Martin Davis Dies; Reshaped Paramount

Martin S. Davis, the tough, crusty New Yorker who headed Paramount Communications until it was taken over by Viacom Inc. in 1994, died late Monday in New York of a heart attack.

Jerry Sherman, a former Paramount vice president under Davis, said the executive apparently collapsed as he was walking back to his office in Rockefeller Center after having dinner. Davis, 72, most recently was managing partner of the New York investment firm Wellspring Capital Management.

Once proclaimed one of the “Ten Toughest Bosses in America” by Fortune magazine, Davis was considered one of the more volatile personalities in the entertainment industry’s executive ranks.

The number of top executives who once worked for Davis--and who typically left after butting heads with him--reads like a “Who’s Who” of today’s media moguls.

They include Walt Disney Chairman Michael Eisner, USA Networks chief Barry Diller and DreamWorks SKG partner Jeffrey Katzenberg. Eisner and Katzenberg left Paramount to join Walt Disney, where they revived the company. Diller left to start the Fox network for Rupert Murdoch.

Davis became head of Gulf+Western, later renamed Paramount Communications, in 1983 following the death of company chief Charles Bluhdorn.

After taking over, Davis launched a massive corporate restructuring, which drew praise from Wall Street for enhancing shareholder value. Gulf+Western had been the quintessential 1960s-era conglomerate, a mishmash of companies that included auto parts, agriculture, cigars, paper products, chemicals, engineering and movies. From 1983 to 1989, Davis sold about 150 companies with a total of about $6 billion in sales.

In the end, Davis ran a media giant that included Paramount Pictures, Paramount’s vast television operations, Madison Square Garden, a theme park unit, movie theaters and publishing operations that included Simon & Schuster and Prentice Hall.

As Davis improved the balance sheet of Paramount, and accumulated a hoard of cash, he came under pressure to make a major acquisition or risk seeing Paramount become a fat takeover target itself. The company failed to buy Time Inc. in 1989, losing the battle to Warner Communications in a deal that formed what is now Time Warner Inc.

In 1993, Viacom and Paramount agreed on a merger plan only to see it upset by Diller, who entered the fray with his own bid through the QVC television network. In the end, Viacom prevailed, but only after the price had been pushed up to more than $10 billion. Viacom also ended up buying the video chain Blockbuster Entertainment for $8 billion so it could use the huge amounts of cash generated by Blockbuster to help pay for the Paramount deal.

Davis reportedly received more than $50 million when he left Paramount after it was sold. He then founded Wellspring, whose deals included joining with rock star Neil Young in the purchase of the Lionel model train company. Other investments included the Hockey Co., the holding company for such ice hockey equipment companies as CCM, Canadien, Koho, Jofa, Heaton and Titan.

After the Viacom deal, Davis was named a director of National Amusements Inc., which has a controlling interest in Viacom.

Davis continued to be active in the fight against multiple sclerosis, something he became involved with in the early 1970s.

Commenting on Davis’ death, Viacom Chairman Sumner Redstone said: “Martin Davis was an outstanding corporate strategist whose insights helped transform Paramount into one of the greatest companies of its day. He was also a tireless champion for the less fortunate, particularly in the fight against multiple sclerosis where he had a leadership role for 30 years.”

Davis is survived by his wife, Luella, and a son, Philip Davis. Services will be private.