IndexOrganizational Structure and OwnershipEconomic Activities and StrategiesFinancial AnalysisRecent DevelopmentsColumbia Broadcasting System (CBS) created Viacom in 1970 to comply with Federal Communications Commission (FCC) regulations prohibiting television networks from owning cable TV systems or distributing their programs in the United States. In 1971, Viacom became its own company with 70,000 shareholders and approximately 90,000 cable subscribers. The large subscriber base is largely due to CBS (“Viacom Inc.”) programs. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay The Showtime movie network was created to compete with Home Box Office (HBO), which had become a major movie outlet by 1976. Viacom shared an interest in Showtime with Warner Amex. Showtime contributed to the growth of Viacom's cable systems, which had grown to approximately 350,000 subscribers by 1977. To continue to compete with HBO, Showtime began transmitting programs to local cable stations via satellite in 1977. In 1978, it struck a deal with Teleprompter Corp., the country's largest cable operator at the time, to offer customers Showtime instead of HBO. Showtime also created a service called Front Row, dedicated to family programming, such as classic movies and children's shows. This service offered an alternative to customers for less than $5 per month ("Viacom Inc."). Viacom has also invested money in building its infrastructure through mergers and acquisitions. In 1981, it purchased WLAK-FM, a Chicago-based radio station, and Video Corp. of America, which saved Viacom money on production costs, as well as revealed its minority stake in Cable Health Network, a via advertiser-supported cable. This growth may have served to prevent takeover attempts. The acquisitions put Viacom in debt, and the purchase of television and radio stations added broadcast licenses to Viacom's legal obligations. Transferring these licenses was a laborious process, slowing down any attempt to take over Viacom ("Viacom Inc."). By 1982, Showtime had 3.4 million subscribers, but the rate of syndication growth, which still accounted for 45 percent of Viacom's profits, was declining. . In 1984 Showtime became a sister station to Warner Amex's The Movie Channel in an effort to increase sales for both, however HBO and its sister channel Channel Cinemax were offered in 5,000 of the 5,800 cable markets in the country, compared to the 2,700 that Showtime offered or The Movie Channel. HBO had a larger market share and already featured many of the films featured on Showtime or The Movie Channel, eliminating much of the incentive to pay for either group ("Viacom Inc."). In September 1985, Viacom purchased MTV Networks and the remaining half of Showtime from Warner Communications, increasing their debt load. MTV networks included MTV, Nickelodeon, and VH-1. Viacom revamped Nickelodeon, creating a style that mirrored that of the more successful MTV. Viacom also created "Nick at Night" to appeal to adult audiences. These changes helped Nickelodeon become the most popular cable channel ("Viacom Inc."). seen on Showtime. This has led to increased programming costs and marketing costs (“Viacom Inc.”). Viacom continued to lose money, attracting the attention of buyers. Viacom was purchased by Sumner M. Redstone, president of the National Amusements Inc. movie theater chain in 1986. Under new management, Showtime gained exclusive contracts with Paramount Pictures and Walt filmsDisney ("Viacom Inc."). Shortly after the acquisition, interest in syndication grew, allowing Viacom to make profits through syndication. In 19898, Redstone sold some of Viacom's assets for large sums of money, including the sale of Viacom's Long Island and Cleveland cable systems, as well as stakes in Showtime. The growing success of Viacom is also due in part to the enormous success of MTV, which continues to grow internationally. Viacom branched out, creating Lifetime, a channel aimed at women, in addition to its own production operations. Viacom was then able to produce content for its own use or sell it ("Viacom Inc."). In 1989, Viacom sold 50% of Showtime to a cable system operator, TCI, in hopes of increasing TCI's incentive to market Showtime. Viacom introduced HA! months after HBO introduced its Comedy Channel. It became apparent that only one channel would survive, so the two considered merging. HBO's parent company, Time Warner, would not allow the merger unless Viacom settled an antitrust lawsuit against HBO. The lawsuit, filed in 1989 by Showtime, alleged that HBO was trying to put Showtime out of business. The lawsuit was settled, with Time Warner