Score one for Viacom CEO Philippe Dauman. The company board just named him executive chairman, replacing Sumner Redstone, 92, who has become Chairman Emeritus — the same role he has at CBS following a change announced yesterday.
Redstone endorsed the decision; his daughter, Shari , was the only member of the board to vote “no.” The board offered her the job of non-executive chair, which she declined. She’ll remain non-executive vice chair.
Dauman’s compensation will not increase with the added title.
“Philippe has been instrumental with Sumner in every aspect of Viacom’s success for nearly 30 years and most recently as CEO has taken on the tough task of navigating our future in a time of unprecedented innovation and disruption,” the board’s Governance and Nominating Committee Chairman William Schwartz says. “He has laid out a strategic long-term vision for the company that we fully endorse. We have complete confidence that his dedication to Viacom, his global experience and his determination to further our culture of creativity and innovation will continue to serve the interests of all shareholders and build long-term value.”
Dauman said that Redstone’s “belief in our company and the power of entertainment will always be an inspiration for me and I look forward to carrying forward his leadership role as a champion for all shareholders.”
The vote appears to be a set-back for Shari Redstone, who has been vying with Dauman over control of her ailing father’s media empire which includes 80% stakes in Viacom and in CBS. Both are members of the seven-person trust that will take control of his holdings when he passes.
In addition, Dauman took charge of the elder Redstone’s health care decisions in October. That’s become the focal point of a dispute with Redstone’s former companion Manuela Herzer. She had been in charge of his health decisions, and sued saying that he was a “living ghost” not capable of deciding to make a change.
On Wednesday, Shari said that it’s her “firm belief that whoever may succeed my father as Chair at each company should be someone who is not a Trustee of my father’s trust or otherwise intertwined in Redstone family matters, but rather a leader with an independent voice.”
Following today’s vote at Viacom, Shari’s spokesperson said that she will “continue to advocate for what she believes to be in the best interests of Viacom shareholders.”
Wall Street seems deflated by Dauman’s victory. Viacom’s shares were up more than 4% before the announcement, and immediately fell to being virtually flat with yesterday’s closing price. The stock price has lost more than 29% of its value over the last 12 months, and 43% over the last two years, as the company’s cable channels — including Nickelodeon, MTV, BET, and Comedy Central — struggled with declining ratings and ad sales.
The big debate now is whether the company’s situation is hopeless, or whether the shares are so cheap that buyers have little to lose.
“We don’t believe there is anything that any new management team can do to get kids and teens to put down their iPads and go back to watching old-fashioned, ad-supported TV,” says bernstein research’s Todd Juenger — one of Viacom’s sharpest critics. “And we believe it’s too late to pivot Viacom’s business mix away from their dependence on kids/teens. That ship sailed when they spent $14.5 billion on buybacks since January 2011 (at a negative ROI), rather than using those funds to re-shape the company.”
Yet MoffettNathanson Research’s Michael Nathanson says that “there are many paths to unlocking value here – including disposal of the entire company, Paramount or their joint venture assets.”
But few believe that Viacom will make dramatic changes as long as Sumner Redstone controls its shares, or even immediately after he passes if Dauman dominates decision making.