New York -- In his first public appearance before the investor community since being named CEO of Viacom, Philippe Dauman said the media giant will focus on growing and complementing its existing assets, and anyone waiting for a major splash on the acquisition front is wasting their time.
Dauman, speaking at the Goldman Sachs Communacopia conference here Tuesday, said rejoining Viacom -- he was named CEO earlier this month after former CEO Tom Freston was fired -- was “like a homecoming.”
Dauman has a long history with Viacom chairman Sumner Redstone -- he advised Redstone on his purchase of Viacom in 1987 -- and he served as deputy chairman of the company from 1996-2000, leaving after Viacom’s purchase of CBS.
Dauman said his focus, after only two weeks on the job, will be to bolster Viacom’s existing cable assets, mainly through small acquisitions of early-stage companies.
He harkened back to his private-equity days -- he and former Viacom executive vice president of finance, corporate development and communications Tom Dooley, now Viacom senior executive VP and chief administrative officer, ran private-equity firm DND Capital Partners for about six years before rejoining the company -- when several start-ups approached him for entry to Viacom.
“We dealt with a number of small leading-edge companies who came to us knowing our association with Viacom and said, ‘If we could only get involved early on with MTV or Nickelodeon or some of the other assets Viacom has, that could turbocharge our development.’ But they didn’t know who to call,” Dauman said.
“That happens in a lot of big companies,” he added. “We need to create a process by which we identify these opportunities early and, once we find people to bring into our family, we need to have a process to integrate them, to make them work with our other digital properties and to flow back to our cable networks and our other properties.”
But that won’t mean a big, splashy Internet buy, Dauman said. Some analysts have speculated that one of the reasons behind Freston’s firing was his failure to acquire social-networking site MySpace, acquired last year by News Corp. for $580 million.
Dauman wouldn’t identify any specific targets, but he said Viacom would spend less than $100 million on individual acquisitions. He added that criteria for future acquisitions will equally weigh the financial aspects of a deal and how the property fits with Viacom’s existing assets.
“Acquisitions will be, to the extent that we need them, in that smallish category,” he said. “Some of them might be a few million dollars. $100 million is kind of a ‘largish’ acquisition; we’ll have a couple of those. But in the aggregate, we will not go beyond just a portion of the free cash flow that we have.”
Later, after Dauman’s presentation, Dooley said that while small tuck-in acquisitions won’t have a short-term impact on the stock, they will in the long term.
And while analysts and observers have tied the recent management shakeup to Viacom’s declining stock price -- it was down 10% in the nine months before Freston’s departure -- Dauman said he will not be ruled by Wall Street.
“Fundamental performance leads to [a higher] stock price eventually,” Dauman said. “It’s broken my heart as a board member to see what has happened to our stock price year after year. I’m going to focus on performance, on making sure the people inside the company and outside the company understand what we are about and produce results. The stock price will take care of itself.”
Dauman also tried to downplay speculation that Viacom’s Paramount Studio would lose its distribution deal with Showtime Networks. Showtime was once part of Viacom: It was moved over to CBS after the January split that cleaved Viacom into two separate entities.
Lately, CBS CEO Les Moonves has complained about the high prices Showtime pays for studio content -- one of the catalysts for his plan for CBS to start producing its own small films.
“I think we will have a new pay TV deal -- if not with Les, than with someone else,” Dauman said, adding that he’s already been in contact with other parties interested in Paramount product. Showtime’s current deal with Paramount carries through 2007.
Dauman also said he has been in contact with “a couple of hundred” of Viacom’s management in groups as small as one and as large as 20.
“We’ve already started to work on several substantive issues, starting to accelerate the change in our company,” he said. “I’m looking forward to working with them.”
Dauman, who earlier praised Redstone as “the greatest entrepreneur of our time,” also said the mercurial chairman has given him free rein to run the company.
Dauman, who has known Redstone for about 20 years, said the two have a relationship where Dauman “can push back.” He added that while he regularly consults Redstone for advice, the chairman does not get heavily involved in operations.
“He has left me alone to run this company,” Dauman said.