On September 7, 1999, Viacom and CBS announced the merger of the two companies, with Viacom purchasing the television network for $37.3 billion. Although Redstone until that time had shown no interest in purchasing a major television network, he was attracted by CBS’s assets, which included production houses and radio stations. Redstone later wrote in his autobiography, “Bigger is not necessarily better, although it is certainly true that bigger is better than smaller. But this merger was not about bigness; it was about putting together two groups of assets that would produce an extraordinary company.”

About the time the merger between CBS and Viacom was falling into place, Redstone’s wife decided to divorce him after 52 years of marriage. According to Redstone, the divorce hit him “like a bullet,” even though he claimed the marriage had been troubled for a long time.

Proving Critics Wrong

Redstone met success through relentless persistence, not by marketing a new technology or selling a personal vision. He reportedly viewed his company’s stock price as a public scorecard. And rather than wearing him down, work seemed to rejuvenate the entertainment mogul. For the tightly focused Redstone, there was reportedly no life outside his company. He told Fortune magazine, “Viacom is me … I’m Viacom. That marriage is eternal, forever.”

Redstone encountered plenty of naysayers along his path to success. Initially dismissed as a “two-bit theater operator from Boston” by the Viacom old guard, he was later called “the foolish boss of a bloated empire” after the troubles at Blockbuster surfaced.

But Redstone always enjoyed proving his critics wrong. And he did not seem to hold a lot of grudges; he even suggested future business deals with those who opposed him in the past. He told Fortune, “It’s a mistake, if you want to run your company right, to let history get in the way of the future.” The much-maligned Paramount merger paid off. Redstone told Fortune, “The deal from hell has become a helluva deal!”

Simple Tastes

Redstone reportedly had no designated heir apparent waiting to take over upon his departure. He assured investors that neither his son Brent, a Denver attorney, nor his daughter Shari, who presides over National Amusements, would assume the Viacom reins when he left.

Although Redstone made more money from the entertainment industry than any other human being, he spent most of his life out of the glare of publicity. Part of the reason is that Viacom lacked the romantic appeal of Disney or AOL Time Warner. But in his trademark cheap suits, Redstone also lacked the charisma of Ted Turner.

Redstone kept an apartment in New York’s Pierre Hotel, but he still lived in the same home in the Boston suburbs that he bought for $43,000. His wants seemed simple, his aspirations without bound. He told Fortune magazine, “To me, staying in a bungalow at the Beverly Hills Hotel, walking out and being surrounded by flowers, and then going down the path to play tennis – that’s the height of my material aspirations … Then I get in the car to go to the studio.”

Books:
Redstone, Sumner, with Peter Knobler, A Passion to Win, Simon& Schuster, 2001.

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