Viacom Inc. (CBS Television Network)

Viacom Inc. didn’t ask to be at the center of an election-year debate over broadcast indecency. But when a company is in a position to control the hearts and minds of Americans through a vast empire that includes television and radio stations, movie studios, cable networks and book publishing, attention is hard to avoid, unwanted or otherwise.

The now-infamous Janet Jackson Super Bowl stunt put the wheels in motion on indecency when angry viewers deluged the FCC with calls and e-mails. The breast seen around the world was first seen on Viacom’s CBS. Thanks to the stunt, Viacom’s 20 owned-and-operated stations are reportedly in line for fines of $27,500 each, for a total of $550,000, from the FCC.

But it didn’t end there. Following the Jackson incident, the FCC targeted its indecency poster-boy, radio talker Howard Stern, whose show is syndicated through Viacom’s Infinity Broadcasting. Clear Channel Communications Inc. dumped the program from all six of its radio stations that carry the program, and later reached a settlement with the FCC for $1.75 million to settle several indecency complaints against the broadcaster. It was the largest settlement for broadcast indecency in FCC history.

On top of the Stern/Jackson quagmire, the past year also saw Viacom announcing a separation from video rental giant Blockbuster, a money loser for the company, which held 81.5 percent of the chain’s shares.

To top it off, Viacom’s president, Mel Karmazin, suddenly resigned in June, the end-result of years of feuding with Viacom’s Chairman and CEO Sumner Redstone over the best way to manage the company. Karmazin won accolades on Wall Street for having overseen CBS during the period when it became the most-watched broadcast network in primetime. He was also the shepherd for Viacom’s vast network of radio stations, which have been a cash cow for the parent.

Immediately following Karmazin’s departure, Redstone, who turned 81 in May, appointed chief CBS executive Leslie Moonves and MTV networks head Tom Freston as co- presidents and chief operating officers. In addition, he announced that he would step down as CEO within three years but remain as chairman.

The resignation seemed to further imperil Stern, who had always relied on staunch support from Karmazin throughout two decades of battles with the FCC, and some analysts saw his departure as a prelude to Stern’s possible shift to satellite radio.

Instead, Stern announced in a press conference at the end of June that not only was he sticking to broadcast radio, but that Infinity was putting him back on the air on its own stations in several of the markets lost by the Clear Channel expulsion. Infinity is expected to fight the next wave of fines from the FCC, reportedly in the neighborhood of $1.5 million, which could land any day stemming from the Stern program that spurred the Clear Channel settlement.

When weathering a highly contentious political debate, it helps to be sitting on top of a media empire.

Redstone built his empire after amassing a fortune in the movie theater business. Redstone is chairman of closely held National Amusements Inc., and its 1,400 theaters, and National Amusements controls over two-thirds of Viacom. Redstone bought Viacom in 1987. At the time, Viacom owned a number of radio and television stations and pay television network Showtime. What followed was a series of acquisitions. In 1994, it bought Paramount Communications for $10 billion and Blockbuster for $8.4 billion. But the crescendo was in 2000 when Viacom bought CBS for $39.8 billion, one of the largest media mergers in history. Today, Viacom ranks No. 64 on the Fortune 500 list.

There’s a good chance your favorite radio station is owned by Viacom’s Infinity subsidiary (No. 2 in the industry by revenue). Viacom also owns the CBS and UPN television networks, as well as television stations that reach a larger audience than any company in the nation. It owns a number of major cable channels, including Showtime, perennial favorite Nickelodeon, MTV and BET. Beyond broadcast and cable, Viacom owns five major theme parks. Movie buffs are apt to see a Viacom-produced film through its Paramount Pictures subsidiary. Even bookworms are not immune—Viacom owns publisher Simon & Schuster and a number of other imprints.

The only thing missing from the company’s impressive portfolio is a cable television system, but there’s a reason for that—until recently, the FCC wouldn’t allow a company to own both a national network and a cable television system, for fear it would give preferential treatment to its own programming. A court invalidated the rule, and it was repealed by the FCC last year. The first action in the wake of that decision was the failed bid by Comcast Corp. to acquire the Walt Disney Co.

Viacom is one of the world’s largest media companies, reporting $26.6 billion in revenue in 2003 and a $1.4 billion profit.

In mid-2003, Viacom was reportedly looking into acquiring the entertainment properties of Vivendi Universal, but they were instead picked up by General Electric Co.

—Robert Morlino, John Dunbar

August 20, 2004

Sources: Viacom Inc. Form 10-K, Broadcasting & Cable, Hoover’s Online, Fortune magazine, Knight-Ridder, Daily Variety