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A Thirst for Synergy

Les Moonves calls synergy
an overused word. But he wishes Viacom had used it a little more.

Moonves and his co-president and co-COO at Viacom, Tom Freston, took the new Les & Tom Show (or is it the Tom & Les Show?) to the Goldman Sachs Communicopia media investment conference the other day. It was part of their ongoing campaign to rally Wall Street to their company's cause. One enticement for investors: The execs said they are working on a new strategic plan to lay out the company's future for the next several years. Viacom's 15-20 key execs and division chiefs, Freston and Moonves said, need a blueprint to follow and to benchmark the company against later. After all, a strategic plan is like private jet or a crate of Blackberries: You can't run a media conglomerate without one, right?

Well, wrong, apparently.

In a moment of startling candor, Tom and Les acknowledged to Goldman's Anthony Noto that, er, the strategic plan isn't an update, it's a whole new thing. Viacom hasn't really had a corporation-wide game plan for years.

Wow. No formalization of how all the pieces of Viacom fit together. No overarching tactical thinking about which divisions the company should invest in more heavily and which should be milked. Or what new businesses to enter and which old ones to sell off.

After his presentation, Moonves had no time to chat with a crowd of investors, but one question stopped him in his tracks as hustled toward the exit: "Les, you guys didn't have any
strategic plan?" He wheeled around: "What does it look like to you? These units weren't working together. No planning, no sharing."

For years, many Viacom executives bragged that they weren't making the mistakes of other media giants by forcing synergy onto every division. Nothing like Disney's ruining ABC by foisting Touchstone productions on the network. Or AOL's forcing every Time Warner employee to switch to the online service's simple-minded e-mail system.

At Viacom, during the era when Mel Karmazin was playing CEO-in-waiting to Sumner Redstone (before the exasperated Karmazin resigned last spring), division presidents were encouraged to make decisions that were best for their businesses, without much regard for their corporate siblings.

"Their strategic plan was whatever Mel and Sumner talked about," says one Wall Street executive.

Freston at MTV Networks and Moonves at CBS no doubt enjoyed their independence. But now they're thirsting for some synergy.

"We want the relationships between the various divisions of the companies to change and take advantage of the fact that we are all in it together," Freston told other investors a few days earlier. "There are a lot of ways we can extract value through stepped-up internal collaboration." Like getting MTV shows and bands promoted more heavily on Infinity radio stations. And making Paramount's TV studio cater more to the needs of CBS—potentially a big customer—rather than treating the network like an afterthought.

It's not a small issue. Moonves and Freston face the prospect of Viacom's revenues growing at a mere 6%-7% over the next few years. Cash flow needs to grow at a much faster rate to get Wall Street excited. So, in addition to reviving struggling units like Paramount Pictures, Moonves and Freston need to work the existing assets more efficiently. Look for more VH1 shows advertised on Viacom-owned billboards near you.

We welcome the debut of Deputy Editor John Higgins' column on the workings of Wall Street and the television industry. Look for Money Talks every week in
B&C. E-mail him at