The $36 billion merger between Viacom Inc. and CBS Corp.
appears to solve one of the nagging problems that has dogged Viacom chairman Sumner
Redstone for several years -- naming a clear successor to his growing media empire.
Redstone has had potential successors in the past -- most
recently Frank Biondi, who was fired three years ago after incurring the 76-year-old
chairman's wrath. Although the potential is there that CBS chairman and CEO Mel
Karmazin could face the same fate, most Wall Street analysts believe the marriage will
last.
Karmazin -- who will become president and chief operating
officer of Viacom after the merger is completed in six to nine months -- is in line to
assume the CEO role in the event of Redstone's departure. Karmazin will take care of
the operations side of the business, while Redstone focuses on the big picture.
"What drives both [Redstone and Karmazin] is the share
price," Merrill Lynch & Co. analyst Jessica Reif Cohen said. "Sumner has an
incredible opportunity working with Mel."
Karmazin also has more protection, with a contract that
runs until December 2003. Also, he cannot be ousted without a 14-member supermajority vote
of the new company's 18-person board of directors, including 10 representatives from
Viacom and eight from CBS.
Karmazin's entry heralded two big-name exits.
Redstone's key lieutenants -- deputy chairmen Philippe Dauman and Tom Dooley -- will
leave after the merger is completed.
Although both men had long histories with Viacom, and they
were Redstone's top advisers, neither had operating experience, nor was either
believed to be a successor. Both will receive compensation packages estimated to be worth
about $120 million, including stock options, and each will retain his seat on the Viacom
board.
At a press conference announcing the deal, Redstone had
high praise for Dauman and Dooley. "My thanks to both of them for their immeasurable
contributions over the past decade and beyond," he said. "We wouldn't be
here if not for them."
