Viacom. Swat Analysis

Viacom Inc. SWOT Analysis

Nowadays media companies continue growing and expanding, thus the challenges of staying competitive on the global scale become increasingly difficult. The same destiny takes over Viacom Incorporation, which strategy is developing on the international arena and retain it's positioning in within the United States.

Viacom, named VIA in the New York Stock Exchange is second largest media conglomerates in USA after Time Warner Inc. and one of the largest media incorporations in the world. The company's major holdings include: cable television, movie production, publishing and retailing. Starting with Cable television, Viacom is a major player in this field, owning MTV, Comedy Central and VH1 among other cable networks. These are number 1 music and comedy channels in the United States. Movie production and distribution: Viacom operates Paramount Pictures and the Blockbuster Video chain of video rental and distribution stores.

Viacom is controlled by National Amusements, a movie theater company (interest). "Chairman Sumner Redstone and his family maintain 71% voting control of the company through National Amusements' holdings of Viacom class A stock. National Amusements was founded by Sumner Redstone's father, Michael Redstone"(Media Owners 2005). Originally, Viacom was the syndication division of CBS, so called CBS Films. But in 1971 the division was renamed "Viacom" which stands for "VIdeo and Audio COMmunications." Viacom didn't become an independent company until

1973. Only in 12 years period, in 1985 Viacom's strategy became conglomerate, when it bought Warner-Amex Satellite Entertainment, the owner of MTV and Nickelodeon. After that it renamed the company "MTV Networks". At the same time, the new strong incorporation acquired

Showtime Networks, Inc. (which included Showtime and The Movie Channel). Since 1986 Viacom's life was controlled by Sumner Redstone's National Amusements, a movie theater company. The growing media industry lead to the fact that Redstone was successful enough to proceeded to make major acquisitions such as Paramount Pictures in 1993 and Blockbuster Video in 1994. In 2000 Viacom grew again, buying its original parent company, CBS. This mass acquisition allowed Viacom to utilize CBS's immense television network, which is a number of broadcast television stations, Country Music Television (CMT), cable channels TNN and the King World television company. But Viacom didn't stop on that, as in 2001 conglomerate acquired Black Entertainment Television or BET.

"When Sumner M. Redstone's Viacom Inc. bought the CBS television network in 2000, adding its television stations and Infinity Broadcasting radio stations to his movie studio, theme parks and Blockbuster video stores, he said the new company would be a "formidable media giant" For that time it was a great giant indeed, but time is changing incredibly fast and in order to stay competitive, the company has to be able to respond the market needs as quickly as possible. Unfortunately Redstone couldn't handle such massive machine and decided to split Viacom in two independent companies: New Viacom and CBS Corporation at the end of 2005. "We live in a different world today, and you have to be able to respond to the changing world," (Ahrens, Washington Post, 2005) Redstone said in an interview for Washington Post. But Sumner Redstone still remains the chairman as well as major shareholder of two companies. Before the split, "Viacom had a total revenue of $17.5 billion in 2004" (Media Owners 2005).

Now the Company operates numerous internet sites, including music websites, around the world which target audiences of various television program services, including online audiences. The websites provide information and entertainment, being a strong outlet for advertising sales and overall promotional platform. It invested great money for the development of the web programming and web program services. Currently the company employs about 10,000 full- time and part- time employees.

Strengths:

Exploring current company's situation on the market, one could easily notice the biggest strength of the conglomerate of this type is the imitation by competitors. Other companies in the industry such as Cox Enterprises, Gannett Company, as well as News Corporation follow about the same way that Viacom does. This might be considered an epoch business trend, but when the company is the rival #2 in the United States, this is a strong reason to be learned from.

Secondly, the company is producing a product that still didn't achieve its level of maturity in the normal product life cycle. Media production is on its peak now, which will last for long time. This product's cycle is very unusual and needs its own chart. It will take a long time till media production starts declining.

Third, the status of conglomerate allows the company to use resources of its daughter company's, but not from subcontractors, which saves large sums of money. This works a big media holding: to make a successful movie, the company will need a studio to film, channels to show and inform, internet to inform, media to criticize, music record company to promote a soundtrack and its huge marketing department to promote the movie on the market and in other countries.

Forth, the company possesses great resources that allow even bigger growth and take a strong back up of any other projects in the future. This asset characterizes company's prospective for the nearest future and puts a green light on for any other bank loans.

And lastly, transnational media corporations have become a dominant force in the production, sale, and distribution of the media products on international arena. "Historically, the United States has been the international market leader in television and film exports, having developed a highly sophisticated worldwide distribution network. In 1998, the seven leading international film exporters were U.S.-based companies (including Sony USA), accounting for 85% of worldwide box office sales" .

Weaknesses:

At the meantime, the company has a number of weaknesses, which makes the game harder, but more interesting. The first and most important weakness is the size of the conglomerate. It is impossible for one person to control such giant organization, when the market of each inner organization is changing and every segment has it's own issues to be solved. This was the reason for 2005 company split, when conglomerate had not reason for existence any more.

Secondly, there are twenty other players on the market, which are