Here is a smattering of reactions to the Freston ouster at Viacom from Wall Street analysts. Generally, the view is hostile. The Street hates uncertainty and volatile shakeups certainly qualify. But technological change is hitting this industry fast and it is only natural to expect a great deal of volatility in the board room as well as on the stock ticker. One interesting piece of speculation – will Viacom do a quick deal with a significant internet player (can you say Yahoo!) to counter the apparent advantage that Murdoch/Fox gained with the (pricey!) acquisition of MySpace. Keep in mind that Terry Semel, CEO of Yahoo!, has an extensive Hollywood background, including stints with Warner, Disney and CBS (the latter a recent spin-off from Viacom).

WSJ.com – Analysts React to Viacom Shakeup

The Hollywood Reporter interviewed Sumner Redstone today on the dramatic changes underway at Viacom of late. The dismissal, first, of Tom Cruise and now of CEO Tom Freston points to an aggressive and creative effort of Redstone to respond to changing technology in the industry. In the interview Redstone sidesteps, smartly, questions about Cruise and, of course, sheds tears about losing Freston. But business pressures won out and those clearly dictate a shift away from star dominated product to new forms of digital delivery.

The connection may not be immediately clear, but the fact that Viacom lost out on the battle to purchase MySpace (which went to the Aussie who dominates American entertainment) clearly lies behind the change. MySpace is emblematic of the potential of new digital consumer driven platforms for entertainement and media products. Those products are likely to be shorter than today’s feature films and may not be simply the vehicles for a handful of stars like Tom Cruise or Tom Hanks as many films have been of late.

Of course, getting this right is no easy task and the new dual leadership has something to prove to Wall Street which rewarded the announcement by dumping Viacom stock. This is ironic since the new leaders, Dauman and Dooley, have been running an investment firm for the last few years.

Discussion about the new digital media and entertainment world often suggests it is a battle between content creators (from artists to production companies) and distributors (from telecom to Apple).

While the entertainment and media labor unions have a toehold in the creators and other unions like CWA and IBEW have a foot in the telecom companies, none have much of a presence in another emerging crucial layer of the digital map: content managers like Heavy.com, the subject of this opinion piece in today’s Financial Times. These sites organize access to the multitude of sites producing content across the web and feed to targeted audiences. When successful these sites can attract their own ad dollars as the authors suggest.

Digitalization means the breakup of a world that had seemed stable to many over decades. Collective bargaining systems evolve slowly in reaction to technological change. The emergence of content managers represents yet another challenge to labor relations in the entertainment and media world.

FT.com / Comment & analysis / Comment – Media money will flow to content managers

One of the most significant effects of the new digital world is the challenge it presents for advertisers. With TiVo and other digital video recording systems now spreading, consumers can easily skip through TV ads. This undermines the buying of ads on TV and motivates the search for new ways to tap into consumer eyeballs. Google’s entire business model revolves around its creative ways to advertise goods and services. A key player in the gaming world, Valley-based Electronic Arts, announced recently it is getting on board with new advertising approaches. Game advertising is a rapidly growing revenue stream – expected to reach more than $700 mn a year by 2010. As this story notes, Microsoft is getting in on the action, too, having purchased one of the leading innovators in so-called dynamic advertising, Massive.

This new revenue stream presents a significant challenge to those who develop the content for these games. Some gamers at EA and other companies get stock options that allow them to get in on the action – but they pay a high price in long hours with little job security. The actors who provide their images and voices for the games, however, are in a different position as, essentially, casual employees of the industry. In recent negotiations with the advertising industry, the unions that represent the actors in ads basically punted on the issue, agreeing to modest increases in pay while conducting a 2 year joint study with the employers on the implications of the new technology without changing fundamentally the way working actors are compensated. Of course, two calendar years in technology is like two decades in the old economy so to delay confronting the impact of digitalization carries significant risks for their members.

MercuryNews.com | 09/01/2006 | EA to embed ads that can be updated into 7 games

The world of television is under assault from all sides these days. As new platforms like YouTube and Google video offer multiple outlets for new content the established networks are struggling to find a new formula for success. One idea: rely on established stars in new products as described in the Wall Street Journal. Ironically, the film world seems to be going in the opposite direction as the recent attack on Tom Cruise by Sumner Redstone suggests.

WSJ.com – New Shows for Old Stars

The emergence of digital delivery to handheld devices like the iPod made by Apple looks like nirvana to some in the world of studios and networks desperate to replace revenue streams that are levelling off in DVD and other formats. But this recent article on Wired.com reminds us how non-union sweatshop conditions help underpin the global entertainment industry. (Ironically, or tragically, some in the labor movement – like Andy Stern at SEIU – and some in academia like Kent Wong at UCLA and Katie Quan at UC Berkeley – have been cozying up to China recently despite the complete absence of genuine labor unions there. For more, see my blog on global labor: https://globallabor.blogspot.com/)

Wired News: IPod Factories: No Unions

As some of my readers know, I spent quite a bit of time in LA and Hollywood this past spring in discussions with the leadership of the Screen Actors Guild about various issues. The major collective bargaining agreements between the unions representing entertainment industry workers and the major employers expire seriatim over the next two years and so stories like this one about the recent split between Tom Cruise and Paramount Studios take on a certain salience. There are various theories advanced in this particular story but the collective bargaining angle is ignored. Sumner Redstone, of course, is a savvy business man and what better way to try to scare the rank and file working actor than to pick on a major, if not the major, star of the last decade? Of course, arguably, Tom Cruise left himself open to attack with his rather unorthodox public appearances of late, not to mention what I thought was the weakest of the three Mission Impossible movies.

Criticism of Tom Cruise stirs Hollywood debate�|�Entertainment�|�Entertainment News�|�Reuters.com

I was interviewed last week for this story in the SJ Mercury News on the stock option backdating crisis. An interesting question is whether or not investor lawsuits or SEC prosecution will solve the problems of managing public corporations. Investors, particularly large institutional investors, need to cosnider a more active role in managing the companies in which they invest such as taking a seat on boards of directors. Unfortunately, the SEC blocked reforms last year that would have made that easier!

https://www.mercurynews.com/mld/mercurynews/business/15374401.htm

The Communist party that is – so if there was any doubt about the link between allowing the ACFTU into WalMart and the Chinese communists this should dispel that! I wonder how those western trade unionists like UCLA Labor Center chief Kent Wong and Change to Win’s Andy Stern who think the ACFTU is a real labor union explain this development!

The party comes to Wal-Mart in China | FT business | The Australian

As some of my readers know, I spent quite a bit of time in LA and Hollywood this past spring in discussions with the leadership of the Screen Actors Guild about various issues. The major collective bargaining agreements between the unions representing entertainment industry workers and the major employers expire seriatim over the next two years and so stories like this one about the recent split between Tom Cruise and Paramount Studios take on a certain salience. There are various theories advanced in this particular story but the collective bargaining angle is ignored. Sumner Redstone, of course, is a savvy business man and what better way to try to scare the rank and file working actor than to pick on a major, if not the major, star of the last decade? Of course, arguably, Tom Cruise left himself open to attack with his rather unorthodox public appearances of late, not to mention what I thought was the weakest of the three Mission Impossible movies.

Criticism of Tom Cruise stirs Hollywood debate�|�Entertainment�|�Entertainment News�|�Reuters.com