11/11/00

Sumner Redstone - Episode #104 Transcript
Sumner Redstone
CEO and Chairman of Viacom, Inc.

The following is an edited version of Sumner Redstone remarks at the Town Hall Los Angeles luncheon.

Introduction

Summer Redstone is a well-known leader in the entertainment and communication industry. As Chairman of the Board and Chief Executive Officer of Viacom, Sumner has been instrumental in leading his media powerhouse into nearly every segment of the international media marketplace. Viacom's portfolio is vast. Paramount Pictures, MTV, Blockbuster, Spelling Television, Showtime, Simon and Schuster and Comedy Central are just some of the entities that make up Viacom. However, Sumner's Rolex tends beyond the entertainment business. He takes pride in teaching and dedicating time and energy to civic and community affairs. In this speech, Sumner Redstone shares his vision of the creative strategies needed for the entertainment world to prosper in the new millennium.

Creativity is King

About ten years ago, I coined the phrase: "content is king." Now the phrase is ubiquitous, echoed wherever you turn. So, I guess it's time for me to move on, but not too far--because nothing will change my fundamental faith in the primacy of content, which has been validated time and again. Still, for my remarks today, I'd like to offer another phrase: "creativity is king."

Products of the human imagination make American culture and American society the most exciting, the most dynamic in the world. And as the home of most of the world's television and movie production, Southern California is the epicenter of this vast, incredibly diverse, exciting and glamorous entertainment industry. So, I'm happy to be here where creativity reigns.

As you heard today, I have worked in the entertainment business most of my life. But entertainment has always been more than what I do, it has always been, in a very real sense, who I am. The fact is that I, like many of you, practically eat, sleep and breathe entertainment.

Despite my obvious youth, I am fortunate to have lived through a series of amazing transformations of the entertainment industry: the birth of network television, which made a new visual world accessible to the mass radio audience. I've seen the growth of Hollywood's motion picture industry into an incredibly powerful worldwide force and I've seen the rise of cable TV, which spurred production of innovative programming of every conceivable type. Now, I'm witnessing the birth of an entire new medium-the Internet-with all its exciting possibilities.

We could talk about these transformations in highly technological terms. But, ultimately, what propels this industry in new exciting directions is creativity-the creativity of the people who invent and produce the programming that attracts and captivates audiences.

We Share a Passion for Entertainment

We work all day to create the best movies, television programs, soundtracks, books and other entertainment experiences. And what do we do in the few hours that we are not working? We go to the movies, watch TV, listen to music and read, of course. We all share an undeniable, and sometimes unexplainable passion for entertainment. It drives us and defines our lives. We are fanatics in the best sense of the word.

Now, at the beginning of a new millennium-here, in the crucible of the world's entertainment industry-there is no better time or place to declare "creativity is king." And there is no better place to explain why this phrase is at the center of everything we do at Viacom.

The Forces of Fragmentation and Branding

But success in today's media world requires more than the creativity and imagination to make captivating content. There are two fundamental forces that drive the entertainment business today, and that provide the foundation for creativity to prosper and for companies like Viacom to succeed. These forces are fragmentation and branding.

In an era like ours, when the options for leisure time are growing exponentially, you need an effective strategy to combat the fragmentation of audiences, as they gravitate to more and more media outlets for their news and entertainment. We cannot just combat it defensively, but we can actually turn it into an advantage and prosper from it.

Ad spending growth is likely to continue to outpace GDP growth for a number of years to come-a historic shift from the industry's cyclical nature of the past. Thus, media will continue to expand rapidly, from a $500 billion industry today to a $660 billion industry by 2003, according to some forecasts. Indeed, by then, Americans will spend more money on media than on food, making media the sixth-largest industry in the United States . . . definitely food for thought.

What exactly is fragmentation? In a word: more. More choices, more outlets, more of what you want, more of what I want…more, more, more. In television, first there were three…now, there are countless channels catering to every interest, whether it be food, football, or fashion. Other so-called old media continue to fragment and grow dramatically: hundreds of new magazines are launched every year. Radio and newspapers are both recording record revenue levels, and on and on.

The Internet will Enhance the Growth of Other Media

And there is the ultimate fragmented media-the Internet. This new medium makes news and information accessible with an amazing immediacy. Now, we are witnessing the first stages of its evolution from an information to an entertainment medium, with recent deals like the creators of South Park agreeing to make animated shorts for Shockwave.com. The new media world is beginning to see how much they need Hollywood's creativity. In fact, according to a front-page article last week in the The Wall Street Journal, Los Angeles is shaping up to be the next Silicon Valley because of "the lure of its show-business know-how as the Internet becomes increasingly content-driven." The result: consumers of entertainment have never had so many choices, and producers and distributors of entertainment have never had so much competition.

