Magazine article Variety

Embattled Viacom in Leadership Crisis

Magazine article Variety

Embattled Viacom in Leadership Crisis

Article excerpt

THE TURMOIL AND TURNOVER at Viacom show no signs of easing up. Long-serving executives at the struggling media giant are being tossed overboard at a furious clip, as a newly reconstituted board of directors scrambles to save a ship that has been taking on water.

Inside of 72 hours last week, Thomas Dooley, appointed as interim CEO only last month, announced his resignation, effective Nov. 15, and Rob Moore, vice chairman of Paramount Pictures, was forced to leave. Both executives resigned under pressure from the Viacom board, which added five new members in August.

The disaster at Viacom has been years in the making. It's the result of leadership that prized stock buybacks and dividends over longer-term investments in building an arsenal of hit shows and movies at Paramount, MTV, Comedy Central, and other properties. Instead, Viacom has seen its Tiffany brands tarnished, as ratings have faded and box office revenue has dwindled.

To replace Dooley, Viacom's board is said to be focusing on hiring from within. That seems to signal that controlling shareholders Shari and Sumner Redstone are increasingly focused on reuniting Viacom with its former corporate sibling CBS Corp. Dooley's successor would most likely be a placeholder until the Redstones can craft a merger that is palatable to the board of CBS Corp. and its chairman/CEO, Leslie Moonves. His happiness is essential, given that CBS is seen as one of the best-run television companies in the business.

The departures of Dooley and Moore followed a two-day review of budgets and long-term planning by the board during the week of Sept. 12 that included presentations from division heads across the company. Additionally, Moore was dragged from Los Angeles to New York last month to be grilled by Viacom's leadership about the moneylosing debacle "Ben-Hur"

The board is said to be surprised by the depth of the company's problems, from its debt load to projected declines in the longterm earnings of its cable networks. Compounding matters, Paramount is on track to lose $450 million in the 2016 fiscal year, according to analysts' estimates.

At Paramount, Moore oversaw the studio's day-to-day operations. He was known as a hard-nosed dealmaker, with an eye toward reining in costs. After his ouster last week, executives at rival studios, producers, and agents privately wondered if the cuts would stop with Moore.

Speculation has turned to Brad Grey the chairman/CEO who has led Paramount since 2005. The studio lags behind its rivals both in terms of market share and in the creation of blockbuster franchises. While Disney has locked up the market on fanboys, acquiring Marvel and Lucasfilm, Paramount has scrambled to produce in-house tentpoles. It has had success with the "Transformers" and "Mission: Impossible" franchises, but other series are flagging. "Star Trek Beyond" cost $185 million to make and earned $335.9 million, and the collapse of "Teenage Mutant Ninja Turtles: Out of the Shadows" likely spells an end for that franchise.

Still, despite Grey's spotty track record, Shari Redstone and the board have publicly endorsed his leadership and are said to be impressed with his vision, though insiders declined to elaborate. Grey has been in daily contact with Shari Redstone and was due to have dinner with her on Sept. …

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