Viacom's Rapid Rise To Power
Viacom Inc., jettisoned by the CBS Broadcast Company in 1970, grew rapidly over the next three decades to become one of the largest media conglomerates in the world, powerful enough to take over its former parent.
Viacom is now a far-flung cable TV operator and entertainment provider, owning businesses stretching from the MTV and Nickelodeon cable stations to the Blockbuster chain of video-rental stores.
CBS created and then spun off its Viacom cable TV arm to comply with new government rules barring TV networks from selling their own programming or owning cable TV systems. At the time, Viacom had just 90,000 cable subscribers and sales of $19.8 million.
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The company quickly helped shape the cable industry. In 1976, Viacom created Showtime to compete with Home Box Office to provide cable subscribers films recently released in theaters. It invested heavily in expanding its cable systems.
In 1986, Viacom bought MTV Networks, and its flashy graphics and fast pace became a favorite among young adults and advertises. With that purchase came Nickelodeon, a channel geared toward children that Viacom transformed from the least popular cable channel to one of the most watched.
Weakened by a heavy debt load, Viacom became embroiled in a takeover battle in 1986 among corporate raider Carl Icahn, a Viacom management team and Sumner Redstone, president of the National Amusements Inc. movie theater chain.
Redstone won out by buying Viacom for $3.4 billion. He began a spree of acquisitions, including the 1994 purchase of Blockbuster for about $8.4 billion and of Paramount Communications for $10 billion, which brought Viacom the Simon & Schuster publishing empire.
Viacom helped start a fifth broadcast TV network in 1995 (UPN), and the following year sold Viacom Cable Television, the 12th-largest cable TV system in the world, to TCI (now part of AT&T).
Seeking to pare down debt in the mid-1990s, Viacom sold its 10 radio stations in 1997, sold its share of USA networks to Universal Studios for $1.7 billion, and divested other holdings.
Last month, Viacom also spun off a portion of the Blockbuster chain of video-rental stores.