Several Viacom directors warned darkly last week of impending corporate chaos — the unseating of the CEO, disruption of the board, and paralysis at Paramount Pictures. What they neglected to add was that this would all be good news, not bad news.
At least that’s the opinion of many investors and Viacom executives, not to mention of Sumner Redstone; that is, if you care to believe those speaking on his behalf. The struggle for control of Viacom increasingly resembles the show Survivor, except that this island keeps getting smaller. Not only have the company’s shares declined by more than 35% over the past year, but, more relevant, most of its divisions seem to be trapped in a creative void. The Paramount dilemma is the most obvious: Philippe Dauman has promised to close a deal by month’s end with an important minority investor, but Redstone apparently doesn’t like the idea. Wall Street wonders what investor would want to buy into this confusion and, for that matter, what filmmakers will want to close deals with a confused company?
Each week Viacom’s agonies grow more operatic. While Shari Redstone now professes to speak for her father, a granddaughter, Keryn Redstone, this week accused her aunt Shari of “kidnapping and brainwashing” her grandpa. The ultimate irony of the Viacom opera is that the voice of Sumner Redstone, the ultimate corporate conquistador, has gone mute. I used to have monthly dinners with Redstone and enjoyed his company, but I would never describe him as soft-spoken. He famously yelled at waiters and once, when I suggested moderation, he smiled and confided, “I like to keep people on their toes.”
Paradoxically, he has not succeeded in doing so with his CEO, Dauman, who has been paid more than $200 million these past five years supposedly to do Redstone’s bidding. While the CEO class in general is vastly overpaid, Viacom’s investors are likely asking whether Dauman, once Redstone’s estate lawyer, has earned his keep as a corporate leader. Eric Jackson, an activist investor, claims Viacom’s shares would immediately jump by $10 a share if Dauman were fired (they’re already climbing on the rumors that he will be).
It’s up to a judge to determine if Sumner Redstone is mentally competent to determine the fate of his own company (he controls 80% of the shares in Viacom and in National Amusements, which controls Viacom). No judge wants to rule on an issue which is as portentous as it is subjective, but a ruling of sorts may be imminent anyway.
If Paramount is the most visible example of Viacom’s chaos (its quarterly loss was $136 million), a much smaller division, Comedy Central, is its most vivid metaphor of failure. Until a year ago, Comedy Central not only owned the comedy business but, in doing so, came to exercise a unique role in our pop culture. Surveys indicated that Jon Stewart and Stephen Colbert basically provided the primary source of news for a generation of millennials and, with a Trump campaign looming, the setup was perfect for the two comedians to exercise their clout. Could a more dynamic Viacom have delayed their exit – or at least found more interesting successors than Trevor Noah or Larry Wilmore? The chief of Comedy Central not surprisingly joined the exodus of Viacom executives last week.
So while judges deliberate Sumner Redstone’s state of health, and family feuds continue to fester, several pivotal questions confront investors: Who will lead the company’s turnaround? Will CBS continue as a separate entity or will Leslie Moonves be given a more prominent role in the overall company?
In Survivor at least, there was always a winner, charred but victorious. Will Viacom be that lucky?