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Sumner Redstone
Chairman & CEO, Viacom;
Author, A Passion to Win
While most people know me as the head of Viacom, my life has been a succession of stimulating careers: student, teacher, attorney, entrepreneur, media executive,
father and grandfather. I’ve relished all of them. I have but one goal when I set out to do anything – to be number one, which doesn’t mean I always am, but I always try.
The measures of my progress against that goal are simple. I look at the core qualities that define success: judgement, commitment, confidence, attitude and perseverance. These are qualities which I have tried to exhibit throughout my life: as the top student at Boston Latin School; as a GI helping to crack Japanese codes during World War II; as a law clerk in the United States Court of Appeals in San Francisco; as a special assistant to the United States Attorney General; as the young head of National Amusements, Inc. – which was a theater chain my father founded that is today one of the largest in the world; as the upstart investor – they called me a peasant from Boston, by the way, who bet the family business on a little-known cable venture called Viacom in 1987; as the triumphant contender some seven years later in what I affectionately refer to as the "deal from hell" for Paramount; and finally as the executive who negotiated the comparatively effortless acquisition of CBS just last year. Of course I’m proud but also I’m humbled by my life’s work. It’s been a thrilling ride, full of ups and downs, twists and turns, the sum total of which have left me wiser and, I’ll admit, a little older, but no less ambitious and energetic.
For years my friends and colleagues have been after me to write a book and I resisted. There seemed little point in recapping a career that was just getting started, but with the acquisition of CBS and the elevation of Viacom to a position of preeminence in the global media business, it seemed an appropriate junction that reflected the life lessons I’ve learned so far.
So I sat down with my able collaborator Peter Knobler and over the course of two years and penned my first, but not my last, autobiography: A Passion To Win. The book has already made the New York Times Best Seller List, and all proceeds will benefit the Massachusetts General Hospital. I receive nothing from the book.
A Passion To Win sums up my life’s philosophy. I have no secret about my relentless drive to be number one. I am not a wallflower, I am a survivor. Through sheer dint of will and determination, with the help of an extraordinary management team, I built a media and entertainment megalith that generates billions of dollars. Today, I would like to share with you five salient lessons I have learned in my business career: It’s not the money, it’s the will to win; unless it’s a win-win you both lose; stick to what you know; business is personal and risk greatness.
It’s not about the money, it’s the will to win.
My material desires have been minimal. When I’m in Boston, I live in the same suburban house that I bought 40 years ago, which cost me $46,000. For 60 years, I bought suits off the rack. Some would say I didn’t do too well doing it. I was born to the children of Jewish immigrants. I spent my early years in a tenement. Our apartment didn’t have a toilet. It never occurred to me that other apartments did. My father peddled linoleum, supporting not only a wife and two kids but his own parents and my mother’s family as well. He was a hardworking, highly competent man who steadily succeeded throughout life, ultimately building his own business, a small chain of drive-in theaters. My mother devoted herself to the care and the education of her two sons and the emphasis everyday was on education.
The values my parents instilled in me did not include living extravagantly or amassing great personal wealth. The truth is, I’ve never cared for money. I realize that sounds strange coming from a billionaire and I recognize that many people do work for money, but I would wager that those who become extremely successful are more strongly motivated by the desire to achieve, by a commitment to excellence, by an obsessive drive to win. That certainly describes me. I do have a will to win. That was never clearer than in 1987 when I challenged management for control of Viacom International. At the time, Viacom was a small but promising company with a diversified portfolio of entertainment assets, but it was Viacom’s cable network, specifically MTV, Nickelodeon, and Showtime, that caught my eye. Having spent my career in the movie exhibition industry, I was convinced that cable and cable programming was a business with a bright future and I wanted to be part of it.
