Sumner Redstone, the famously ambitious and ruthless media titan who often claimed he would never die, lived long enough to build one of the world’s largest media conglomerates out of a chain of theaters, speaking of a power struggle that lasted for years tabloid heads dominated, and eventually saw his daughter consolidate power amid a rapidly changing media landscape.
The future of that company, ViacomCBS, remains in flux. If Redstone, who died Wednesday at the age of 97, had lived a few years longer, he might have witnessed his daughter’s attempt to sell the family empire – something he once swore would never happen.
Shari Redstone, Sumner’s daughter who spent most of her life estranged from her father but murdered with him in recent years, effectively took over his empire in 2016 after a long, drawn-out legal battle against the backdrop of deteriorating health and Sumner’s revelations about his sexual affairs.
The years that followed were difficult for ViacomCBS. The media empire, once worth up to $ 80 billion, was valued at about $ 30 billion when Redstone merged Viacom and CBS last year. Today, it’s worth just $ 16 billion, and ViacomCBS drowned under a massive pile of debt: nearly $ 19 billion like last year.
In a media landscape dominated by the likes of Disney (with $ 236 billion in market capitalization), AT&T ($ 215 billion) and Comcast ($ 198 billion), not to mention the most powerful tech giants in Silicon Valley and Seattle, ViacomCBS will now be a relative minnow. The long-term strengths that a robust television advertising company has in store may soon be a liability, as pay-TV subscriptions continue to decline.
Comcast is the owner of NBCUniversal, the parent company of NBC News.
A ViacomCBS spokesman referred to a request for comment from representatives of Redstone and National Amusements, the Redstone family’s holding company. Those representatives declined to comment.
That Shari Redstone will eventually seek to sell ViacomCBS has become conventional wisdom among Hollywood executives. Sumner’s death does little to change that. The 80 percent of ViacomCBS ‘ownership of National Amusements will now transfer to a trust of seven people that includes Shari and is firmly in the loop with its ambitions, according to sources familiar with the thinking of the trust members who were not authorized to to speak publicly.
However, in order to position ViacomCBS for a sale, Redstone will first have to prove that it is worth a purchase.
Redstone, ViacomCBS CEO Bob Bakish and board members believe the company’s share will be significantly undervalued, and its stated goal in the coming years is to maximize potential value through investments in streaming and digital, such as an estimated $ 800 million saved by the merger.
Several market analysts share that view.
“We continue to believe that the market is adding intangible value to VIAC’s streaming and digital business, with upcoming product enhancements and launching potential positive catalysts,” Goldman Sachs said in its guidance this month following the company’s quarterly report.
Streaming has indeed been a bright spot for ViacomCBS. While total revenue fell 12 percent in the last four years, digital and streaming revenue grew 25 percent. The company’s free streaming platform, Pluto TV, recorded 61 percent growth in its monthly average user base, while subscriptions to CBS Access and Showtime grew by 74 percent.
The company also makes money by licensing its content to other services, such as “South Park” (to HBO Max) and “Yellowstone” (to NBC’s Peacock).
“We are very focused on maximizing the value of all our assets,” Shari Redstone said in an interview last year with media banker Aryeh Bourkoff. “We want to be wherever the consumer is. We want to bring our markets to the largest addressing market.”
Still, Redstone may have to do some more buying before it can put ViacomCBS in a position to sell. And as NBC News reported last year, it is pursuing acquisitions to further grow the company.
“I think she’s more of a buyer than a seller,” said Rich Greenfield, a media analyst and partner at Light Shed, a technology and media research firm.
And what could she buy? There are any number of smaller companies that may be on the table, from Discovery and LionsGate to MGM and AMC. Not one of those acquisitions would give ViacomCBS the hip to compete with the likes of Disney and Comcast, but they might make it a more appealing acquisition target for someone else.
Alternatively, “someone else” may now recognize the potential value of ViacomCBS, switch early and persuade Redstone to sell the company for a price that recognizes what it considers to be its real value.
