Can a CEO really get fired from his $20-million-per gig at a media conglomerate generating $10 billion in annual revenue over failing to buy an Internet social-networking Web site?
Apparently so, judging by Tom Freston’s departure as Viacom’s chief last week, eight months into the job after more than 20 years in the organization.
Sumner Redstone, Freston’s Viacom Inc. boss, seems to be acting like George Steinbrenner used to, firing his CEO the way the younger, combative “Boss” might have fired a New York Yankees’ general manager over failing to acquire slugger David Ortiz.
The newer, mellow Steinbrenner merely tortures his GM a bit over pass-ups like that. There are always lots of good reasons not to make a deal, not to take a risk.
But in Viacom-land, within hours of announcing that his good buddy Freston, one of the people who built MTV, had resigned, there was Redstone talking up new CEO Philippe Dauman.
To extend the metaphor, Dauman comes off as kind of a Gene “Stick” Michael, the sort of guy who’ll walk away from the executive suite in order to accommodate a newcomer but remain available to return to the job when needed, even years later.
In Dauman’s case, when Viacom bought CBS in 1999, he and Philip Dooley were invited to leave with a reported $150 million in severance each, clearing room for Mel Karmazin to play the boss. Dooley’s back at Viacom now, too, as a senior executive VP.
Here’s what Redstone was saying about Dauman: That he was a real go-getter who would never let a competitor “ever beat us to the trophy.”
Ouch. I guess we know how Redstone really feels about Viacom not winning the race to buy MySpace.com, an honor that went instead to News Corp.
It’s like calling a pro baseball player “Mr. May,” as, of course, Steinbrenner did to irritate Dave Winfield, a player he was feuding with at the time.
Wall Street isn’t quite ready to drape a “Mr. October” mantle on Dauman. Surprise and disappointment were among the emotions expressed by analyst reports after the coup was executed on Tuesday. Merrill Lynch’s Jessica Reif Cohen, in a widely quoted note, said the management shake-up was likely to be perceived as Redstone’s reasserting himself into the business, a move she said was not likely to be well received by the Street or by Hollywood. Dauman and Dooley are Redstone confidants, but haven’t run a big media company and didn’t do a great job trying to fix the problems at Viacom’s Blockbuster Inc., she observed.
I’m not sure how an eight-month period in the corporate world equates to a baseball season, but it seems a bit early in the process for the principal owner to be making such a big managerial change. But Redstone has expressed deep commitment to unlocking all the shareholder value kept suppressed by a structure that chained Les Moonves’s CBS Corp. business to Freston’s former Viacom operations.
If Freston wasn’t the skipper to convince Wall Street of the purity of Redstone’s vision as regards Viacom, then someone else had better step into the manager’s chair. Someone else who’s willing to take the enormous risk of running the company, possibly for months, only to be shunted aside later with only a severance package north of $60 million to show for it.
Wonder if Dooley and Dauman haggled over that part of the prenuptial agreement before coming back?
Hasn’t Redstone heard that Steinbrenner has pulled back a bit in his golden years, putting in place skilled managers and executives and letting them do their jobs, recognizing you can’t necessarily buy or order up a win every day?
Redstone also said Viacom’s board of directors was disappointed in the stock price. Fair enough. But the whole unlocking thing is supposed to be for the long term, not accomplished in three or even four fiscal quarters. Especially if it means putting pressure on creative companies and people to only think short term. Baseball fans know that kind of pressure has led more than one team to make a bad trade, giving up can’t-miss prospects for maybe a little certainty in the short term.
But don’t get me started on my team, the New York Mets.