Viacom Is One of the Term Paper

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In 1996 Westinghouse/CBS bought Infinity radio broadcasting and outdoor advertising group for $4.7 billion, a deal that was largely the result of the Telecommunications Act of 1996. The Telecommunications Act heavily deregulated the media industry and allowed a company to significantly increase the amount radio stations it could own. In 1997, Viacom dealt its educational, professional and reference publishing businesses to Pearson for $4.6 billion, and retains Simon & Schuster. In 1999, CBS bought King World Productions, the leading television program syndicator at that time, for $2.5 billion. On September 7, 1999, Viacom and CBS announced their merger, a $50 billion deal. This was the largest media merger of that era, which came one-month after the FCC approved duopolies. Under this merger, the new Viacom had 33 television stations, eclipsing the FCC's 35% ownership cap. This cap was based on the amount of stations one company owns that reach 35% or more of the nation's television households.

In 2001, the United States Court of Appeals, DC Circuit gives Viacom temporary approval to exceed the 35% ownership cap. Also that year, Viacom completed a $3 billion deal for BET Inc. In 2002, Viacom completed the acquisition of KCAL-TV (Los Angeles) from Young Broadcasting Inc. For $650 million. This deal formed a Viacom duopoly in Los Angeles raising the number of markets where it owns two broadcast stations to eight. In 2003, Infinity Broadcasting owned and operated 185 radio stations, second in size to only Clear Channel Communications. Viacom outdoor became the largest outdoor advertising entity in North America, and Viacom Television Stations Group currently owns and operates 39 TV stations. Thus, Viacom has built itself on its' many mergers and acquisitions.

Competition

As with any giant-sized company, Viacom has many competitors. One such competitor is Time Warner (formerly AOL Time Warner), with revenues of approximately $34.2 billion. Time Warner is the product of the 2001 merger of America Online with Time Warner. This company's reach extends across the vast properties of the two companies from which it originated. America Online brought its flagship online service, Netscape, and several interactive services to the merger. Those operations were combined with old media spanning film and TV, cable, publishing, and professional sports, and include such brands as Warner Bros and Time Warner Cable.

Another major competitor is Viacom is Walt Disney, with revenues of $23.5 billion. The Walt Disney Company is the #2 media conglomerate in the world, behind Time Warner. Disney owns the ABC television network, 10 broadcast TV stations, and more than 70 radio stations. It also has stakes in several cable channels such as ESPN (80%) and A&E Television Networks (37%). Its Walt Disney Studios produces films through imprints Walt Disney Pictures, Touchstone, Hollywood Pictures, and Miramax. Walt Disney Parks and Resorts, which includes Walt Disney World and Disneyland, owns the most popular resorts in North America. Finally, Walt Disney Group oversees the Mouse's Web properties (ABC.com, Disney Online, ESPN.com). A few of the other competitors include Vivendi Universal, with revenues of $22.6 billion, and News Corp. (FOX), with revenues of $14.3 billion.

Foreign Interests

Viacom has operations in about 165 countries. Its' international sales for 2004 were $3,713.9 million. Viacom's holding company, National Amusements, owns Showcase Cinemas and Multiplex Cinemas with about 1,400 screens across the U.S., the UK, and Latin America. Unfortunately, it is the foreign interests segment of Viacom that has received the most criticism. For example, in February 2003, the grass-roots advocacy group-solicited donations from its email members to raise $75,000 to place an anti-war ad on billboards in four major American markets. The group claimed that they raised the amount from members in two hours, and when they approached Viacom Outdoor, the company refused to post the ads, according to MoveOn.