Still, I had no interest in running Viacom – that is, until I read in The New York Times that an investment group led by the company’s CEO had made an offer to buy the company and take it private. At the price they were proposing to pay, the company was a steal. As one of the company’s largest shareholders, they were stealing it from me. This theft provoked two reactions: It increased my interest in Viacom and it stimulated my competitive juices. I saw Viacom as a sleeping giant ready to explode, and I was not going to be denied the opportunity to partake in that upside. Furthermore, I did not want to see this company dismantled, and that’s precisely what these new owners would have to do to pay down the junk debt that they were assuming to finance the acquisition. I owned at that time nine percent of the company. I began buying more stock and eventually made my own bid for Viacom. These guys were going to put $50 million in the company. They offered me half the company for $25 million to get me out of the contest. I bet my company, National Amusements, Inc. on that acquisition. We sold everything we had, did everything we had to, and raised $500 million in order to do this deal.
The board appointed a special committee of outside directors to evaluate bids for Viacom but it quickly became apparent that the impartial body was in management’s back pocket. They told us nothing. Every time we made a bid they’d raise a bid by a quarter. Their bid was flawed because of the amount of money they were going to put in the company. The company was piling on all kinds of defensive luggage: poison pills, golden parachutes, you name it. So what? These obstacles only fuel my passion to win. More than once I had an opportunity to exit “with a good profit,” but the more I learned about Viacom, the greater my conviction that I would own that company. I put everything I had into the battle for Viacom. I relished every minute of it because Viacom was a company worth fighting for and I enjoyed a contest. If you get involved in a major competitive struggle, and the stress that inevitably comes with it, you’d better derive some real sense of satisfaction and enjoyment from the ultimate victory. Wrestling control of a company like Viacom was warfare. I believe the real lesson it taught me was that it is not about money, it’s about the will to win.
Unless it’s a win-win, you both lose.
In the spring of 1994, the New York Rangers were on their way to winning the Stanley Cup for the first time in 54 years, and the New York Knicks were on their way to the NBA finals. With the Paramount acquisition, we now owned the Rangers and the Knicks, as well as Madison Square Garden. Of all the Paramount assets, the cable network that broadcast all the games, the Garden and the two sports teams were the most likely to sell, because they were sexy. Potential buyers began lining up as soon as we indicated interest in selling. The contest quickly boiled down to three serious contenders: Rand Araskog’s ITT, Chuck Dolan’s Cablevision, and Liberty Media Corporation – which was about to be reacquired by John Malone. The Street priced the MSB package of assets at $500 million and the media flogged that figure to death. When I was asked whether we’d accept bids in the $600 to $700 million range I answered, "That’s a price we wouldn’t even begin to be interested in." That’s how you negotiate. From a position of firm resolve, I knew how important local sports was to TCI/Liberty and how important this piece of New York was to Chuck Dolan, so I thought I had a chance. Ultimately, after a nail-biting round of bidding, the combined forces of ITT and Cablevision won the prize. I sat in my office with Araskog and Dolan and made a deal for $1,075,000. It was an expertly engineered auction. Both Viacom and the ITT/Cablevision alliance emerged as the victors.
Something else: Don’t be distracted by the press or by Wall Street. When we bought Paramount, we were accused of paying too much. That’s why I call it "the deal from hell that became a hell of a deal," because if you look at the Paramount deal and what we kept and what we sold, we were a billion ahead. Chuck was accused of overpaying, and he declared, "The opportunity to acquire a world class property like Madison Square Garden comes along once in a lifetime, and we were determined to make it ours." I understood that. I had felt the same way about Viacom’s acquisition of Paramount. Cablevision ultimately acquired ITT’s interest in Madison Square Garden and produced great results, which pleases me. The best kind of deal is one in which you get the highest possible price and the party on the other side ultimately succeeds. That kind of shared success is particularly helpful when you find yourself across the negotiating table again. Dolan and I have since done several more deals that were mutually beneficial. So you can be aggressive in negotiating and at the same time deal with people in a fair, honest, and appropriate way. A negotiator should always be conscious that there is a life beyond the deal, not only for morality’s sake but for business reasons, because when all is said and done, unless it’s win-win, you could lose.
