MTV, the television network built on cool, is feeling the heat.
What was once a humble cable station known for airing music videos in endless rotation is now a programming powerhouse and media juggernaut. Fueled in part by a string of acquisitions, MTV has made forays into radio, movies, books, Websites, and related businesses, and has seen advertising revenue climb by more than 30 percent at a time when other networks are struggling.
But growth threatens to exact a price. MTV Networks (MTVN)—the Viacom Inc. unit that runs MTV and a long list ofother cable stations and associated ventures—discovered that its finance processes and systems aren’t all they can be, or even should be, for a company its size. “The growth was so explosive, we didn’t invest a lot in systems,” explains Alex Ferrari, COO of MTVN International and, until July, MTVN’s CFO. “We didn’t really step back and say, ‘Let’s look at what we have now and figure out if it’s the right structure, the right set of processes.’”
To avoid a very uncool meltdown, earlier this year MTVN embarked on an ambitious effort to reengineer its core financial reporting and planning processes, and to invest in new information systems to support them. Called Project FORE (which stands for Financial Operation Review and Enhancement, but is also a joking reference to several project members’ fondness for golf), the effort is in the hands of a dedicated team of 11 full-time professionals who are working with the blessing and support of top executives (Ferrari was an original sponsor), a sense of urgency, and an eyes-wide-open appreciation of the difficulty, complexity, and scope of what they’ve undertaken. “This is going to touch every area of the company,” says Michael Day, one of two senior vice presidents of finance at MTVN and the man overseeing the effort.
Project FORE is being driven by two forces that many CFOs can relate to: growth through acquisition and pressure from a parent company focused on the bottom line. Acquisitions, including $1.2 billion spent to acquire the 50 percent of Comedy Central it didn’t already own, have taken the group far beyond its eponymous MTV brand—an empire in its own right, with nearly 84 international channels and 17 Websites, as well as books, videos, radio, and movies—to include VH1, Comedy Central, College Television Network, Nickelodeon, TV Land, Spike TV, CMT, Noggin, The Digital Suite, and other properties.
Yet bigger still is parent company Viacom, a $24.6 billion giant that owns CBS TV, BET, Showtime Networks, Infinity Broadcasting, Paramount Pictures, Blockbuster, and Simon & Schuster, among others. While media companies have fallen on hard times due largely to declining advertising revenues, Viacom still managed to clock a 10 percent revenue gain and 12 percent operating-income gain for this year’s second quarter, ended June 30. Viacom is every bit as acquisition-happy as MTVN, but insiders say that’s where the cultural similarities end. While MTV rewards creative executives who launch popular programming, Viacom demands careful, precise controls. “There will be constant pressure on MTV from corporate for information, clarification, and for much more,” says Joe Simon, who wears the CIO hat for both Viacom and MTVN. “MTV is going to find that if they don’t have something like [Project FORE] in place, they’re not going to be putting anything on the air! The pressure is already there, and I don’t think it’s going away.”