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Viacom on the mend
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June 17, 1998: 8:36 p.m. ET
Company's dramatic turnaround has largely silenced Redstone critics
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NEW YORK (CNNfn) - A year ago, things were far from rosy at Viacom International Inc.
The company's Blockbuster video rental chain was bleeding cash and MTV's ratings were off 20 percent.
However, things have dramatically improved in 1998. Pre-tax earnings at Viacom's entertainment unit have climbed 21 percent -- thanks largely to the success of Titanic -- MTV's earnings are up 17 percent, Showtime's up 11 percent and Blockbuster's up 1 percent.
The company's long-term debt, which once stood at $10.6 billion, will shrink to $4 billion once the sale of Simon & Schuster's educational and reference publishing units is complete.
Viacom expects Blockbuster's cash flow problems to be largely corrected by the end of the year.
Appearing Wednesday on "Moneyline With Lou Dobbs," Redstone said that in the past, Viacom's achievements were being obscured by Blockbuster's troubles. However, he said the company's on the mend.
"What the world did not know was that unlike The Titanic, Blockbuster wasn't sunk forever. It would rise again," he said.
He said selling Blockbuster is not something the company is currently considering, although that could be considered once its growth reaches acceptable levels.
Viacom's stock (VIA) is also reflecting the good times. It's up 120 percent from its 52-week low of 26, closing Wednesday at 55-9/16.
(Click here for a 52-week stock chart)
Redstone said the company has entered a new era of growth. (128K WAV) or (128K AIFF)
If there's one mistake that was made, Redstone said, it was leveraging the company to purchase Paramount.
"For Paramount, it was worth it. We got Paramount for nothing. There may be transactions in businesses we know and understand, but we will never over-leverage Viacom again," he said.
One thing the 73-year-old Redstone's not talking much about is retirement, saying he still enjoys his job.
"Should the day come when I can't make that kind of contribution, someone else will be CEO. Unlike other companies, we won't go outside for successors. I am surrounded by potential successors, but I'm not going to tell you who's No.2," he said.
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Viacom
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