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Freston out, Dauman in as Viacom's CEO
2006-09-05
Tom Freston, one of the founders of MTV, is being forced out as CEO of Viacom Inc. just eight months after the media conglomerate split up from CBS Corp. Viacom's chairman and controlling shareholder Sumner Redstone said the board was disappointed with the company's stock performance and wanted more aggressive management. Freston is being replaced by Philippe Dauman, a longtime Viacom executive and board member. Dauman's business partner Thomas Dooley, another board member, is also assuming an active role in the company with a newly created title of senior executive vice president and chief administrative officer. Redstone told analysts on a conference call that the decision was a difficult one given Freston's deep roots at the company, but that the board wanted a more entrepreneurial and aggressive management team that would have a closer relationship with investors. "On the one hand we love Tom," Redstone said. "On the other hand, the board felt that not enough was being done ... that the communication with Wall Street had been deficient, and the stock price reflected that." Freston's abrupt departure comes as Viacom's stock has underperformed that of CBS Corp. after the two companies split up at the beginning of the year, despite the fact that Viacom had been billed as having faster-growing businesses than CBS including the cable networks Nickelodeon, MTV and VH1. CBS, which has raised its dividend three times since the beginning of the year, has seen its stock appreciate 12.6 percent in the year to date, versus a 15.7 percent decline in the year to date for Viacom. Viacom's shares fell $2.27, or 6.1 percent, to $34.70 in morning trading Tuesday on the New York Stock Exchange, while CBS's rose a penny to $28.87. On the conference call, analysts questioned whether the appointment of Dauman and Dooley was a stopgap measure or if it reflected deeper troubles in the company's businesses. Like all media companies, Viacom is racing to adapt its traditional media businesses to rapid technological changes and the exploding growth of Internet advertising. Redstone insisted, however, that the move was "not a short-term fix," adding: "This company is in good shape, it could just be better managed." Viacom was seen as having missed out on an opportunity to buy the massively popular Internet site MySpace.com, which was bought by Rupert Murdoch's News Corp. and has sealed a lucrative advertising deal with Google Inc. Redstone wouldn't comment on specific deal plans but said the company would be looking closely at potential opportunities. Redstone said that a rebound in Viacom's share price would vindicate his decision to split the companies in two, a move that was intended to create two more nimble companies that would better appeal to investors. Viacom's businesses are focused largely on cable TV networks including MTV, VH1, Comedy Central as well as the Paramount movie studio. CBS Corp. owns the CBS network as well as a large TV station group, a radio broadcaster and an outdoor advertising business. The executives said Freston's departure was not related to an announcement in late August that Redstone was abruptly ending Paramount's 14-year relationship with Tom Cruise, saying the movie star's off-screen behavior was hurting box office returns. Freston, 60 and a founder of MTV, became president of Viacom in January when it split from CBS. Both Dauman, 52, and Dooley, 49, have previously held a number of executive positions at the company. Since 2000, they have run DND Capital Partners, LLC, a private equity firm specializing in media and telecommunication investments. Dauman will report to Redstone, while Dooley will report to Dauman. Dauman and Dooley have worked with Redstone for more than 20 years. Dauman has been a director of Viacom since 1987, oversaw strategic transactions, legal and government affairs, human resources and administration in the 1990s and was general counsel of Viacom from 1993 to 1998. Dooley held various corporate positions at Viacom from 1980 to 2000, was a board member from 1996 to 2000 and rejoined the board in 2006. ___ On the Net: http://www.viacom.com
Freston's wild career takes another surprise turn (2006-09-05)Freston out, Dauman in as Viacom's CEO (2006-09-05)Viacom profit up 27 pct on cable ad sales (2006-08-09)Google to distribute MTV clips with ads (2006-08-07)
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