So, fragmentation produces infinite choice and infinite competition. Now that might sound like a recipe for disaster, as more and more media outlets slice up the entertainment pie. But as far as I am concerned, this industry has never been more exciting, and potentially more profitable for companies like Viacom that has a coherent strategy for the future.

So how do you turn fragmentation into an advantage and prospect from it? First, you assemble audiences that advertisers want to reach. Today, media companies are increasingly delivering their content over a variety of platforms; radio and television, network and cable, online and print, big screen and video. And advertisers are using the same variety of platforms to reach their desired audience. In fact, cable TV is expected to surpass broadcast TV in total audience two years from now. Still, for many advertisers, broadcast remains the most attractive place to be. So, for a company like the new Viacom, with strengths in both network and cable TV, audience fragmentation is not an excuse for hand-wringing, it's an opportunity to put the strongest possible hand into more than one game.

Our job is to reach audiences wherever they are. More and more, that means heading to the Web which is the ultimate "fragmenter." At Viacom, we will be prepared for the day when most consumers receive an incredible array of services through one wire or cable or satellite. Once, again, we see that media is not a zero-sum game. Television didn't replace radio, and the Internet is not going to replace traditional media, even as they are transformed under its influence. In fact, partly because of the Internet, forecasters are seeing significant growth in traditional media consumption down the road, as the time saved by going online increases dramatically. More and more, consumers will use the Net to save time doing mundane activities like paying bills, getting directions, or calling retail stores for information. This saved time will belong to companies like Viacom. Conventional wisdom on this point has it exactly wrong: the Internet will enhance growth of other media, not kill it off.


In the Point and Click World "Branding" is Crucial

Some so-called experts have predicted that the Internet age means the demise of traditional media companies. Anyone can have a Web site. New technologies allow virtually anyone to film a movie, make a TV show, publish a book. When content can go directly to the public, or so the argument goes, established media players are toast. And that brings me to the second fundamental force: branding.

Nothing is possible without a strong brand, especially in our new point-and-click world. Indeed, you are virtually invisible without brand strength, as new Web companies are discovering. Flush with cash, Internet start-ups are scrambling to distinguish themselves from their competitors. Brand strength is what makes you the "go to" product. But if you want them to come back again and again, you must provide the experience they expect and demand. In other words, you must deliver on what this business is all about: the content.

We are successful at creating content because we have an intimate knowledge of our audiences. I don't think it's too much to say that, overall, we at Viacom know our audiences better than any other media company in the world. 

Touching an Audience is Magic

Ultimately, however, there is nothing unless there is great content, no matter what the medium might be. Whether you are talking about motion pictures, or television, or streaming video over the Internet, people respond to powerful, compelling stories and images just as they have for generations immemorial. That's what makes the world of entertainment so exciting to me: it all comes down to storytelling, to creating stories that entertain, enlighten, entrance audiences everywhere. It all comes down to creativity, to the possibilities of the human imagination.

That's why Hollywood is at the heart of what we do. Hollywood is where humanity's dreams are brought to life and shared with the world. It is creativity that harnesses fragmentation and branding. At the heart of this business is our fundamental desire to be moved, to be provoked, to be enlightened, to be inspired…our natural, insatiable, undeniable love for a good story. We thirst for comedies, for dramas, for narratives. They help us understand others, they help us make sense of our communal and individual lives. They are vital for human beings. 

As many of you well know, making that emotional connection with an audience is wonderful and rare, and increasingly very, very expensive. But it is a process that I wouldn't trade for anything. Shepherding the spark of imagination into a vision realized, and then seeing that vision reach out and touch an audience is still a magical experience for me. This magic is what makes our work unique. But we can never forget that this same magic also gives our work great power. For many, we are their window to the world. The images we create travel around the world, helping to shape ideals and to define standards.

More importantly, our work, when it's good, allows people to see the world from a new point of view.
A well-told story has the capacity to make us experience the world through the eyes of its characters. That is an awesome power and one that has unlimited potential to teach empathy and understanding for others and, simply stated, to make the world a better place.

We have just witnessed the end of a glorious century of entertainment. But the years to come will be even richer in creative expression. Being here in the creative heart, where it all begins, underscores for me how fortunate I am to play a role in this extraordinary industry.

Town Hall Los Angeles invites inner-city high school students to attend the speech and question the speaker afterwards.

Q.    What direct impact will the merger between America Online and Time Warner have on Viacom's future Internet-related strategies?

