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Media Firms Piece Together New Strategies

Rebuffed, Comcast withdrew the offer and returned to its core business. It has joined with Time Warner to make a multibillion-dollar bid for Adelphia Communications Corp. and its 5 million customers.

Liberty Media Corp. Chairman John C. Malone is also in the midst of dismantling his hodgepodge of media assets. Last week, after enduring years of Liberty stock trading at a discount as compared with the value of its assets, Liberty said it would spin off its roughly 50 percent stake in Discovery Communications Inc. into a new publicly traded holding company. If the other major shareholders, Cox Communications Inc. and Advance/Newhouse Communications Inc., which each own about 25 percent of Discovery, merge their shares with Liberty's, Discovery will effectively become a public company -- which is what Malone expects. If Malone is right, then Discovery will be in a better position to acquire other businesses or be acquired itself.

Rupert Murdoch's News Corp. has massive holdings in the media. The company seems to have given up on building a Los Angeles Dodgers-based sports empire and is eyeing the Web and video games. (Martin Kaplan -- AP)

Sliding Stock
Shuffling Giants
_____Post Archive_____
Viacom Settles Outstanding FCC Fines (The Washington Post, Nov 24, 2004)
Viacom Offers a Premium To Push Blockbuster Shares (The Washington Post, Sep 9, 2004)
In Succession Plan, Viacom CEO Sees the Small Picture (The Washington Post, Jun 2, 2004)
Viacom President Resigns (The Washington Post, Jun 2, 2004)

At Viacom, the past five years have taught Redstone that all parts of his company will not grow at the same rate, he said, which is why it makes sense to split the steadier, slow-growth company -- the CBS side -- from the faster-growth side, MTV and the film studio.

In 2000, after the government erased the national radio ownership cap, Viacom's radio business grew at a 27 percent clip, fueled largely by acquisition, he said. Now, with nearly 200 stations, the company's radio division produces steady cash but only single-digit growth.

The businesses that have not met Viacom's aggressive growth goals would be jettisoned in the reorganization, he said, mentioning the company's 856 movie screens in Canada. As for the theme parks, he said, "They may go, also."

Redstone has been frustrated that the slower-footed elements of Viacom have been a drag on Viacom's stock price, which is still far below its early-2000 high of nearly $70 per share. Time Warner learned the same lesson after it was acquired by AOL: The online unit pulled down the stock price as it shed subscribers and advertising dollars and endured a government accounting probe. The AOL brand was dropped from the company's name in 2003.

Topping Redstone's shopping list are more cable television channels to add to the MTV/Nickelodeon empire, he said. He added that Viacom is "underinvested" in the Internet and will look for acquisitions there. "But not Yahoo or Google," he said. Also not on Redstone's list: a cable or satellite system. "I would expect the company would not be involved in distribution," he said. "We don't need it."

Like Rupert Murdoch's News Corp., Viacom cannot buy any more television stations in the United States, thanks to a cap put in place by Congress last year.

In 2004, General Electric's NBC bought Vivendi Universal's movie studio, cable channels and theme parks, but not Universal Music Group, seeing an industry troubled by sales losses and piracy. Compared with others, GE was a latecomer to the media mega-mergers and has so far not made an Internet investment, passing on the tech-boom temptation that nearly sank Time Warner and cost Disney millions. It learned by the mistakes of the too-early adopters.

Randel A. Falco, president of NBC Universal Television Networks Group, said the company surveyed the remains of the tech bust and decided its play would be content, not distribution.

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