Interview Transcript: Sumner Redstone
The following is the unofficial transcript of a CNBC interview with Sumner Redstone, Chairman of Viacom and CBS, on CNBC's "Closing Bell with Maria Bartiromo" today at 4:30PM ET. All references must be sourced to CNBC's "Closing Bell with Maria Bartiromo."
MARIA BARTIROMO, host: Sumner, nice to have you with us. Thanks for joining us.
Mr. SUMNER REDSTONE: Nice to be with you.
BARTIROMO: Let's talk about sort of a status check, if you will. You split the company...
Mr. REDSTONE: Yes.
BARTIROMO: ...18 months ago. Would you do it again and are shareholders better off today than 18 months ago?
Mr. REDSTONE: I would do it again and over and over again and shareholders are definitely better. Let me tell you about it. I had thought about this for about a year without discussing it with anybody. Then I presented it to the board. The board thought about it for months with advisers, decided I was right. What do we have? Today, we have two nimble, focused companies, each concerned with their own challenges, with their own opportunities, and not distracted by the challenges and the opportunities of the other. Two companies led by fantastic managements, Les Moonves, CBS, great executive, Philippe and Tom, great at Viacom. Stocks doing great, stocks making a run a little late now. We have a down market but basically making new highs within the last week of it and going further. Operations are great, moving fast into the digital world. What more could I ask?
BARTIROMO: Yeah, but some might say it hasn't worked. I mean, when you look at the stock prices and you put the companies together, and then you divide it two by one, it's the same price where it was eight months ago.
Mr. REDSTONE: No. But you have to consider this.
BARTIROMO: And you added debt.
Mr. REDSTONE: No! And you have to consider this, so think, Maria. The stock was down 20 percent under prior management. I won't mention names. The stock of Viacom is up 25 to 28 percent in nine months since I put Philippe and Tom in charge. So you have to look at the fore and after. Meanwhile, both stocks in the last week have made new highs. I can't project stock price, you know, that's not allowed. I would hopefully expect they'll go higher.
BARTIROMO: You're always watching the stock price.
Mr. REDSTONE: Right.
BARTIROMO: You like watching the stock price.
Mr. REDSTONE: Well, because the stock price is, in a way, a report card. It's not always accurate but it is a record card on your operation. The operations of both companies are terrific, the stock is terrific and the management is terrific. What more do you want?
BARTIROMO: All right. Some people might say, look, these two companies now are almost competing in certain ways.
Mr. REDSTONE: Yeah.
BARTIROMO: CBS wants to get a movie studio now. Then you've got Viacom suing YouTube for a billion dollars. CBS is doing deals with YouTube.
Mr. REDSTONE: No. Wait a minute, now, Maria, a minute. I won't discuss the lawsuit too much with Google because it's pending. Our deal is we want Viacom and CBS, we want our product in every platform, every legitimate platform. But we expect to get paid for it. And you understand, of course, that the protection of proprietary rights is critical, not only to the entertainment industry, but to the economy. CBS got paid, they got paid for what they did with Google, and they really did it with an advertiser, rather than Google. There's nothing wrong with that. If you get paid, do it.
BARTIROMO: OK. So you would--you would have that arrangement, then, with Viacom? I mean, because it seems like CBS is willing to do deals with YouTube.
Mr. REDSTONE: Partly, partly. Viacom is willing to do deals with any legitimate distributor. They've done deals recently with Joost, they've done deals with Yahoo! And should that unnamed company want to do a deal that respects and reflects the value of our content, Viacom will be ready.
BARTIROMO: And so they are respecting CBS' content?
Mr. REDSTONE: Well, I don't know for how much respect they have for their content, but on that one particular deal, what I say is CBS got paid and they got paid by the advertiser, not by Google. But getting paid is the name of the game. We have spent decades creating the most valuable content in the world. As you know, Viacom is the only pure content media company in the world, And our content is valuable, you know what it is. We expect to get paid for it and we will get paid for it.
BARTIROMO: What are you expecting out of this lawsuit?
Mr. REDSTONE: Well, you know, I really don't want to discuss the lawsuit but say hypothetically, someone files such a lawsuit, without referring to Viacom, what would they expect? Money? They would expect the protection of their rights for the future and they might expect a deal that reflected the value of their content. Those are our mights.
BARTIROMO: Let me talk to you a little about the news this week, the Russia licensing deal.
