Street Shrugs at Freston's Departure
By R. Thomas Umstead & Steve Donohue -- Multichannel News, 9/5/2006 12:06:00 PM MT
Tom Freston’s exit as CEO of Viacom sent ripples throughout the cable industry Tuesday, but it didn’t do much to shake up the company’s stock.
Freston officially resigned as Viacom CEO Tuesday after nine months at the helm. Viacom named Philippe Dauman president and CEO in the surprise announcement and promoted Thomas Dooley to the newly created position of senior executive vice president and chief administrative officer.
But the change didn’t initially help Viacom’s stock, which finished Tuesday down 5.38% to $34.97. CBS also finished down 0.9% to $28.60.
Investment company Citigroup Investment Research dubbed the change “mildly positive” for the stock. It cited uncertainty surrounding the management change on the various Viacom-owned cable networks where “employees identify strongly with Mr. Freston.”
In a conference call, Viacom executive chairman Sumner Redstone referred to the Viacom board in discussing Freston’s departure.
“It was a very difficult decision. On the one hand, we love Tom -- we appreciate his great contribution to the company. On the other hand, being very realistic, the board felt that not enough was being done, that we were not moving ahead as entrepreneurially and as aggressively as we should, that the communication with Wall Street had been deficient.”
Redstone pointed to Dauman as a highly aggressive and entrepreneurial executive “who will let no opportunity pass and let no competitor ever beat us to the trophy” -- a clear reference to Viacom’s failure to purchase popular social website MySpace.com. (www.myspace.com) before News Corp. scooped it up last year.
For his part, Dauman said he doesn’t anticipate “any major acquisitions” in the near future, but he added that the company has to be more “plugged in” to potential opportunities.
Freston, 60, became CEO of Viacom in January, after the company split with its CBS unit. Freston had worked as CEO of MTV Networks before taking the helm at Viacom.
“I’ve spent over 26 years at Viacom, 18 of them with Sumner. With my exceptional colleagues, we built a worldwide powerhouse of brands and businesses, literally from scratch,” Freston said in a statement issued by Viacom. “I will do all I can to ensure a smooth transition.”
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