ANALYSIS: Does Sumner Redstone Have The Guts To Fire New Viacom's CEO Tom Freston?

Authored by Jay Baage on August 28, 2006 - 9:49am.

MTV is slowly turning its ship to head in a new direction. The problem is not what the company has done in the past 25 years, I would argue it is what it has not done in the past 5 years. It missed a number of new media opportunities seized by Apple’s iTunes, News Corp’s MySpace and YouTube. The man responsible for that is New Viacom CEO Tom Freston. But MTV’s new President Christina Norman finally promises new initiatives “in the next couple of months” including a social network of their own.

The MTV executives defend themselves by saying that the whole traditional media industry was taken aback by the sudden explosion in consumer and investor interest in New Media.

"That's true not just for us, but for everyone," says MTV president Christina Norman, who took the helm in May, to Reuters in an interview published today. "All the media companies now are having discussions about things that never would have been fathomed two, three years ago. I think we're finally moving beyond the phase where everyone was afraid to move because they were afraid of making the wrong move, and instead they're just trying things to see what happens."

The problem here is that MTV is the youth network – it claims to be more in tune with what the young media audience wants than anyone else. It is now painfully obvious that MTV lost that touch somewhere down the line. Advertisers and marketers alike are not referring to the most attractive young audience they want to reach as “The MTV Generation” anymore. They are talking about “The MySpace Generation”. That’s a big “ouch”.

To be fair, MTV was in the game but was outfoxed when its parent company, Viacom, in 2005 lost out to News Corp. on the bidding for MySpace. MTV executives tried to shrug it off, but it is hard to look away from the fact that since the acquisition, MySpace's usage has quadrupled, and only the video-sharing site YouTube has come anywhere close to matching its success.

MTV turned 25 years 1 August, 2006. The network is now older than many in its core audience. If MTV was a person, it would be in therapy for identity crisis. While its brand should be all about rebel youth culture and music, millennials identify those characteristics with MySpace and YouTube instead. Where does that leave MTV? The network surrendered to ratings and the big record companies years ago, playing big label artists over small indie acts, and finally gave up playing music videos altogether for a strange mix of odd reality programming.

"We know we want to be in social networking, and we know that's where our audience is," says Norman to Reuters. "But it's important for us to approach this in the right way and not have another 'me too' application."

Some of the initiatives she is working reportedly include extending many of MTV's social outreach efforts like Rock the Vote, sexual health campaigns and town-hall-style meetings with politicians into an online community. MTV is also working on how to reconnect socially with young people. This includes creating a new social networking site readying a number of services that let users post their own content and interact with MTV's content on multiple platforms. Finally, MTV is exploring digital downloads with the test version of Urge, a subscription music service that is integrated into the next version of Microsoft's Windows.
Norman expects to make the results of these efforts public "in the next couple of months."

"A lot of us are learning how to create to the platform rather than just spreading content across platforms," Norman says. "It gets harder and harder the bigger you get. You'd love for everything to be interconnected in some way or another, but that may not always be the right thing for that channel or that audience. For us it's always about making it addictive for the audience and not just shoving another (program) down (their) throat."

My Take: Diagnosis and awareness of that you are sick are the first steps toward recovery. But hey, we are talking about MTV here! The network that brought us M. J.’s “Thriller” when music videos was not even a concept yet. We are talking about the network that aired groundbreaking provocative original series like "The Real World" and "Beavis and Butt-Head". Suddenly, the best they could do is “The Surreal Life.” Come on. What happened? They lost their nerve. Became corporate, risk-averse and stopped taking their teenage audience seriously. MTV and risk averse does not go well together. In fact, it is a good example of when 1 + 1 does not equal 3, but just 2. There is no magic anymore.

Sumner Redstone, who controls New Viacom and CBS, is my hero for having the guts to speak his mind of Tom Cruise instead of sucking up to Hollywood’s biggest star-gone-haywire. That shows that he has the kind of nerve it takes to revitalize MTV. Splitting Viacom back-fired - the market does not have faith in MTV to deliver across new platforms and reconnect with its audience. As seen in the graph below, his “old media” properties in CBS have outperformed New Viacom on the stock market. I think that MTV has a brand that can be revitalized. But at this point I think that both the financial community and millennials alike require that Sumner Redstone does a Donald Trump and fires his right hand man, Tom Freston. I am a big fan of Freston and what he has done as head of MTV in the past, but this is business. And not just any business. It’s Show Business.

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Comments

Aquisition of Atom Entertainment Shows Viacom's Smarts

Submitted by Ned Sherman on August 28, 2006 - 11:55am.

I wouldn't count Viacom out of the digital loop by any stretch of the imagination. Their recent acquisition of Atom Entertainment shows that they have a keen understanding of profit centers in the digital space -- casual games and broadband video are on the rise. This was a smart purchase and positions MTV Networks as a leader in the casual gaming business, with more than 50 million casual gamers playing more than 400 million games a month. Ned Sherman, CEO & Publisher, Digital Media Wire, Inc.

DING DING DING

Submitted by anonymous (not verified) on September 4, 2006 - 8:24pm.

I predict you will get lots of site visits today.

Pay for music videos? You

Submitted by anonymous (not verified) on June 28, 2007 - 5:31am.

Pay for music videos? You must be kidding...