Marty Shea is a genial veteran of the IR field. As senior vice president of IR for multimedia giant Viacom, he began almost before investor relations was a recognizable profession, and certainly before the company took its present form. Now, he looks on philosophically as so many of his IR peers at other companies have moved on; and he consoles himself that at least one plausible explanation is that he is doing the job so well that no one wants to replace him.
But then, as a former history graduate and teacher, he can take a longer-term perspective, and he engagingly confesses he falls into ‘instructor mode’ very easily. His career has certainly covered the changing world of IR and ‘shareholder value’. His first boss, Charlie Bluhdorn at Gulf & Western, thought shareholders and Wall Street were a bunch of parasites, and he did not conceal his hostility to them. It was not that he was a crypto-socialist. Rather, he thought that if they were any good, they should have their own bright ideas and put money into them. The best Shea could manage was small meetings with analysts, who never got to see the boss, which was perhaps just as well.
Bluhdorn’s successor as CEO of Gulf & Western was Martin Davis, who was much more active with Wall Street and took a larger role. This, in turn, increased Shea’s responsibilities. By the time Paramount and Gulf & Western merged, he was already an IR veteran.
Of course, in those days senior management pretty much depended on their salary, with a small addition from stock options, which could always be priced to their then modest satisfaction. Shea has few doubts that the current vigor of the investor relations profession and the enthusiasm for it among corporate leaders owes a lot to the much larger stock options that now form so much of their compensation packages. It concentrates their minds on shareholder value.
In the case of Viacom’s senior management, Shea suggests there is an additional factor: they enjoy relating to shareholders, and they devote much of their time to it, which – with over 100,000 employees and $25 bn in revenues – is no mean feat.
IR as a profession has matured in the last decade of bull markets, and the current crisis will show how essential it is judged to be.
While it may seem logical that it needs more – not less – attention and resources when the market goes down, logic does not always conquer. Just look at advertising. The popular theory suggests companies should spend more on advertising in the face of weakening demand, but if Viacom’s ad revenues are any guide, that it is not what is currently happening. ‘I see no signs of less attention to IR out there either,’ Shea observes.
Shea’s opinion is not based just on Viacom. An active Niri member and former head of Niri New York, he admits to getting great recharges from just chatting with other local luminaries of the IR community, like Mark Aaron from Tiffany, Catherine Mathis of the New York Times and Susan Watson of IPG. Like them, he takes his profession seriously and thinks about it in a way belied by his light conversational touch.
Numbers & substance
Shea says each year he’s reminded of the importance of exposing senior management to investors. Substance is essential, but numbers are not enough: investors want to see who is getting their money. They need to be convinced that management will make it grow for them. He counts his blessings with the current management team who relish the meetings. CEO Sumner Redstone along with COO Mel Karmazin backed by CFO Richard Bressler, give the IR department more senior management to expose.
‘When we go to a buy-side meeting, the room is usually full when Sumner Redstone comes in. He lays it on the line to them: Ask me what you want to know about Viacom and how the future looks.’
For his part, Karmazin is an equally persuasive force, Shea believes. ‘He relishes opportunities to tell investors the information they need about the company, and chides them about how much they will regret not buying more Viacom stock.’
Indeed, Mel Karmazin is such a strong Viacom proponent that many investors believe he’s the CEO. He scored highest for best IR by a CEO of a $2.5-10 bn market cap company in the survey for the Investor Relations Magazine US Awards 2001. ‘I have never come across a CEO who cares as much about shareholders as he does. He will move heaven and earth to get his stock price higher,’ enthused one portfolio manager.
Just as important as exposure of management to investors, of course, is exposure of management to the IR department. When Viacom first took over Paramount, they told Shea he would report to the treasury, instead of the CFO, with a dotted line to the CEO. Shea says he drew a line in the sand and told them there was no way that an IRO could function on that basis. They were adamant, but he was equally so, and left to work with Nelson Peltz and Peter May at Triarc Companies. Three years later and with sagging stock, Viacom asked him to come back, allowing him to draw his own organagram with an all-access pass to the senior executives. No one has since questioned the wisdom of the decision, least of all the execs themselves.
It used to be one of Shea’s IR basics that phone calls should be answered the same day. However, he is beginning to reconsider as the proliferation of mobile phones leads to long games of phone tag. Anyway, while admitting the telephone’s importance as an IR tool, he is firm that it takes second place to one-on-one meetings, which are the real Viacom specialty.
If Shea is toting his senior management somewhere, he wants undivided investor attention for them, and no-one else will go to places like Texas in the summer and Minnesota in the winter. ‘The locals really appreciate it,’ he grins, and contrasts it with Europe in springtime, when it seems half of America’s senior management are all on the road at the same time, clogging up the hotels and the investor meeting schedules during the good golfing weather.
Home operations
When not on the road, the IR operation is conducted from Viacom’s headquarters on Broadway, a high floor with a sweeping view of Manhattan from Central Park down to Wall Street. You almost get the feeling they could shout out the window to the analysts, but of course they work the phones. His back-ups are Jim Bombassei, Lisa Rubino and two assistants, who cope with the 30-plus sell-side analysts who cover the company. ‘We pretty much all do the same stuff,’ Shea says, disclaiming any specialization.
