The second incarnation of Viacom Inc. ( VY-ə-kom or Vie-ah-kom; a portmanteau of Video & Audio Communications) was an American multinational mass media and entertainment conglomerate with interests primarily in film and television. It was split from the original Viacom on December 31, 2005, alongside the second incarnation of CBS Corporation. The controlling shareholder of both companies was National Amusements, a theater company headed by businessman Sumner Redstone. The split was structured so that the original Viacom changed its name to CBS Corporation and spun out its cable and film interests as a new Viacom.
The second Viacom operated Viacom Media Networks, through which it controlled approximately 170 networks and reached approximately 700 million subscribers in approximately 160 countries. Viacom's studio assets included Paramount Pictures, MTV Films, and Nickelodeon Animation Studio, as well as a 30% ownership stake in the Rainbow S.p.A. animation studio. CBS Corporation retained the over-the-air broadcasting, television production, pay television subscription service, and publishing assets, which were previously owned by the first Viacom. The second Viacom was the world's ninth-largest media company in terms of revenue and headquartered at One Astor Plaza in Midtown Manhattan, New York City.
Viacom announced its second merger with CBS Corporation on August 13, 2019. The merger was completed on December 4, resulting in the creation of ViacomCBS (later Paramount Global which would later merge with National Amusements and Skydance Media to form Paramount Skydance Corporation).
Contents
History
Early years
In March 2005, the first Viacom announced plans of exploring the option of splitting the company into two publicly traded companies because of a stagnating stock price and the rivalry between Les Moonves and Tom Freston, longtime heads of CBS and MTV Networks, respectively. Also, the company was facing issues after MTV was banned from producing any more Super Bowl halftime shows after the Super Bowl Halftime Show controversy in 2004.
After the departure of Mel Karmazin in 2004, Sumner Redstone, who was chairman and chief executive officer, decided to split the offices of president and chief operating officer between Moonves and Freston. Redstone was set to retire in the near future, and a split was seen as a creative solution to the matter of replacing him. It was also intended to provide alternative investments that would be more appealing to investors: one a high cash flow, lower growth company that could afford to pay a substantial dividend and the other a growing company that would have greater investment opportunities and therefore would not be expected to pay a dividend.
The second Viacom was created by Redstone and headed by Freston. It consisted of BET Networks, MTV Networks, and Paramount Pictures. It started trading on January 3, 2006.
2000s
In June 2005, Viacom announced its purchase of Neopets, a virtual pet website, along with GameTrailers, GoCityKids, and iFilm. That December, Viacom announced it would acquire DreamWorks Pictures. All indications were that the whole of DreamWorks—both live-comedy film and television studios, albeit not the DreamWorks archive (which was sold to a group led by George Soros in March 2006) nor the animated unit (which was not part of the deal, which would later go on be acquired by Comcast subsidiary NBCUniversal in 2016)—would remain owned by Viacom, even though CBS Corporation acquired Paramount's television studio.
On February 1, 2006, Viacom completed the acquisition of DreamWorks. On April 24, Viacom obtained Xfire. In August, Viacom announced that it had acquired Atom Entertainment for $200 million. In September, Viacom acquired game developer Harmonix for $175 million.
In February 2007, Viacom ordered leaked copyrighted video clips be taken off the video-sharing service YouTube for copyright reasons. On February 21, Viacom publicly announced they would be offering free online access to their material through Silicon Valley's distributor Joost.
On May 21, 2007, Viacom entered into a 50–50 joint venture with Indian media company Network 18 to form Viacom 18 which would house Viacom's existing channels in India: MTV, VH1 and Nickelodeon as well as Network 18's Bollywood movie business. All future Viacom content for India and new ventures such as a Hindi entertainment channel and a Hindi movie channel would be housed in this joint venture.
On December 19, 2007, Viacom signed a five-year, $500 million contract with Microsoft that included content sharing and advertisement. The deal allowed Microsoft to license many shows from Viacom owned cable television and film studios for use on Xbox Live and MSN. The deal also made Viacom a preferred publisher partner for casual game development and distribution through MSN and Windows. On the advertisement side of the deal, Microsoft's Atlas ad-serving division became the exclusive provider of previously unsold advertising inventory on Viacom owned websites. Also, Microsoft purchased a large amount of advertising on Viacom owned broadcasts and online networks. Finally, Microsoft would also collaborate on promotions and sponsorships for MTV and BET award shows, two Viacom-owned cable networks.
2010s
In February 2011, Hulu and Viacom announced the return of The Daily Show with Jon Stewart and The Colbert Report to Hulu, along with shows from the Viacom library. Nickelodeon's shows are not part of this deal. Also that month, Viacom became a co-owner of Rainbow S.p.A., an Italian television studio best known for the Winx Club franchise. Since the purchase, Viacom's Nickelodeon networks have broadcast Rainbow's shows worldwide. Nickelodeon's American studios have also collaborated with Rainbow on multiple productions, including Winx Club and Club 57.
