This is the actual case in which Viacom filed an amended complaint, seeking punitive damages in addition to the statuory damages originally requested in the March 13, 2007 case.

In reference to my project, this provides an update to the ongoing case of Viacom v. Youtube. The request to amend for additional damages was denied. It was ordered that punitive damages could not be recovered in accordance with the Copyright Act.

Viacom Inernational Inc.v. YouTube, Inc. No. 95-02103. Southern District of New York District Ct. of the US. 7 March 2008.

This article recounts the early days after the decision was announced to break Viacom into two separate companies (one cable, which would be a growth stock, and the other broadcasting, which would be a value stock). Simply put, Sumner Redstone’s acquisition strategy was not nearly as successful as he had expected it to be. Indeed, it has failed. But, that does not mean that the split is welcomed with open arms and rave reviews on the part of Wall Street analysts.
The main logic behind the split up is that sprawling conglomerates become dragged down by their own size and that expected synergies often do not occur because of management struggles or clashes of corporate cultures (see chapter 11, pages 233-235 of Media Economics, Theory and Practice for a great example of this).

This article focuses on CBS’s measures to assure investors that it is prepared for the new digital age and will remain profitable even as the ways in which consumers consume media radically change. The broadcast network is focused on creating new revenue streams from video-on-demand, internet sites/portals, and more diverse program offerings on other channels that are not dependent on advertising (except in the internet case) and are more amenable to consumers’ new tendency to watch TV when and where they desire. Part of the problem that traditional broadcast networks have been having is that their content is regarded as having a different value for cable carriers than those stations that exist exclusively on their medium. This weakens broadcast newtorks’ bargaining position, for they are not regarded as having the same economic structure. In some senses, CBS (along with all other major networks) is seeking to change that by reconstructing its business model.

Important quotes:

“The shows will cost 99 cents each, and will be available in areas where CBS owns TV stations and Comcast provides digital cable. The deal bears some similarity to recent agreements NBC and ABC have struck with DirecTV and Apple Computer. All are meant to adapt the business model of a broadcast television network to changing technologies and viewer habits, and find additional ways to be paid, beyond the advertising that has been broadcasting's sole source of revenue."

"But unlike NBC and ABC, which reside inside the conglomerates General Electric and Walt Disney and have sizable cable network siblings, CBS has an extra incentive behind its digital hustle: the split-up of Viacom. The breakup will leave the CBS Television Network as the centerpiece of a new CBS Corporation, which will include 40 television stations, the UPN network, the radio group Infinity Broadcasting, Showtime, Simon & Schuster and the Paramount Television production business. The rest of the company, which includes the fast-growing MTV Networks cable channels, BET and the Paramount Pictures film studio, will continue under the Viacom name.”

This article does not specifically talk about media companies, although it does mention them in the context of the current waves of spin offs and having conglomerates split up after not realizing the promised synergies before the mergers.  Indeed, there seems to be a penalty for conglomerates right now, such that the sum of the parts is probably worth more.  The idea behind many mergers was that the companies together would be more valuable than their individual assets added together, although it has since been proven that that is not the case.  According to Media Economics, Theory and Practice, 75% of all mergers and acquisitions fail to deliver on promises made to investors.

This article, published in early November 2005, focuses on the fiscal woes of the large media companies.  Even though many of them were not hemorrhaging money, their stocks had been seriously underperforming: since August, most stock prices were down between 6 to 17 percent at a time when the major indexes had lost only a handful of percentage points.  The main argument is that even though the major media companies (including the conglomerates such as Viacom and the more focused newspaper companies such as Knight Ridder) had been shaking up and revitalizing their business models to prove that they were ready to capture new markets in the evolving economy, many institutional investors were not warning up to their actions and plans.  Indeed, you could even say that there are some corporate civil wars going on in board rooms.  The article specifically mentions that a large shareholder of Knight Ridder wants the company to put itself up for sale, and it makes a reference to Carl Icahn’s efforts to get Time Warner to divest itself of some of its assets to begin a large stock buyback program (since the publication of this article, Carl Icahn has become even more confrontation when dealing with Time Warner’s current board of directors and management).  The writer does not mean to say that all media companies are having trouble, for Google and Apple have been steadily increasing for quite some time (the continue to do so).  Rather investors are not feeling the least bit sanguine when it comes to traditional ‘big’ media companies.  Perhaps they are all just dinosaurs waiting to be extinct.

Here are two interesting and important quotes from the article:

”Beyond those concerns, they worry that with slower advertising growth, the profitability of media properties like television and radio stations could be affected. And even if the ad market were to become robust again, just how many of those dollars might flow to the Internet and away from traditional media is an open question.”

And

''There is a buyers' strike,'' said Dennis Leibowitz, general partner at Act II Partners, a media hedge fund. ''People are afraid to touch the old media. No matter how cheap they have gotten, people are fleeing. The environment is scaring them, and they can't figure it out.''

Bagdikian works to expose the monopolistic practices of the media industry. He specifically focuses on the big five (Time Warner, Disney, Bertelsmann, News Corporation, Viacom) and how they act together like an oligopoly or cartel. One of the main issues is that they work together on joint projects that prevent them from being true competitors.

He also looks at the monopolies in other media areas, specifically newspapers. He examines the ways in which newspapers are run without true competition in local markets and the self-censoring effects of advertising (for a more in-depth analysis, I recommend Professor Baker’s books).

Another problem that becomes apparent is the conglomerate nature of these corporations and the fact that advertisers and interest groups can leverage their power against one facet of the conglomerate to create change in another (boycott ads in one periodical to protest an article in another in which the advertiser does not place its ads).