The bruising battle for control of Viacom has ended, and now the hard work rebuilding Sumner and Shari Redstone’s troubled media company begins.
Viacom COO Tom Dooley becomes the interim CEO, replacing Philippe Dauman, who fought Redstone, his mentor, and walks away with a $72 million golden parachute as a consolation prize. And the Redstones, who also control CBS, have to decide if two media companies are better than a combined one.
Dooley and whoever else gets a turn at running Viacom has their work cut out for them. Under Dauman, the company faced a brain drain of the creative talent that originally built brands including MTV and Nickelodeon. Instead of building the digital assets Viacom’s young viewers prefer, Viacom spent billions buying back its own stock.
Now facing a debt squeeze, Viacom might have to sell off its struggling movie studio Paramount Pictures—a move endorsed by Dauman but strongly opposed by the Redstone.
Change at Viacom is seen as a good thing, both among former staffers and on Wall Street. Jason Hirschhorn, at one time MTV’s chief digital officer and now curator of the Media Redef website, applauded the Redstones’ victory over Dauman, who he said led “what may be the greatest looting and worst destruction of value and culture in media company history.”
Hirschhorn said a new CEO must come from outside the company. What’s needed?
“Someone with creative vision who understands where media is going coupled with strategic and operational talent support,” he wrote in his newsletter Aug. 19.
“Find out where the audiences are going and follow the engagement because that’s where the money will be.”
Last Friday morning, after Viacom’s board acted, the company’s stock, which had hit a new low earlier this year, rose nearly 3%
“This is a liberation day for shareholders,” said Eric Jackson of Spring Owl Asset Management, who earlier this year wrote a scathing report about Dauman’s high pay and poor stock price performance. Speaking on CNBC, Jackson said he was outraged about the former CEO’s parachute payment.
Jackson noted that while Dooley is well-regarded by Wall Street and seen as a moneymaker, he was “joined at the hip” with Dauman and doesn’t have the relationships with Hollywood needed to overcome what has become a “creatively bankrupt culture at Viacom.”
Analyst Michael Nathanson of MoffettNathanson Research is among those who think the best move is a combination with CBS. “And even then, the combined assets would not be that much of a bargain relative to its peers,” Nathanson said.
CBS has the creative leadership in CEO Leslie Moonves—long called a “super genius” by Redstone—but Moonves has dismissed the idea of merging with Viacom. CBS management “will need to be re-incentivized to do this,” Nathanson said.
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