Stick to what you know.
I’ve been in the media business since 1954 when I gave up my law partner salary and took a massive pay cut to join my father’s company. It was Northeast Theater Corporation, today known as National Amusements, Inc. Over the next 20 years, I took that handful of drive-ins and created one of the largest and most successful indoor theater chains in the country. I owned and trademarked the term "multiplex." I helped Jack Valenti devise and roll out the motion picture rating system and I led the fight to end some of the more blatant discriminatory practices that ruled motion picture exhibition. All the money I made, I’d plow back into the businesses I know best: media and entertainment. The acquisitions I made in more recent years – Viacom, Blockbuster, Paramount, CBS – are some of the biggest bets I’ve made in the industry. But I’ve been investing in the motion picture industry for decades.
During the years I was running National Amusements, Inc., the company took large stakes; we made a lot of money. My profit on Columbia stock was $26 million. Many investors counseled to diversify. That’s probably good advice for a lot of people. I followed a simpler investment strategy: Stick to what you know. I have enormous faith in the law as a place of resolution where reason and justice prevail. I don’t like to litigate. I would rather handle disagreements from discussion and accommodation, but if that fails, litigation is an appropriate tool. I’d never file frivolous litigation, I wouldn’t want to have people think I use it every time I fail to get a business advantage. If I did that, I’d be in court everyday. I do want people to know that if they treat me or Viacom unfairly they are going to face the battle of their lives.
Business is personal, but you can’t take it personally.
You can’t overestimate the importance of personal involvement and personal relationships in the context of running a business. I work among colleagues and friends at Viacom, not employees. I’ve never used the word "employee" in my life. Trust is a foundation of any solid business relationship. I earn colleagues’ trust by treating them well and by making them understand that they can always count on me and trust me – and I don’t just mean in terms of compensation. If you go to Viacom today at eight or nine o’clock, you’ll see people working. They don’t work because they are compelled to, they work because they share my passion for Viacom. You don’t see people walking in and out the doors like you see at other companies. We have stable management. I know that sounds like Polyanna piety, but it’s true.
While I fundamentally believe that business has to be personal, I am equally resolute in my view that you cannot take it personally. Things don’t always go your way. You have to roll with the punches even if a friend delivers them. In 1993, Barry Diller, whom I considered a friend and still do, launched a bid for Paramount after Paramount had already agreed to be acquired by us. We had a signed deal – he was basically trying to break up the contract. Over several months, the Paramount deal evolved into what was called "the deal from hell." I was lampooned in the press, forced to raise billions more in capital and dragged into distracting litigation. But when all was said and done, I took Barry’s congratulatory call and we ended our long war on a note of mutual respect. He said, "Sumner, I’m sorry you won but congratulations." I said, "Barry, thanks, but I’m sorry you cost me $2 billion."
Risk greatness.
What many people overlook is that you can only win if you risk losing. If you polled advertisers, cable operators, record labels, in the early 1980s, they would have told you that MTV was just a fad. Analysts attributed far more value to Viacom’s hard assets, its cable system, radio and TV stations. I coined the phrase “content is king.” People don’t watch distribution, they watch what’s on it. They don’t watch CBS. They watch "Survivor," "Everybody Loves Raymond." Today MTV and its sister networks Nickelodeon and VH1, have become the growth engines of Viacom. We closed out the last decade and MTV was providing more than 50 percent of Viacom’s cash flow. As eager as I was to purchase MTV and as determined as I was to hang onto it, to support it, to drive it all over the world, which we’ve done, I did not dream it would become such a fabulous success. MTV networks have lived long enough to take its viewers from childhood to middle age and are now locking in a whole new generation of viewers. When the banks wanted us to sell MTV and Nickelodeon, that was the year we launched MTV International. MTV now plays to a billion people.
