Redstone Doesnt Fret Over Powerful MSOs


Las Vegas-Viacom Inc. chairman Sumner Redstone last week said that he no longer fears MSO consolidation as a possible barrier to distribution of his popular cable networks over cable systems.

Redstone used to rail against Tele-Communications Inc., claiming the MSO used its access to subscribers to bully programmers on carriage deals. But now, Redstone-who claims he coined the phrase, "Content is king"-said Viacom has such compelling content that no distributor could do without it.

Viacom owns such basic-cable networks as MTV: Music Television, VH1 and Nickelodeon, and is about to merge with CBS Corp.

"Why aren't we worried? We have enormous and powerful brands and you know what they are. They find their way onto every platform," Redstone said here to reporters after giving the keynote address at the National Association of Broadcasters convention.

Following AT & T Corp.'s merger with MediaOne Group Inc. and America Online Inc.'s absorption of Time Warner Inc., the two companies would control about 44 percent of subscribers to cable and direct-broadcast satellite. AT & T bought TCI in 1999.

That level of cable concentration, Redstone said, ought to inspire Congress and the Federal Communications Commission to abolish a host of broadcast-specific regulations. They include the ban on common ownership of two TV networks and the rule barring one TV-station-group owner from reaching more than 35 percent of TV households.

"The regulation that was imposed on broadcast is outmoded today. The world has changed enormously," he added.

Redstone said the AOL-Time Warner deal hasn't stopped Viacom from working with AOL. "There's probably more going on between Viacom and AOL today than there is between Time Warner and AOL," he added.

In other comments, Redstone said he expects the $37 billion deal with CBS to close by the end of April, probably with the Department of Justice and the FCC agreeing to allow Viacom to retain United Paramount Network.

"I don't like to use the word confident, 'but there is no public-service argument that could be made that would warrant the death of UPN, which is just what would happen if we don't get it," he said. "I expect that we will be able to keep UPN, and if we do get it, it will succeed."

He said he has no plans to follow Fox Broadcasting Co. and NBC by withdrawing CBS from the NAB over the network-affiliate split on whether the FCC should relax the 35 percent national audience cap. "We think it is better to remain members of this powerful organization to carry on that fight," he added. "Obviously, others got disgusted and look at it differently."

In his speech, Redstone said broadcasting was as vibrant as ever and an alert TV industry has nothing to fear from the Internet-or, as he tagged them, the "dot commandos."

Instead of fretting about Internet-induced audience splintering, broadcasters need to realize that no else aggregates viewership like TV stations and networks combined, and the industry must play to its strengths, which, he said, are content, brands and reach.

"Fragmentation? Bring it on. Because ultimately, it will only increase the margin between the major broadcasters and the hundreds, thousands or even millions of other media hopefuls trying to stand out amid all the clutter," Redstone added.

TV stations, he said, offer advertisers the ability to reach "in a single instant" an audience as large as the "entire membership of AOL." AOL has about 23 million subscribers.

During this year's Super Bowl, he added, ABC Inc. raked in $150 million in just a few hours-"three times as much as the leading content Web site made in the entire 12 months of 1999."

Billionaire Redstone saw reinforcement from ABC's hit show Who Wants to Be a Millionaire, saying a widely popular network program burrows deep into the public culture and consciousness in ways that no one else can match.

"The Millionaire phenomenon teaches us that the mass' in mass media is still important and ultimately driven by the viewing public," he said.

Redstone also let it be known that Silicon Valley hasn't got a vise grip on the Internet. He said the Web's top three news sites are affiliated with broadcasters and cable networks, as are the top three sports sites. And the top three music sites are part of MTV Networks' programming stable.

"That is what MTV has done with the MTVi Group, the Web's leading source of music content. This is what we're doing with Nick Online, a powerful force for kids," he added.

Redstone praised the Internet as a transformative technology, but he insisted that the content carried over the Internet drives consumers toward the technology.

"Take it from someone who has lived through more than a few technological revolutions-those who make and distribute the content are the big winners, and our current revolution is no different," the 76-year-old magnate said.