MTV’s Future Shock?

The recent sacking of former Viacom CEO Tom Freston by chairman Sumner Redstone comes at a crucial time for MTV Networks, which includes MTV, VH1, Nickelodeon and Comedy Central and accounts for most of Viacom’s income and profit.

While Redstone has thus far retained an important cog in MTV chief Judy McGrath, a longtime network exec and associate of Freston, some observers fear the upheaval could be traumatic to the close-knit, iconoclastic corporate culture of the network, according The Wall Street Journal.

“It’s critical to empower Judy,” a former top exec at MTV Networks told the paper. “You can’t lose mom and dad in the same year or the place will fall apart.”

But others think upheaval is exactly what’s needed at MTV Networks’ Times Square corporate offices, where a decentralized approach to management has at times been blamed for allowing problems to fester, and founding execs pulled up drawbridges to their own fiefdoms, institutionalizing them.

While MTV is still the gold standard for advertisers seeking the all-important 18-34 age demographic, ratings have been stagnant for years, and the network is no longer the home of cutting-edge programming. It all but eliminated actual music programming years ago.

But it has always been known as a hospitable environment for writers, producers and artists – owing in no small measure to Freston’s influence. Viacom’s new CEO Phillippe Dauman, told the WSJ he’s well aware of that legacy.

He recently held a lengthy meeting with MTV Networks staff to assure them he will keep that culture growing and told the paper his goal was to be “a trend leader not a follower.” But where Freston spent most of his career building MTV and its sister networks, Dauman is relatively unknown to the creative side of the entertainment business, the WSJ said.

Among the challenge facing Dauman is making MTV Networks a force on the Internet while protecting its television audience. Even though the cable networks are more profitable than ever, analysts are showing concern, according to the WSJ: Some see a long-term slowdown in cable ad buys and others a decline in Viacom’s brands.

Evidence of that decline was seen by critics in the recent Video Music Awards. Ratings for the show reportedly fell nearly 30 percent from last year to 5.8 million viewers. Instead of moments with Madonna swapping spit with Britney Spears, viewers were treated to a lecture on the environment from Al Gore.

In terms of day-to-day programming, MTV broke ground with reality television with the introduction of “The Real World” – but that show just wrapped its 19th season and is the worse for wear. Both MTV and VH1 schedules remain awash with “reality” programming including “My Super Sweet 16,” “The Hills,” “Next,” and “Celebrity Fit Club.”

But that genre has by now saturated non-cable television and gone stale for Viacom, some say. Whether MTV Networks seizes the opportunity to create something fresh or decides to rest on its 25-year-old laurels remains to be seen.

“They’ve overplayed the reality card to the degree that it’s hurting their brands,” Brad Adgate, a senior VP at NYC-based Horizon Media, told the Wall Street Journal.

Some producers and agents currently doing business with MTV Networks told the paper the company must shed a certain institutional sense of entitlement that’s come with past successes and battle it out with new, competing media.

“Networks that have been kings of the jungle for so long have a very difficult time truly accepting that they have become the hunted,” Adgate said.