We’ve had our share of tribulations – with Blockbuster, for example. Many doubted the wisdom of acquiring Blockbuster from the outset. The information superhighway and interactive TV were all the rage in 1994 when we acquired the company. Many thought these technologies would soon disintermediate the video rental business. But Blockbuster’s robust cash flow, management continuity, optimistic expansion plans, gave us reason to believe that it was a solid investment.
Little did we know that all three of these assumptions were faulty. At the time we acquired Blockbuster, its management team was opening a new store somewhere in the world every 14 hours. They were getting into music with Blockbuster Music; Discovery Zone, a playground network for kids, was already in operation; Block Party virtual reality centers were slated to be the equivalent experience for adults; finally, Blockbuster Park, an entertainment, sports and retailing complex was in the planning stages. Shortly after we acquired the company, we dug into the books and discovered the cold, hard truth: Each of these ventures was either running well below projections or into the ground. Blockbuster’s founder Wayne Huizenga and his management team were "deal guys" – consolidators; managing a business was not their forte.
Wayne had long since left the company. We killed the plans for Blockbuster Park and Blockbuster Party, Discovery Zone went bankrupt, we closed 50 unproductive Blockbuster Music stores. Then, just as we began to regroup, Steve Berrard, Blockbuster’s CEO abruptly announced his departure. We hired someone from general retail; the number two guy at Wal-Mart seemed a great idea. His solution to Blockbuster was to move the company from Fort Lauderdale to Dallas and make Blockbuster an entertainment concession stand. Awash in the low margin merchandise, Blockbuster lost focus in the core video business. We had a disaster on our hands. The slogan "Make it a Blockbuster Night" changed to "One word: Blockbuster," which sounded more like a United Nations peace keeping mission than a call to rent videos.
By August 1996 we were $200 million short of our projected cash flow. Viacom stock dropped precipitously. The domino effect was taking hold. Business Week was printing a story called "Sumner’s Last Stand." I was really embarrassed. I recall going to a party at Michael Eisner’s house. I was ashamed to go but I thought I’d better, and as soon as I walked in, he didn’t mention the story, he said, "Sumner don’t worry. It will be trash a year later."
I went to Dallas and ran Blockbuster. A year ago Forbes printed a story called "The Vindication of Sumner Redstone." I’ve always said, and I say it to my kids today and my grandchildren: Success isn’t built on success, it’s built on failure. It’s built on frustration. It’s built on calamity and how you deal with it.
I brought in John Antioco and together we restored the luster of the Blockbuster. The key to our success was convincing the movie studios to engage in revenue sharing, which is a new business model that transformed not just Blockbuster but the whole economics and dynamics of our business, and it created an entire new video rental industry. Revenue sharing allows us to stock a lot of tapes for the customers. In those days, customers never got what they wanted. It was like going to McDonald’s and asking for a hamburger and being told they only had french fries. We paid $65 a tape. Today we pay $6 a tape.
Today, Viacom’s brands and properties reach and influence tremendous numbers of people around the globe. The cross-over benefits among Viacom’s divisions are endless. We can use the number one children’s van in the television world, Nickelodeon, to create a Paramount movie like Rugrats, which can then be supported and promoted by every division in the company. We can show those movies on thousands of screens around the world including our own. We can turn our books into movies or movies into television shows or television shows into movies. We can sell and syndicate those television shows on our stations as well as others. We can provide marketing solutions for advertisers across the MTV network, CBS, Infiniti radio Stations, and outdoor billboards. And most important, we have made Viacom a place where financial discipline lives side by side with artistic freedom, where aggressive executives work together as friends and where the best interests of the entire company are a common goal.
At the first meeting I had with our executives I said, "There’s one thing I always want you to remember: You don’t work for Paramount. You don’t work for MTV. You don’t work for Simon & Schuster. You work for Viacom." I hope I’ve made a mark, at least a small dent, that will make a difference for many years to come. The best part of it all is the knowledge that I am not done yet and the anticipation of the work still to be done and for my never-ending passion to be number one.
