It's not personal, it's very personal

nobody@vox.com(Mikester) — Sat, 26 Aug 2006 14:25:27 -0700

It's not personal, it's business - straight from the Godfather. Except what happened with Sumner Redstone and Tom Cruise this past week was personal and business. And Redstone made it very personal.

Now here is my theory: Sumner Redstone did what he did in an effort to prevent Viacom stock from going down even more, which it most likely would, when word got out that Tom Cruise had left Paramount. The key here is Tom left Paramount, not the other way around. It just had not been announced, but Paula Wagner made that very clear and gave some specifics as to the future of Cruise / Wagner Productions. The media has completely missed this point. They are so infatuated with anything related to Tom, and of course sensational news is what they think sells, so the story has to be that Tom was fired.

In actual fact, the truth is this simple: Sumner Redstone decides to deflect attention from Viacom stock, which has been steadily declining, is off roughly 18% since its December 2005 high. By "firing" Tom, it looks like Paramount is in control and taking measures to cut costs. So what Mr. Redstone has done is to publicly tell a lie (he fired Tom rather than Tom quitting) solely in an effort to influence his stock price. This is not unlike what the Enron executives did, though in their case, the lies were very deep indeed and the effects were tragic.

Viacom

Viacom12Months

Why would the head of a parent company make such an announcement in the Wall Street Journal? It only makes sense if he is trying to prevent his stock from declining. He didn't tell it to Premiere or Variety! And he didn't have Paramount announce it. The message had to come from the top of the corporation. It is even more apparent that his own attention is very much on his stock - he mentions, gloatingly, that Viacom stock went up the day of the announcement (a whopping 19 cents). This is tantamount to saying - see, I made my own stock go up! Of course when your holdings of stock are 12% of the company or nearly 50 million shares, a 19 cent uptick represents nearly 10 million dollars. But when you look at the performance since January, where the stock price has dropped nearly $10/share, Sumner Redstone Viacom stock is worth about a half billion less now than last December. That's quite a hit, even for a billionaire.

Generalities and Specifics

Sumner Redstone never mentioned what behavior of Tom's was unacceptable to Paramount. Presumably he was referring to the Oprah couch jumping and the Matt Lauer Today Show interview as these have gotten the most media attention.

Meanwhile, Paula Wagner was probably about as specific as she could be. She mentioned there were two hedge funds that will furnish 100 million with options to go up to 300 million. She mentions one is on the east coast and the other on the west coast. The only thing we don't know yet are the names of the funds. As anyone is business knows, agreements are usually in place that govern things like when information is released to the press and so forth. I'm sure the names to these two hedge funds will become known when the time is right.

Unfounded criticism

I have long known that Tom Cruise is an exceptional human being and any negative treatment is unfair and simply not based on anything of substance. Let's take a look.

Paxil and Brooke Shields

This is the long and short of the Brooke Shields story:

The FDA issues black box warnings for ALL antidepressants, Paxil included. Black box warnings are the most serious and the last step before removal from the market. Reason for the warnings: they can cause a user to commit suicide. The UK bans Paxil completely for those under 18 years for the same reason (risk of suicide).

Tom criticizes Brooke Shields for promoting the use of Paxil. She made money by writing a book that advocates the use of Paxil, a drug that the FDA says can cause suicide.

What Brooke did earned her money - she had a vested interest in promoting the use of a drug known and stated by the FDA to have as a side effect of suicide.

What Tom did was call her on it, saying this isn't cool and you should show a bit more responsiblity. He happens to be right. And you can't spin this any other way. He knows based on scientific measurement that these drugs are very dangerous and at best only mask symptoms. If you know this and do nothing, well that is irresponsible. If you promote the use of these drugs while making money from it, well that is even more irresponsible.

Katie and Couch Jumping

I am amazed that this story is even a story. Tom loves Katie - good for him. He professes publicly how much he loves her. Even better. Most women would love to hear their man say they love them. Many would probably be very touched when their man does so publicly. The Oprah crowd that witnessed it absolutely loved it! For some reason, the media's message is suppress your emotions and if you show the least bit of enthusiasm, you must be nuts!

Redstone errors

When you look at the facts of this story, it's difficult to conclude that Tom was fired the way Redstone wants you to believe. Tom quit, Redstone is doing damage control by a preemptive strike. I imagine he holds a grudge against Tom for leaving Paramount, so why not make it public and personal.

There is a real problem when your basis of operation is to publicly slam people. That is what Mr. Redstone did and it is a bad business practice. Kharma is certainly one aspect to it; what goes around, comes around. Redstone made this very personal, he bypassed his executives at Paramount, he was discourteous to another Paramount money maker by the name of Steven Spielberg, he underestimated the number of people that really love Tom (many very influential in the industry), and he alientated the Creative Arts Agency, the hand that feeds the studios some of the best talent around. Tom will make money, a lot of it, and it will be for the competitors of Sumner Redstone. Now matter how that is spun, it still boils down to very bad business for Paramount and Viacom.

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It's not personal, it's very personal