Amid the orgy of congratulation and self-congratulation last week, it was difficult to find anyone pumping the hand of Philippe Dauman. It was exactly 10 years ago that the Viacom CEO took office, yet today he takes the rap for putting his company on the corporate casualty list.
In assuming his duties a decade ago, Dauman delivered a stern lecture to his subordinates. “Never let a competitor beat you to the trophy,” he intoned. The “trophy” at that moment was not an Oscar. It was a site called MySpace, which Rupert Murdoch had just bought for a numbing $580 million (he later dumped it for $35 million). Dauman’s boss, Sumner Redstone, had coveted MySpace and was so angry about losing it to Murdoch that he fired his then-CEO, Tom Freston. One of Dauman’s first moves was to dispose of Viacom’s stake in a new company called Vice for $3 million (it now values itself at around $4 billion.) And so began the vicissitudes of Viacom — one of the fascinating corporate melodramas of its era.
Cut to 2016: Sumner Redstone now fights legal battles contesting his mental competency as Dauman struggles to recruit outside investors while still retaining control of his troubled company, The man Dauman replaced, meanwhile -Freston – is widely regarded as the luckiest ex-CEO and also one of the most quietly creative. On one level, Freston is a phantom of philanthropy, a man whose fingerprints are on important causes but rarely his name. On another level, he continues the career of innovation that he embarked on in creating the MTV networks. Freston’s energies, for example, have fueled the expansion of Vice across a broad media spectrum.
Journalists never write about Freston because it’s hard to find him. While most former CEOs take up residency on corporate boards or hedge funds, Freston presides over startup TV networks in Kabul and Ethiopia, or orphanages in Burma. He hangs with Bono in raising millions for ONE, an organization fighting “extreme poverty.” Then there’s Vice: Freston is allied closely with the volatile Shane Smith, a man whose personality is the exact opposite of Freston’s. The boss of Vice covets public attention as he expands his company into new arenas – a TV channel on A+E, a news service on HBO. While Freston is invisible, Smith is ubiquitous, but it was Freston’s diplomatic initiatives that helped engineer the alliances with both Murdoch and Bob Iger that have given Vice its new clout.
In a speech some years ago, Freston reflected that “a career path is a clumsy balance between the things you try to make happen and the things that happen to you.” Given that tenet, it’s interesting to speculate what things would have happened to Freston, and to Viacom, had he not been fired by Redstone.
In building MTV networks, Freston demonstrated his talent for pioneering new media. By contrast, Viacom’s principal policy under Dauman has been cost-cutting. The Dauman focus was initially aimed at pumping up the price of the stock. This was one motivation in orchestrating the split-off of CBS – a move that briefly paid off in terms of the market but that arguably hurt corporate value in other ways.
The upshot of the Viacom melodrama is that the stock has lost 50% of its value over the last couple of years. Tom Freston, I am told, is somewhere in Kabul so I don’t think he’s noticed. “I happened to meet Freston not long ago, and talking with him made me wish I, too, could get fired,” the production chief of one studio told me. Understandably, he did not want to be quoted.