Freston Only the Latest Big Departure9/10/2006 11:00 PM Eastern
It’s a tough time to run a media company. Viacom CEO Tom Freston was just the latest to throw in the towel.
Since January, five other top media executives have offered their resignations:
• Robert Johnson: The billionaire founder and chairman of Black Entertainment Television left the company officially in January, when his contract expired. He now oversees his interests in the National Basketball Association’s Charlotte Bobcats, a film company, a hedge fund, a private-equity fund and a bank.
• Herb Scannell: Resigned as vice chairman of MTV Networks and president of Nickelodeon Networks in January. Scannell, a 20-year veteran of MTV, was reportedly upset on being passed over for the MTVN CEO job -- won by Judy McGrath -- after Freston was made CEO of Viacom.
• Henry Schleiff: Stepped down as CEO of Court TV in May after Time Warner purchased the remaining 50% interest in the channel it didn’t already own for $735 million. Schleiff -- who built Court TV into a powerhouse network and created roughly $1.2 billion in additional value -- will stay on as nonexecutive chairman until the end of the year.
• David Evans: Resigned as CEO of struggling Hallmark Channel in June.
• Judith McHale: Announced Aug. 1 that she would resign as CEO of Discovery Communications effective Dec. 1. McHale, who has been active in political circles, is expected to help Sen. Hillary Clinton make a run for the White House should the New York Democrat stage a bid for the presidency.
Although Freston brought to six the number of top executives in entertainment media companies who have resigned this year, analysts don’t believe there is a pattern.
But they did say that running one is a lot harder than it used to be.
MySpace.com (www.myspace.com), which Rupert Murdoch and News Corp. bought for $580 million last year, essentially did not exist four years ago. Now it counts more than 100 million members. The hottest Web-video site, YouTube (www.youtube.com), only launched nine months ago.
“The media sector is so dynamic that it may require a new perspective and new managers in some areas to execute on strategies that are still evolving. Business models are being developed every week that are new and sometimes divergent of each other,” UBS Securities cable debt and equity analyst Aryeh Bourkoff said.
“It’s very difficult to be a major media company in the public market today -- the strategies are more complex, the cycles are more rapid and the need to accumulate assets is at the forefront,” he added.
Add to the mix a difficult advertising market that isn’t showing any signs of recovering soon, a split investor base and rapidly changing technology.
“There is a tremendous amount of uncertainty as to how these guys are going to adapt to the new-media business model,” Jefferies & Co. media analyst Robert Routh said. “And if they do change, are they going to be successful?”
Maggie Bellville, a partner at Atlanta executive search firm Carter Baldwin and former chief operating officer of Cox Communications and Charter Communications, said running a media company is only going to get harder.
“I think the pressures on performance are going to be much more significant and real,” she added.