Mr. REDSTONE: Yeah.
BARTIROMO: It seems that CBS and Viacom are on different sort of paths in some regard.
Mr. REDSTONE: Well, they have to--you must remember, the assets of these two companies are very different. They basically--Viacom is a niche programmer with, you know, great programming like MTV, VH1, you know, Comedy Central, Spike, Google. I mean, who--did I say Google? That was a google.
BARTIROMO: That was a Freudian slip.
Mr. REDSTONE: No. But no, I've been--but CBS is a broadcaster, broadcasts to big audiences. And think about CBS. The number one drama, "CSI," "CSI: Miami," "CSI: New York." The number one comedy, "Two and a Half Men," number one reality show, "Survivor." Number one news show, "60 Minutes." They're both doing great. Any investor who isn't satisfied should talk to me.
BARTIROMO: What's the international strategy at this point? So this week, you announced MTV sold a majority stake in the Russian joint venture, meanwhile CBS is buying into India. Tell me where you go internationally.
Mr. REDSTONE: Hang on. Let me tell you first about Russia. It was a drag-along deal. We got up, $193 million, a lot of money, and we still maintain our presence with an exclusive license which pays us revenue every year. Now, India. In India, we made a deal with a very respected company called T18D. And that's going to be called--it's an Indian company. We contributed on Indian channels. VH1, Nickelodeon, MTV. We have a 50/50 partnership. We will now be known as TV Viacom. Now, we have great hopes there. Why? Think of the population of India. And more important, even, the largest youth population in the world is in India, so India's a great market for us. We're already moving ahead. We're going to do a Hindi channel. As soon as we get there, we move ahead. That's true everywhere.
BARTIROMO: What are you going to do with MTV ratings? I mean, MTV was a global powerhouse. The ratings are down. And sure, the India story sounds like a good one. But you've got to get, somehow, the ratings back up on MTV.
Mr. REDSTONE: MTV ratings are now rising. They were very bad in the last quarter, they rose significantly in the first quarter. We're doing everything we can. Let me tell you some of the things we're doing that are extremely interesting. We're congregating our various brands around a particular demographic and then we're selling that demographic to advertisers so the advertisers can reach cross-brand demographic with one message. Pretty clever. No, we're doing everything we should. I think you'll see them rise. Meanwhile, you know what? I have to tell you his story, OK? When I acquired Viacom, everyone said MTV was a fad. Nickelodeon would never make it. Well, I saw MTV as a cultural channel that would travel. Nickelo--I knew people were interested in kids and I also saw something very important. Only 5 percent of the world's eyeballs were in North America, and I determined to aggressively drive those brands all over the world, which we have. Today, you know that fad reaches a billion people? A billion people. MTV has 55 out of this channels. Nickelodeon has 35. We're pretty satisfied with what's happening and it will continue.
BARTIROMO: No doubt about it, while you try to keep it going.
Mr. REDSTONE: I'll try. Right.
BARTIROMO: Right? People are worried that...
Mr. REDSTONE: Yeah. How do you keep it going? I travel to China. I've been there seven times in recent years. Do you know that only our brands can be seen in China? You see MTV and Nickelodeon all over China. You can't see the others expect in compounds or hotels. So it was out of a deal I made recently. Nickelodeon animation is broadcast to 125 million homes in China. We have a joint venture with Beijing. We have the only branded channel in China with is MTV China. We have a deal to co-produce programming, children's and adult programming, with Shanghai Media. We even had a deal for an equity interest, which is on hold as a result of a new, tougher regulatory environment check. We are treated like no one else in China.
BARTIROMO: What about Europe?
Mr. REDSTONE: Well, in Europe, it's great. We're doing very well. I think I have been in every city in every country. We're now in 160 countries. Look what's happened in those 20 years. I've been in every city in every country selling Viacom. As Philippe says, planting the Viacom flag. I've just been in Turkey, where we opened a 24-hour channel in Turkey. I've just been in Dubai and Kuwait. I travel the world, planting the flag, and nobody--I tell you, we're too far advanced. Nobody will ever catch up with us.
BARTIROMO: Sumner, how do you think broadly about traditional vs. digital? Let me get your though on this for a minute because some people say, yeah, the ratings were down at MTV, but it's not necessarily a programming issue, it's a secular issue. It's that the young generation, the MTV generation, is not necessarily not liking your programming, they are spending less time watching TV and they are on the Internet.