paying Viacom $75 million, agreeing to distribute Showtime and The Movie Channel on Time Warner's cable systems and creating a joint marketing campaign to revive cable's damaged image. The two also decided to merge HA! And Comedy Channel in Comedy Central (“Viacom Inc.”). In 1994, Viacom purchased Paramount Communications Inc., a production company, which also gave Viacom ownership of Simon & Shuster, Inc., a book publisher. That same year, Viacom purchased Blockbuster, a fast-growing business. These acquisitions left the company with significant debt, so Viacom began to scale back other segments of its business, including radio stations and operations at Madison Square Garden (“Viacom Inc.”). 1998 proved to be a hugely successful year, thanks to the success of Titanic and the sale of most of Simon & Shuster's book releases. Viacom later merged with former parent company CBS, then split again in 2005 into two independent public companies. Blockbuster became a separate company in 2004. Viacom then had to deal with the effects of the Internet on its business, where it is still struggling to regain the great success it achieved in previous years (“Viacom Inc.”). Organizational Structure and Ownership Viacom Current Subsidiaries include over 400 companies worldwide. A complete list of branches can be found in Table 1: Viacom Branches (Mergent Online). Major subsidiaries include Paramount Classics; Paramount Pictures; Supreme Advantage; MTV Movies; MTV Networks; Nickelodeon Movies; BET Networks; and VH-1, Inc. Many of these subsidiaries also include international subsidiaries, such as MTV India, or production subsidiaries, such as Nickelodeon Animation Studios. These branches are further divided into magazine companies, music labels, and acquisition companies. These subsidiaries can be classified into two main segments: Media Networks, including MTV, CMT, VH1; and Filmed Entertainment, including Paramount Pictures, MTV Films, Nickelodeon Movies (Mergent Online). Sumner M. Redstone, who acquired the company in 1986, serves as Chairman Emeritus. Robert Bakish is acting president. Wade Davis serves as Chief Financial Officer. Philippe P. Dauman is CEO. James W. Barge, Carl D. Folta, Michael D. Fricklas, DeDe Lea and Scott M. Mills serve as executive vice presidents. Katherine Gill-Charest is senior vice president. Viacom also has a Board of Directors made up of 12 directors, Redstone aschairman emeritus, Thomas May as non-executive chairman and Shari Redstone as non-executive vice-chairman (Mergent Online). Businesses and Strategies Viacom's mission is: "Viacom's business is to become the world's leading branded entertainment company across television, motion pictures and digital media platforms. What sets us apart our portfolio is that we are consistently top of mind with fans, maintaining deep connections with diverse audiences to create value for our and partner brands. Our award-winning programming, long-term focus and industry-leading solutions create engagement of unprecedented fans, every minute, on every platform, around the world By capitalizing on our creative strengths and deepening our relationships with audiences, advertisers, distribution affiliates, talent and licensees, Viacom is positioned to deliver. achieve global success in an ever-changing media landscape” (“Investor Relations”). Through this mission statement, Viacom shows its desire to be at the top of the media industry across many different media channels, as well as its desire to adapt. to technological advances. To its shareholders, Viacom emphasizes three main objectives: investment in original programming, global reach, and innovation in data and technology (Dauman). Viacom also briefly addresses the importance of adapting to change due to the young nature of its audience. Viacom's letter to shareholders highlights its investments in original content, from feature films to 10-second videos for mobile platforms. The letter justifies the increased spending on original content by highlighting programming successes in 2015: Comedy Central earned 26 Emmy nominations and 8 wins, Nickelodeon ranked first in children's entertainment, MTV's 2015 Video Music Awards were the ​​most tweeted entertainment program to date and Spike's Tut series averaged 2.2 million viewers, generating 81% of the channel's new views. Viacom also discusses Paramount's ramped-up content production, with ten shows ordered for production in addition to twelve projects for other networks and digital outlets. Paramount has also committed to fifteen feature films for release in 2016 (Dauman). Viacom is also focused on expanding the various Viacom