Viacom’s Bressler Not Gloating Over EchoStar

Mar 29, 2004  •  Post A Comment

Earlier this month Viacom was in a high-profile stare-down with No. 2 satellite operator EchoStar Communications over programming fees for carriage of networks such as CBS, MTV and Comedy Central. The battle involved tricky must-carry issues and even stirred up antitrust questions.
Two days after EchoStar stopped carrying the Viacom-owned networks in protest of the media company’s demand that EchoStar also carry several new cable networks as a condition for airing CBS owned-and-operated local stations, the two companies struck a deal that was widely seen as giving Viacom everything it wanted.
That was a very public demonstration of the power of Viacom’s content. It was the latest success for a company that has evolved into perhaps the most successful pure-play content company in the media and entertainment industry, consistently setting financial records quarter after quarter and being generally regarded by Wall Street as one of the healthiest media companies and, according to some, one of the most feared.
That is something Richard Bressler would never say. He isn’t about to gloat. Viacom’s chief financial officer said the situation simply reflected the reality that Viacom owns must-have content-and must-have content is the lifeblood of any distributor.
“The fact that we are a pure-play content operator is really compelling,” Mr. Bressler said last week in an interview with TelevisionWeek. “People know we have no other agenda other than having good content to sell to cable operators at a reasonable price.”
Mr. Bressler pointed out that cable operators pay less than $2 per month per subscriber to get all of Viacom’s programming-far less than what The Walt Disney Co. charges operators to carry ESPN. But at the same time, Mr. Bressler said, Viacom content is so important to cable and satellite operators that they enter into long-term carriage agreements that ensure up to mid-single-digit rate increases and that generate robust and stable revenue streams for the company.
Thanks to a slew of regulations and laws aimed at clamping down on corporate malfeasance and increasing executive accountability, many CFOs are being forced to acquaint themselves with the operations side of the companies for which they work. As a result, many CFOs who were once simply number crunchers are evolving into experts on operations and strategy as well as finance.
For his part, Mr. Bressler said making such a transition was easy, given Viacom’s philosophy about the role of CFO. So while other CFOs are now introducing themselves to company employees, familiarizing themselves with the operations side of the business and inculcating corporate managers to include the finance department in discussions about business plans, Mr. Bressler said such a culture was already in place when he got to Viacom nearly three years ago.
“One of the attractions to coming to work with Mel and Sumner is that they emphasized to me that they wanted somebody who is in constant contact with the senior management, setting budgets and strategies,” Mr. Bressler said, referring to Viacom President and Chief Operating Officer Mel Karmazin and Viacom Chairman and CEO Sumner Redstone.
That mindset also made it easier for Viacom, and Mr. Bressler in particular, to adapt to increased scrutiny by investors, who, in the face of scandals at companies such as Enron, WorldCom and Tyco, are holding corporate executives a lot more accountable for a company’s performance.
“We do have investors demanding more transparency, and I think, quite frankly, it’s a good thing,” he said. “We are always dealing with transparency, and constantly dealing with investing in our businesses for the medium and long term, while at the same time knowing that this company is owned by public shareholders. We remember why we are here, and there’s no ambiguity that it is to make money for shareholders.”
Proud of Transparency
Mr. Bressler said that investor demand for greater corporate transparency is something Viacom has long taken seriously, and he said is proud that investors have commented to him that the filings made with the Securities and Exchange Commission following an earnings call contain no surprises and support the notion that the company is being as clear as it can about its finances and strategy. “What we tell them orally gets cemented in a legal document,” he noted.
He predicted that investors should be pleased about what they hear for the coming year as well. Thanks to an economy that is in recovery and a strong advertising environment, he predicted Viacom will have “a terrific year,” particularly as the presidential race heats up and the campaigns begin buying more ads. As Mr. Bressler quipped: “God bless the George W. Bush and John Kerry fund-raising machines.”
He even believes that Viacom’s assets will benefit from NBC’s coverage of the Summer Olympics this fall, since advertisers not interested in buying time on NBC look elsewhere.
In addition to a lift from advertising, Mr. Bressler said the company continues to be on the hunt for assets that make sense strategically, including television, cable, radio and entertainment assets.
International expansion is also a priority. Mr. Bressler noted that given that just 15 percent of Viacom’s revenue pie comes from business overseas, he sees lots of room to grow internationally, particularly in Asia and Europe.
“So much of the world’s population is outside the United States, and with all the technologies developing out there, we are looking at how do we take advantage of that,” he said.