Later, in October 2011, Viacom purchased a majority stake in Bellator Fighting Championships. Spike started to air Bellator in 2013, after the rights to the Ultimate Fighting Championship (UFC) library ended in 2012.
On December 1, 2011, the company stopped trading on the New York Stock Exchange (NYSE) and began listing its securities on Nasdaq instead. The stock ticker symbols are the same as that used while the company was on the NYSE.
On July 10, 2012, during contract negotiations over raising carrier rates the U.S. satellite television provider, DirecTV's executives approached Viacom with a new proposal and a request to continue broadcasting 17 of Viacom's television networks (including Nickelodeon, MTV, Logo, and Comedy Central) during talks, but received no response and thus Viacom ceased transmission to DirecTV's 20 million subscribers. On July 11, in a counter response to DirecTV advising its subscribers to view original programming from the affected networks online, Viacom scaled back access to recent episodes of Viacom-owned program content available to the websites of its networks. Viacom described this as a "temporary slimdown" until a new carriage deal with DirecTV was reached. Viacom and DirecTV reached an agreement on July 20 to return the interrupted programming.
In 2012 CEO Phillip Dauman began to report Viacom's intentions to bundle past programming and make it available on-demand via services like Hulu.
On January 22, 2014, Viacom established a marketing division, Viacom Velocity.
On April 1, 2014, Cable One removed 15 channels owned by Viacom (MTV, VH1, Nickelodeon, and TV Land) off after the two companies failed to reach an agreement. Channels were replaced with other networks, including BBC America, Sprout, Sundance TV, IFC, Investigation Discovery, TV One, CMP/TV, National Geographic Channel, and TheBlaze. The change has been deemed permanent.
Copyright complaints against YouTube
In February 2007, Viacom sent upwards of 100,000 Digital Millennium Copyright Act takedown notices to the video-sharing site YouTube. Of the 100,000 notices, approximately 60–70 non-infringing videos were removed under the auspices of copyright infringement.
On March 13, 2007, Viacom filed a US$1 billion legal claim (Viacom International Inc. v. YouTube, Inc.) against Google and YouTube alleging massive copyright infringement, alleging that users frequently uploaded copyrighted material to YouTube—enough to cause a hit in revenue for Viacom and a gain in advertisement revenue for YouTube. The complaint contended that almost 160,000 unauthorized clips of Viacom's programming were made available on YouTube and that these clips had collectively been viewed more than 1.5 billion times.
In July 2008, the case generated controversy when District Judge Louis Stanton ruled that YouTube was required to hand over data detailing the viewing habits of every user who had ever watched videos on the site. Judge Stanton rejected Viacom's request for YouTube to hand over the source code of its search engine system, saying that the code was a trade secret.
Google and Viacom later agreed to allow Google to anonymize all the data before handing it over to Viacom.
On June 23, 2010, Judge Stanton ruled in Google's favor in a motion for summary judgment, holding that Google was protected by provisions of the Digital Millennium Copyright Act, notwithstanding evidence of intentional copyright infringement. Viacom announced its intention to appeal the ruling.
On April 5, 2012, the ruling was overturned by the United States Court of Appeals for the Second Circuit. Writing for a two-judge panel (because Judge Roger Miner had died while the trial was pending) of the Second Circuit, Judge José A. Cabranes concluded that "a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website". Eric Goldman, a professor at the Santa Clara University School of Law, expressed concern that the ruling would negatively affect startups, by making them "more hair-trigger on taking down news or content, for fear that failure to do so will be held against them by content providers".
Corporate governance
The previous board of directors of Viacom were George S. Abrams, David Andelman, Joseph Califano, Jr., William Cohen, Philippe Dauman, Alan C. Greenberg, Charles Phillips, Shari Redstone, Sumner Redstone (deceased), Frederic Salerno, William Schwartz, and Robert D. Walter.
Following the Viacom/CBS split, the Viacom board consisted of George S. Abrams, Philippe Dauman, Thomas E. Dooley, Ellen V. Futter, Robert Kraft, Alan Greenberg, Charles Phillips, Sumner Redstone (chairman), Shari Redstone (non-executive vice-chair), Frederic Salerno, and William Schwartz. As of 2010, the Board consisted of George Abrams, Philippe Dauman, Thomas E. Dooley, Alan Greenberg, Robert Kraft, Blythe McGarvie, Bob Bakish, Charles Phillips, Shari E. Redstone, Sumner Redstone, Frederic Salerno, and William Schwartz.