brands internationally. The company is expanding across the globe, namely in the UK, India, Africa, Latin America and Asia. The UK is the fastest growing developed economy outside the US, and Viacom's acquisition of Channel 5 in 2014 led to Viacom becoming the second largest privately held commercial media network group in the UK. India is also a huge market for Viacom developments, with 10 Viacom channels including MTV, Nickelodeon, Comedy Central and Colors, a Hindi entertainment brand. Viacom has also gained interest in Prism TV, a very popular Indian channel, which the company hopes will help grow Viacom's presence in the rapidly evolving television market. The company also mentions expansion into Africa, where Viacom is already the largest media company, Latin America and Asia, all considered growth markets for Viacom. Viacom believes its reach of 3.7 billion subscribers can continue to grow (Dauman). The letter to shareholders also highlights the importance of continuous innovation to identify and reach more targeted audiences. Viacom recently launched Viacom Vantage, an ad effectiveness tool with features that go beyond traditional demographic targeting. Viacom plans tocontinue to use this tool to reach millennials, who make up a large portion of the audience for Viacom programming but who often go unmeasured. Viacom is also looking to continue developing innovative ways to reach viewers through social media. By doing so, the company hopes to better connect advertisers with targeted audiences. In addition to data innovations, Viacom is looking to partner with various distributors and social media platforms to expand streaming and mobile distribution services internationally. By placing extensive attention on social media distribution, Viacom is demonstrating the importance of reaching millennial audiences. Through Viacom's desire to continue to expand the use of data and technology, the company shows its goal to expand its brands and create a better customer experience (Dauman). Viacom also has a broad diversification of media products. The company produces content of various lengths and formats and distributes it to television channels within its network. In addition to this, Viacom's production companies create feature films for distribution through typical film distribution channels. In addition to television and movie content, Viacom produces apps, games, social media experiences and other entertainment content in 180 countries. This diversification and global reach, as highlighted in the letter to stakeholders, allows Viacom to continue to grow and create content that pushes technological innovations forward, as well as provide content desired by millennial audiences (Dauman). Viacom's television profits come primarily from both advertisers and investors. licensing fees, paid by distributors of multi-channel video programmes. In addition to the company's television arms, Viacom's diversified portfolio allows the company to earn profits from other areas as well, for example through box office successes in movies and mobile phone-based games. The introduction of Viacom Vantage provides a new method to increase advertiser-based profits by enabling advertisers to make data-driven decisions. Viacom hopes this new targeting data product will be able to increase the amount advertisers are willing to pay for specific audiences. Although Viacom has a widely diversified portfolio of products and subsidiaries, the company has experienced declines in profits in recent years, leaving investors nervous about the company's future (Hagey and Beilfuss). Financial Analysis As stated previously, Viacom experienced an overall decrease in profits from 2013 to 2016. Revenue decreased from $13,794,000,000 in 2013 to $12,488,000,000 in 2016, a decrease of $1,306,000,000. Viacom's total expenses have remained fairly constant over these years, ranging from $9,958,000,000 in 2013 to $10,156,000,000 in 2015. The decrease in revenue is greater than the changes in expenses, showing that Viacom is not making as much money like in past years. This decline in profits worries Viacom and investors (Income statement as reported). The total amount of assets is also decreasing from 2013 to 2016, with a slight recovery from 2015 to 2016. Assets in 2013 amounted to $23,829,000,000 while assets in 2016 amounted to $22,508,000,000, with a decrease of 1,321,000,000 dollars. The 2016 total increased by $365,000,000 over the 2015 total of $22,143,000,000. This relatively small increase can be seen as an advantage, however an increase in assets indicates an expansion which could lead to debt (balance sheet as.