Wall Street analysts have taken heavy fire on social media for failing to address the elephant in the room during CBS’s second quarter earnings call — the damaging allegations of sexual harassment against CEO Les Moonves.
Analysts who didn’t ask questions during Thursday’s investor call, which focused exclusively on second-quarter financial results, took the company to task in investor notes. They criticized CBS for failing to address important questions about management succession or workplace safety.
“While there are aspects of CBS’ results and its forecasts to be positive about at the present time, discussion of many of the company’s longer-term initiatives is moot to a significant degree,” writes Pivotal Research Group analyst Brian Wieser. “The most important topic for the investment community (except, perhaps, the analysts asking questions on Thursday’s call) relates to Moonves’ near-term status and whether or not he will be around to execute on those long-term initiatives.”
Veteran media analyst Michael Nathanson called CBS stock “uninvestable,” given the combination of the sexual harassment charges leveled against Moonves and the board’s ongoing battle with National Amusements over control of the company.
“If these accusations are correct, it would be impossible for Les Moonves to continue running the company,” wrote Nathanson. “It is patently obvious that if Moones is forced out by the CBS Board on the back of sexual harassment, CBS will be materially weakened by the loss of an irreplaceable programming executive … and the stock should fall further.”
Nathanson said the board also will be wounded if the CEO is removed after they declared “open war” on the company’s controlling shareholder, National Amusements. That could open the door to NAI replacing directors, just as it did in its 2016 battle for control of Viacom that resulted in the ouster of CEO Philippe Dauman, with little objection from independent shareholders.
“We admit that while we have no clue as to what will happen here, we do know that CBS stock, at this point in time, is simply uninvestable,” Nathanson wrote.
BTIG analyst Rich Greenfield, who’s known for making media companies uncomfortable with his inquiries, published a list of a dozen questions he wanted Moonves to answer — starting with addressing the company’s plan for succession, should he depart CBS. [COO Joe Ianniello is the presumed heir apparent.]
Greenfield took to Twitter to criticize members of the investment community for their timidity, writing, “Shame on CBS analysts who were allowed to ask questions and failed to use the opportunity.”
B. Riley FBR analyst Barton Crockett took a contrarian view. He left open the possibility that Moonves retains his job, under narrow set of circumstances — namely, that no new allegations surface, the independent investigators agree with the executive’s claims that, while his advances may have made some women uncomfortable, he “understood and respected’ that “no means no,” and the board concludes it’s not that unusual for entertainment executives to “date and marry talent” and that “advances are OK, even when clumsy.”
Crockett predicted CBS will not only survive this crisis, but thrive, given its solid financial performance and its strategy of using online distribution as a hedge against cord-cutting.
“Every media company that’s lost top execs/talent to #MeToo has continued apace, because of other talent/management stepping up,” Crockett wrote. “CBS, we believe, would too.”
CBS shares, which dropped 11% in the first two sessions after the Moonves crisis started a week ago, have stabilized. They are virtually unchanged today at $52.64.
Here’s a tweet from Greenfield that puts a colorful point on it: