This editorial was originally published in 2016.
Viacom’s latest debacle, from one view, is a Snapchat-era remake of 1980’s primetime soap; there are lots of tears, eye-rolling, dramatic exits, glorious hair, fuming selfies, and, naturally, an immense, disputed generational fortune.
Viacom’s financial timeline, however, would make an excellent chorus in a Greek tragedy—if it were not so convoluted and, at times, tawdry.
One of the world’s most powerful media conglomerates, Viacom has been in decline for more than a decade, and yet few in the press went so far as to question the logical fallacies behind its troubled, profligate history until two mistresses started a catfight over the 95-year-old boyfriend’s will. That is the tawdry bit.
A story of miscalculation, outsize ambition, and heart-stopping risk, Viacom has become an unfortunate spectacle for national amusement—a circus of bit players providing a distraction from a distinctly American cautionary tale.
The company’s current troubles—sliding revenues, profits, and stock prices—have been complicated by myriad missteps, but most significantly by an insistence on the maintenance of a nearly 50-year-old business model despite all indicators which would advise the contrary– including its own fall in fortune.
The slow, painful descent of Viacom from the realm of the unassailable to that of a common and vulnerable media conglomerate cannot be laid squarely at the feet of its board of directors, Sumner Redstone, or his string of demonized and/or failed messianic CEOs.
It is the preservation of Viacom’s legacy—which came to be seen as indistinguishable from its business plan—that has subverted newly every opportunity that the company was offered to move ahead, rather than follow, the industry.
No one, not even Wall Street’s most venerable soothsayers, predicted the age of PewDiePie—when user-generated content on YouTube would begin to supplant broadcast television with ad hoc self-promotional videos reaching as many as one billion page views.
There appears to have been few, if any, early allowances made for the competitiveness of the digital world or the caprice of a market which is now turned towards an unending search of tech unicorns, not old-school broadcast TV conglomerates.
The roster of its holdings, however, look magnificent—Paramount, MTV, BET and Comedy Central are under its wing— but the industry, its analysts, and focus groups know that MTV, for example, is not the edgy, slice of cool that it was in 1981.
Yet, it is not merely the lack of MTV’s hipster cred, the recent string of duds released by Paramount or the “cord cutter” revolt among consumers of virtually every demographic that have caused Viacom’s stock prices to falter over the years.
“(Viacom) stock,” wrote analyst Michael Nathanson in a report entitled “Huis Clos” (no exit) quoted in a New York Times article, “was cheap for a reason after significant earnings cuts.”
“We have clearly put too much trust in the old playbook; the game has changed, ” Nathanson wrote.
Fixing what is wrong with the company requires more than shifting board members and making various heads roll. Realizing that no global brand is invulnerable—not in a global climate which has seen startup AirBnB inspire an outright war between itself and the world’s largest hotel chains– is only the first step. The company must not only match its competitors with its pace of innovation; it must overtake them.
Viacom, however, as powerful as it is, seems unable to pull itself away from its own reality show.