Table of ContentsOrganizational Structure and OwnershipEconomic Activities and StrategiesFinancial AnalysisRecent DevelopmentsThe Columbia Broadcasting System (CBS) established Viacom in 1970 in order to comply with Federal Communications Commission regulations (FCC) prohibiting television networks from owning cable television systems or syndicating their own 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 the syndicated programming of CBS (“Viacom Inc.”). Say no to plagiarism. Get a Custom Essay on "Why Violent Video Games Should Not Be Banned"?Get Original Essay The Showtime movie network was created to compete with Home Box Office (HBO), which had become one of the major movie outlets in 1976. Viacom shared interest in Showtime with Warner Amex. Showtime contributed to the growth of Viacom's cable systems, which reached 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 concluded a deal with Teleprompter Corp., the nation's largest cable operator at the time, to offer its customers Showtime instead of HBO. Showtime also created a service called Front Row, dedicated to family programming, such as classic films 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 own 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, and also disclosed its minority stake in Cable Health Network, an advertiser-backed cable service. This growth may have helped 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. The transfer of these licenses was a laborious process, thus slowing down any attempt to acquire Viacom (“Viacom Inc.”). By 1982, Showtime had 3.4 million subscribers, but the rate of growth in syndication, 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 of both. However, HBO and its sister Channel Cinemax were offered in 5,000 of the country's 5,800 cable markets, compared to 2,700 offering Showtime or The. Cinema channel. HBO had a larger market share and already had many films shown on Showtime or The Movie Channel, which removed much of the incentive to pay for both groups ("Viacom Inc."). In September 1985, Viacom purchased MTV. Networks and the remaining half of Showtime's interest with Warner Communications, thereby increasing their debt load. The MTV networks included MTV, Nickelodeon and VH-1. Viacom revamped Nickelodeon, creating a style that mirrored the more successful MTV. Viacom also created “Nick at Night” to appeal to an adult audience. These changes helped Nickelodeon become the most popular channel on basic cable ("Viacom Inc."). Showtime continued to lose customers between 1985 and 1986, so it began obtaining exclusive rights to popular films, promising viewers a new film every week that could only be seen on Showtime. This led to an increase in costProgramming and Marketing Cost (“Viacom Inc.”). Viacom continued to lose money, attracting buyers' attention. Viacom was purchased by Sumner M. Redstone, chairman of the National Amusements Inc. movie theater chain, in 1986. Under new management, Showtime obtained exclusive contracts with Paramount Pictures and Walt Disney Films ("Viacom Inc."). Shortly after the buyout, interest in syndication increased, allowing Viacom to make a profit through syndication. In 19898, Redstone sold some of Viacom's assets for huge sums of money, including selling Viacom's cable systems on Long Island and Cleveland, as well as stakes in Showtime. Viacom's growing success was also due in part to the enormous success of MTV, which continued to grow internationally. Viacom is diversifying by creating Lifetime, a channel aimed at women, as well as its own production operations. Viacom was then able to produce content for its own use or for sale (“Viacom Inc.”). In 1989, Viacom sold 50% of Showtime to a cable systems operator, TCI, hoping to increase TCI's incentive to market Showtime. Viacom presented HA! a few months after HBO introduced its comedy channel. It became clear that only one channel would survive, so the two considered merging. HBO's parent company, Time Warner, would not allow the merger unless Viacom settles an antitrust suit against HBO. The suit, 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 men also agreed to merge HA! And Comedy Channel within Comedy Central (“Viacom Inc.”). In 1994, Viacom purchased Paramount Communications Inc., a production company, which also granted Viacom ownership of Simon & Shuster, Inc., a book publisher. Later that year, Viacom purchased Blockbuster, a rapidly growing company. These acquisitions left the company heavily in debt, so Viacom began scaling back other segments of its operations, including radio stations and Madison Square Garden ("Viacom Inc.") operations. 1998 proved to be an extremely successful year, due to the success of Titanic as well as a sale of most of Simon & Shuster's book editions. 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 enjoyed in previous years ("Viacom Inc.") .Organizational structure and ownership of Viacom's current subsidiaries include more than 400 companies worldwide. A complete list of subsidiaries can be seen in Table 1: Viacom Subsidiaries (Mergent Online). Major subsidiaries include Paramount Classics; Primordial images; Primary advantage; MTV Movies; MTV Networks; Nickelodeon Movies; BET Networks; and VH-1, Inc. Many of these subsidiaries also include international branches, such as MTV India, or production branches, such as Nickelodeon Animation Studios. These branches are 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, is its chairman emeritus. Robert Bakish is interim president. Wade Davis is CFO. Philippe P. Dauman is Managing Director. James W. Barge, Carl D. Folta, Michael D. Fricklas, DeDe Lea and Scott M. Mills serve as executive vice