Cbs's Success Validates Redstone's Strategy
When National Amusements chief Sumner Redstone decided to split his media conglomerate Viacom in two eight years ago, many analysts questioned his judgment, if not his sanity. The large company, which would retain the Viacom title, the analysts figured, would have no trouble holding its own, with such assets as the Paramount film studio and the MTV cable networks. The other half of Viacom, to be named CBS Corp., was likely to struggle as it competed with much larger media groups. After all, unlike Time Warner, NBC Universal, and Disney/ABC, it had only the CBS TV and radio networks and stations to rely on and a billboard company, but no cable network to speak of other than Showtime, and no film studio (it would later make a half-hearted attempt to make movies, most of which have flopped). But in the end, it would turn out that Redstone's gambit was astute. Indeed, Viacom turned out to be the struggling company, while CBS has recorded steady and often impressive growth. CBS had a record year in 2012, as well as a record fourth quarter, and the momentum is building for an even better 2013, CBS chief Les Moonves said on Thursday as the company reported a 6-percent jump in fourth-quarter profit. Advertising revenue is growing, and our revenue from non-advertising sources [principally retransmission fees from cable and satellite TV companies] continues to grow even faster. Said Redstone, who is executive chairman of both Viacom and CBS Corp: CBS has turned in another quarter of exceptional performance, capping off another terrific year. The company's SEC filing came on the same day that CBS slightly raised its cable TV presence by becoming a partner in Mark Cuban's AXS network (formerly HD-TV). In a statement, Moonves said, This is an innovative way to use our tentpole programming to gain more ownership in the cable network business, seeming to imply that CBS may have paid little or nothing for its stake in the cable channel.