A.    None. We like where we are right now. As I pointed out, the combination of Viacom and CBS puts us about everywhere in the media world we want to be. You know, we look at Viacom and CBS as two and two making six. So if there was another two, we'd have to get to ten before we'd do a deal.

Q.    How do you feel about the current role that the media is playing in today's politics?

A.    I think they're doing a pretty good job. Basically, it's the candidates who determine the quality of the role that the media plays. I think one of the great issues -- and I'm glad to raise it here -- is that young people have become very cynical about the entire process. And more and more young people are not voting or turning out. At MTV, we had a big campaign a few years ago which was called Rock the Boat, in which we did get hundreds of thousands of young people to register and to become voters. And we intend to do the same thing this year.

Q.    What is your opinion on shows like Dawson's Creek or Love Boat that deal with less than aboveboard topics like extramarital or underage sex? What kind of values does this instill on the young people of America?

A.    I would just say this, I don't see any harm generally -- it depends on the way the matters are presented -- in discussing, you know, issues of the kind you just raised. It depends on whether the issues are discussed in a flamboyant exploitative manner or whether they are discussed in a way that, you know, it's really like an exercise in social responsibility. So it's hard for me to discuss. But in general terms, I see nothing wrong with the subject matter. It depends on how it's presented. Now, I remember we did--we did at Nickelodeon several years ago, a--a special on AIDS. And the cable operators were really extremely upset that we would take on a subject like that on a children's channel. But the truth of the matter was that we won awards for it. Public broadcasting picked it up because it really was a very important show. So I say again, it's the way these topics are presented that really counts.

Q.    Personally, my motivation to accomplish new goals is to be able to look back on the ones I have already accomplished. My question to you is since you have accomplished so many honors and awards, how do these accomplishments make you feel and are they--do they personally motivate you and if not, what is?

A.    Well, first, you know, awards are large virtualistic. So I'm never impressed by awards. Naturally, all of us want to achieve, do something worthwhile. And I am not "spurred on" by awards. I'm a driven person. Period. I'm always driven to try to do better. I never think that good is enough. We always strive. In fact, the whole company has a commitment to excellence. And excellence is a kind of a goal you never really quite get to. So it's not a matter of awards. It's just wanting to be the best at what you do.

Q.    Because you're the CEO and chairman of Viacom and it's such a big corporation. It's so successful, with UPN, MTV and Nickelodeon, how do you even find the time to do all those community service?

A.    I try not to get, you know, involved in community service that can't really do anything about. In other words, I won't let my name go in a heading so they could use my name unless I can make a contribution, I really would prefer not to be involved. You have to remember, in a company like Viacom, I don't run this myself. I mean, I have one of the great management teams, you know, I believe, I think I have the best in the media industry, running every one of our businesses. If I had to run every one of our businesses, Viacom would not be this good. Nobody could do that. So anyone who thinks that I get the credit for everything the company accomplishes is mistaken. We have a big, big management team all over the world.

Q.    What kind of new technology is going to be offered in media?

A.    The Internet, you know, has become a revolution. But you're going to see still the development of new technologies. For example, you are going to see movies, uh, programs on Nickelodeon coming over a telephone wire. You will see a continued growth--there's always new technologies being delivered. But let's face it; the AOL has a lot farther to go than it is right now. We're at the beginning. I don't think we can grasp the importance of the Internet in the world that we are facing.

Q.    Do you believe that it's healthy for us as young people and the lives of adults that entertainment is taking a bigger, bigger more important--taking more times in our lives which time we could use with other things more fruitful?

A.    I think that's right. I think between watching television and being on the computer, based upon the number of hours we hear that young people are spending doing things of this kind, I think it's a real issue as to when they do their homework. Hope I didn't say anything I wasn't supposed to say here, but that's what I believe.

Q.    Well, first of all, I'm really amazed of the accomplishments that you had throughout your life. I was wondering what advice or could you give us as youths?

A.    Well, it always comes back to the same thing. It comes back to commitment. And I refer to commitment to excellence, a really--an obsessive drive to win, to be the best at what you do. That's what it all comes back to. And if you add that to some degree of intellectual capacity, your chances for success are great.
Q.    During your earlier speech, you talked a lot of about the future of your company; however, you didn't talk a lot about the future--your personal future. What remains unaccomplished?

A.    See, the only thing I really worry about is being here. People have asked me where I'm going to be in ten years and I say, "One thing I guarantee you. I'll be here." So in terms of my personal ambition, it's to be around as long as I can because I work very, very hard. I'm passionate about our company and I'm passionate about this industry. And so I hope I can participate in it for a long time.