Quizzed about why none of their names appear on the Viacom IR web pages, he quips, ‘It’s not about personalities – there are a lot of buses on Times Square, and if one of them hits me, Viacom will carry on.’
Besides analysts, Shea’s audience of choice is the 200 or so institutions that own Viacom, including giants like Fidelity. Although he eschews targeting, and is happy with the present investor mix, he is always eager to add new shareholders. He keeps a close watch on holders with the help of Thomson Financial/Carson and characterizes most of his current holders as Garp (growth at reasonable price). However, he has noticed momentum players coming in, which he sees as a good augury: they at least are expecting upward trends, and with a stockholder base as big as Viacom’s, even if they were to unload, they would not cause more than a micro-blip in the price.
With Viacom’s shares around 65 percent held by institutional investors, obviously the buy side is extremely important, hence all those one-on-ones. But senior management also focuses on sell-siders, especially COO Karmazin, whose personality vibrates in sympathy with them. He wants to sell the stock and wants them to want to as well. ‘We treat them all equally, and give them plenty of time.’ But Shea does then add a pretty big caveat: ‘If someone started asking really stupid questions, we’d politely suggest they go away and do their homework and then come back afterwards.’
Shea is not unduly concerned about current IR hot potato, Regulation FD. He concedes that it could pose problems but says there are lots of ways to help analysts with information that is already in the public domain. A big part of it is holding their hands and giving them comfort that their assumptions are logical.
With justifiable pride Shea recounts how Viacom managed its second quarter earnings report: ‘We came in under some estimates and had hardly a tremor at a time when companies were being slaughtered for being a cent under.’ The reason? Basic IR principles of trying to not surprise the market, being honest and sharing grounds for future optimism. It should have been no surprise given the economic climate, but analysts always need reassurance, which is where the human element of IR and senior executives’ personalities and performance come into play.
Retail holders are served by the sell side, which is enthusiastic about the company in its own right, even without the pep talks from Mel Karmazin, the web site and the mass media generally. There, the IR department works very closely and harmoniously with Carl Folta of corporate relations, making sure their messages are orchestrated, as for example with a previous quarter’s earnings shortfall.
Surprisingly, Shea is very laconic about the value of show biz awards as an IR tool. ‘Winning awards is nice, but we are in the business of making money for the shareholders,’ he snorts. Similarly, the company has resisted suggestions of branding based on Viacom. ‘It’s well enough known in the markets,’ he says, ‘and the kids who watch MTV would be suspicious if they were reminded it was part of a corporate empire.’ Nor, for that matter, would many Nickelodeon viewers be stuffing their piggybanks with Viacom stock.
Looking back, did Shea ever regret quitting history teaching? ‘No, I love this job, and really find it satisfying that I can make a difference, that I can make things happen.’ While he would not go so far as to say that history is bunk, he does say, ‘We look to the future here.’
What the analysts say
Jessica Reif-Cohen, Merrill Lynch
‘Marty is a pro,’ enthuses Reif-Cohen. ‘He’s been around for a long time, and he’s probably the most loved IR guy in the business. He’s got a great personality, he’s forthcoming, he’s honest, he’s trustworthy, and because he’s been around for so long, he handles the Street really well. He’s the person to deal with. He’s the best.’
Brian Demain, Janus Capital
‘In Viacom, the IR function is a lot more critical than it is in many other companies,’ remarks Demain. ‘To be in that role, Marty clearly has a lot of respect from senior management. One token of that is that Sumner Redstone refers to Marty along with all the operating heads in his autobiography. [Shea] does a great job in guiding the big picture element of the company as well as the nitty-gritty details, which is why he is so well respected by analysts. He’s been pretty straightforward with us. He also balances the usage of senior management’s time with Wall Street’s need to see them. But at any meeting, there’s always value added when Marty’s there.’
Chris Dixon, UBS Warburg
‘The strength of Marty is that he is very levelheaded. He doesn’t succumb to the hype of the media industry,’ says Dixon. ‘He’s very patient with young analysts, to help them understand what is a very complicated industry. Viacom, like AOL, is a big business, in the internet, advertising, the movies, publishing. With his experience at Gulf & Western where he had everything from lead to movies, Marty was able to put things in perspective. Additionally this is an industry that has led through mergers, so he’s been able to put the mergers and restructuring of the last two years into perspective.’
Dixon continues, ‘Marty brings a longer-term perspective to the industry because he’s been around, and his management respects his read of the Street. There are two or three people who are really good who I’ve had to deal with over the last 15 years, and he is one of them. He’s a gent – and he has been instrumental in how the marketplace has seen Viacom for the last couple of years.’
Jill Krutick, Salomon Smith Barney
‘Marty Shea’s depth of knowledge of the industry helps set him apart from his peers. And he’s ready to share that knowledge, he’s very forthcoming and very responsive, which certainly helps in getting the message across. He has such a good rapport with the management at Viacom. It really furthers things. He is very proactive as well, with a lot of back and forth. In fact, he has such charm and such a magnetic personality that people gravitate towards him.’