Mr. REDSTONE: OK. Our experience is to the contrary. Tubes can work 48 hours a day, digital and linear programming. So we don't believe that. And we don't believe people are leaving MTV. I mean, what you may have seen is something very temporary. One does not cannibalize the other. As digital grows, remember, digital is very small, now. As digital grows, the world will expand. It will not cannibalize linear programming. And that's our view. And history will demonstrate that. Every time there's been a new technology, the world caught up, it didn't destroy the old.
BARTIROMO: So how do you capitalize on that? I mean, let's face it. You've been buying back a lot of stock at Viacom.
Mr. REDSTONE: Yes.
BARTIROMO: Four billion program--$3 billion program, you're almost done with. Now you're announcing a $4 billion buyout program.
Mr. REDSTONE: Why? Why?
BARTIROMO: Is that money better used buying digital property?
Mr. REDSTONE: Pardon me. Why? Because we're doing so well, we have enormous free cash flow at Viacom as well as at CBS. We're not just borrowing the money, we're making so much money, we have so much free cash flow, we owe it to the stockholders to use that money to enhance the value of their stock. Remember, every time you buy a share of stock, you increase the earnings per share of the stock. That's good for stockholders. At both companies, we have one major commitment: to enhance shareholder value.
BARTIROMO: How about using the money to buy...(unintelligible)...properties?
Mr. REDSTONE: And we are. We've bot a lot of--you saw that just the other day, CBS spent $280 million for a music--we bought a lot of digi--Neopet...(unintelligible)...voice range. We've bought many properties. We are not, however, committed to doing any major transaction. These are cutting-edge deals. We'd like to get the companies when they're in their infancy and then we'll grow them as we know how to.
BARTIROMO: So how do you continue to ramp up digital so that that offsets any slowdown in ad dollars from traditional media?
Mr. REDSTONE: Here's what--here's what I don't think many people know. Do you know what the number one entertainment digital company is? It's Viacom. Viacom today is the number one digital entertainment company. Viacom will double its revenues this year from digital, with, I don't know, if you aren't satisfied, you should be.
BARTIROMO: So that means you're going to be making more acquisitions, then, in digital?
Mr. REDSTONE: We're going to be building our own Web sites, creating new experiences there, but at the same time, we'll be making deals with companies Joost, Yahoo! and other credible companies who are willing to pay us for what our company--what our content is worth.
BARTIROMO: Well, you need more digital properties to have scale vs...
Mr. REDSTONE: Well, we're on the lookout. We consider all properties, including digital properties, all the time. We never rule anything out. We look at them. We don't buy anything. We buy those that we think will best fit with what we have and will best enhance the value of our company and a value for our shareholders.
BARTIROMO: Let me turn to transition ownership issues, Sumner. You're 83 years old.
Mr. REDSTONE: No, I am not!
BARTIROMO: Eight-two years old.
Mr. REDSTONE: How old do I look?
BARTIROMO: You do not look 82. But are you 82?
Mr. REDSTONE: Well, give me a number. I'm not going to ask for 20! How about 67?
BARTIROMO: Sixty-five, how's that?
Mr. REDSTONE: I'll take it.
BARTIROMO: But truly, you've been very philanthropic.
Mr. REDSTONE: Yes.
BARTIROMO: What do you want your legacy to be? Philanthropy or media mogul?
Mr. REDSTONE: Well, in the first place, I hate the world mogul. Mogul, to me, implies...
BARTIROMO: Media giant.
Mr. REDSTONE: That's a little better. But how about king or emperor?
BARTIROMO: King of the hill, yeah, that's good.
Mr. REDSTONE: I don't think you have to be one or the other. I've enjoying giving money away, particularly since, unlike others, I didn't inherit it. I worked for every dollar I have. And it makes it sweeter to give money away and really, I know it sounds maybe reversely arrogant. I get more pleasure out of giving it than you can imagine. So I'm happy to do it. I don't even look at it as philanthropy. I look at it as a reward for me.
BARTIROMO: So it sounds like the legacy is both.
Mr. REDSTONE: Yes, it is.
Mr. REDSTONE: I think I've accomplished a small thing in this industry...(unintelligible). Yes, I would like--I won't be a hypocrite--to be remembered for that. But legacy is a big part of my life. I mean, philanthropy is a big part of my life.