PENNIES FROM KEVIN - Paramount's Smarter than Disney!
The Paramount parks will soon leave the Viacom family! Where are they going? And will the move be good for them?
Written by Kevin Baxter
While there has been speculation about how long NBC Universal will hold onto their theme parks, Viacom has beaten them to the punch by dumping theirs.Tweet
Well, kinda. Viacom has decided to split into two companies, Viacom and CBS. The makeup of each company may seem a bit odd at first glance: Viacom Inc will retain MTV, VH1, BET, Nickelodeon (and other cable channels) and Paramount Studios (the film division); CBS Corp will consist of CBS, UPN, Infinity Broadcasting (radio division), local television stations and the Paramount theme parks. But everything that remains under the Viacom umbrella is considered fast-growing while everything under the new CBS name is seen as cash-rich but slower-growing. So there is a method to this madness.
But what's the point? Viacom stock has languished of late and the board, led by chairman Sumner Redstone, decided to create one company for stockholders looking for fast rewards and one for those looking for long-term stability.
While analysts question the success of this move - many departments will have to double, Viacom's cable channels will lose negotiating muscle without CBS - it does make sense. It was getting to the point where Viacom might've started making questionable moves to bump up the stock.
Sound like another major media company we know? The analysts can say what they want, but check out the moves Disney has made to try to increase stock prices: paying too much for ABC, paying too much for Fox Family, keeping too many inhouse television shows on the ABC schedule, creating questionable US parks, creating questionable overseas parks, going cheap on existing theme parks, "Wal-Marting" the Disney Stores, spending millions on an unnecessary Internet portal, and so on.
And Disney wasn't alone in focusing more on the stockprice than on the health of the company itself. Vivendi Universal was another company that made lots of horrible decisions to help artificially jack up stock prices. And their recent history is even rockier than Disney's, to the point where they were forced - by stockholders - to sell off most of the risky entertainment division.
So will this work? It's too early to tell yet, but history shows that it couldn't be worse than going on a buying spree, or going on a cheapness binge either. Chances are CBS Corp will probably remain a steady business, especially with cash cow CBS leading the way. Viacom will remain the risky venture, which is what many traders want.
How does this affect theme park fans? Well, a stable parent company promises a more stable set of parks. Remember when the Disney parks would suffer due to a bad year at the film studio? Remember when the Universal parks sat ignored during the Vivendi fire sale? The Paramount parks should continue to grow at their current rate, and there couldn't be a better time for that to happen.
Now if only Disney would follow suit! (We'll give NBC Universal a couple years to see if they should also.)
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