presidents. Katherine Gill-Charest serves as Senior Vice President. Viacom also has a board of directors consisting of 12 directors, Redstone as Chairman Emeritus, Thomas May as Non-Executive Chairman and Shari Redstone as Non-Executive Vice Chairman (Mergent Online). Its goal is to become the world's leading branded entertainment company across television, film and digital media platforms. What sets our portfolio apart is that we always put fans first, cultivating deep connections with distinct audiences to create value for our brands and partners. Our award-winning programming, long-term focus and cutting-edge solutions create unprecedented fan engagement – ​​every minute, on every platform, everywhere. By capitalizing on our creative strengths and deepening our relationships with audiences, advertisers, distribution affiliates, talent and licensees, Viacom is well-positioned to achieve global success in an evolving media landscape” (“Relationships with investors"). Through this mission statement, Viacom shows its desire to be on top of the media industry across many different media channels, as well as the desire to adapt to technological advancements. With respect to its shareholders, Viacom emphasizes three main objectives: investment in original programs, 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 spending more 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, the Video Music Awards MTV's 2015 was the most tweeted about entertainment program to date, and Spike's. the Tut series attracted an average of 2.2 million viewers, which generated an 81% audience share on the new channels. Viacom also discusses Paramount's increased content output, with ten shows ordered into production in addition to twelve projects for other networks and digital media. Paramount has also committed to fifteen film releases in 2016 (Dauman). Viacom also focuses on developing Viacom's various brands internationally. The company is expanding across the world, including the UK, India, Africa, Latin America and Asia. The United Kingdom is the fastest growing developed economy outside the United States, and Viacom's acquisition of Channel 5 in 2014 helped Viacom become the second largest commercial media network group private in the United Kingdom. India is also a huge market for Viacom developments, with 10 Viacoms. channels including MTV, Nickelodeon, Comedy Central and Colors, a Hindi entertainment brand. Viacom also secured a stake in Prism TV, a popular Indian channel, which the company hopes will help increase Viacom's presence in the rapidly evolving television market. The company also mentions expansion into Africa, where Viacom is already the largest media company,in 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 continued innovation to identify and reach more targeted audiences. Viacom recently launched Viacom Vantage, an advertising effectiveness tool with features that go beyond traditional demographic targeting. Viacom plans to continue using this tool to reach millennials, who make up a large portion of Viacom's programming audience but often go unmeasured. Viacom also seeks to continue developing innovative ways to reach viewers through social media. In doing so, the company hopes to better connect advertisers with targeted audiences. In addition to data innovations, Viacom is looking to work with various distributors and social media platforms to expand streaming and mobile distribution services internationally. By focusing heavily on social media distribution, Viacom is showing the importance of reaching a millennial audience. With Viacom's desire to continue to expand the use of data and technology, the company states its goal to expand its brands and create an enhanced customer experience (Dauman). Viacom also has a great diversification of media products. The company produces content of various lengths and formats and distributes them to its network's television channels. In addition, Viacom production companies create feature films for distribution through traditional cinema distribution channels. Beyond television and film content, Viacom produces apps, games, social media experiences and other entertainment content in 180 countries. This diversification and global reach, as outlined in the stakeholder letter, allows Viacom to continue to grow and create content that advances technological innovations as well as provide the content sought by millennial audiences (Dauman). Viacom's television profits come primarily from advertisers and licensing fees, paid by distributors of multichannel video programming. In addition to the company's television arms, Viacom's diverse portfolio allows the company to make profits in other areas as well, such as from the box office successes of films and mobile games. . The introduction of Viacom Vantage provides a new method to increase advertiser profits, enabling advertisers to make data-driven decisions. Viacom hopes this new targeting data product can increase the amount advertisers are willing to pay for specific audiences. Although Viacom has a very diverse portfolio of products and subsidiaries, the company has experienced declining profits in recent years, leaving investors nervous about the company's future (Hagey and Beilfuss). Financial Analysis As noted previously, Viacom experienced an overall decrease in profits from 2013 to 2016. Revenues 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 throughout 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 change in expenses, which shows that Viacom is not making as much money as in years past. This drop in profits worries Viacom and investors (Income statement as reported). The total amount of assets is »..