In March 2003 MTV, another Viacom-owned entity, refused to accept a commercial opposing war in Iraq, citing a similar policy against advocacy spots that it says protects the channel from having to run ads from any cash-rich interest group whose cause may be loathsome. Accordingly, the youth-oriented music station regularly airs recruitment ads for the U.S. Army. Furthermore, in January 2004, CBS rejected a request from MoveOn to air, during the forthcoming SuperBowl event, a 30-second ad that criticizes the Bush administration's run-up of the federal deficit, saying that it violated the network's policy against accepting "advocacy advertising." At the same time, CBS is allowing ads placed on the docket by the White House's anti-drug office.

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In 1994, in the wake of the CEO of Viacom's declaration of support for George W. Bush, Viacom refused to air political advertising from advocacy organizations on its cable channels (MTV, VH1 and Comedy Central). The independent progressive group Compare Decide Vote produced an ad comparing the presidential candidates' policy positions on issues important to young people, which the group says was accepted for placement by MTV Network's Comedy Central. Two days later, the station rejected the ad, citing an MTV Networks policy against running advocacy ads. The reason behind Viacom's policy distinction between issue-ads and political campaign ads was that across all Viacom's properties, such issues were talked about every day. However, it was later pointed out that the reasoning that it was outside perspectives on important political issues and was blocked because Viacom's own coverage of the issues was sufficient was undermined by CBS's decision to hold until after the election a 60 Minutes story on forged documents that the Bush administration used to sell the Iraq war. The network stated that it would be inappropriate to air the report so close to the presidential election.

Although Viacom has been reported to have stifled the messages of both political organizations and its own reporters, Sumner Redstone, CEO of Viacom has made his own political voice heard clearly. Redstone formerly stated that he votes for Viacom; Viacom is his life, and he believes that a Republican administration is better for media companies than a Democratic one. This comment was severely criticized by media critics, who stated that a politically motivated delay would be reprehensible, a worse abdication of the network's journalistic responsibility than even Rather's careless rush to judgment on the supposed National Guard memos.

Future Expectations

Despite the criticism on Viacom's international stance, the future expectations of Viacom appear bright, especially if the company continues its path of mergers and acquisitions. According to the press, the CBS group has eyed foreign broadcasters, including SBS Broadcasting, which recently sold to a consortium of financial buyers. The press report stated that Viacom would definitely be interested in purchasing CNN if it were for sale. The report also stated that Viacom would also look into buying Univision, however, the company cannot own more TV stations under the 40% cap initiated by the FCC. Paramount has reportedly explored buying a couple of studios, but also reported that there were not very many, and that they were very expensive. Viacom's focus will be on strengthening the new Viacom's core brands, such as MTV, and developing others and beaming them to consumers by any and all means possible, including the Internet, broadband and wireless.

Viacom recently lost a bid to competitor News Corp., for MySpace.com and IGN. According to Viacom insiders, wireless deals mostly outside the U.S. now bring in well over $100 million in revenue, which will easily swell to $500 million in three to four years. Viacom's current $75 million from online advertising is growing fast, and the company is said to currently said to be in talks to buy iFilm for $50 million. Viacom has also reported that it would focus on smaller "tuck in" acquisitions. Another future expectation of Viacom is the great expectations of cash for carriage as CBS starts renegotiating contracts with cable operators solo (without MTV Networks). Future deals could include carriage for Showtime, the one cable net that will remain with the CBS side. Viacom was likely to take partners on future networks, and a net for older viewers is reportedly in the works with Comcast.

Viacom plans to split into two companies in 2006, and has named Shari Redstone as nonexecutive vice chairwoman of both units and said investors would receive half a share in each new business for every Viacom share. The boards of the new Viacom and the CBS Corporation will share three other common directors, including Ms. Redstone's father, Sumner M. Redstone, the chairman, Viacom said in a regulatory filing. Mr. Redstone is splitting Viacom to revive its shares, down 10% this year after falling 18% in 2004. The new CBS will contain broadcast television and Infinity radio and carry about $7 billion in debt and most of Viacom's pension obligations. The new Viacom will have more than $3 billion in debt, and shares of Viacom fell 81 cents, to $31.99.

The new CBS posted sales.....

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