The much-discussed feud between Viacom Inc. chairman Sumner Redstone and president and chief operating officer Mel Karmazin came to a head last week, with Redstone reportedly telling company directors he would not renew Karmazin's contract when it expires at the end of 2003.
In a prepared statement last Friday, Viacom denied any friction between the two executives, adding that the men have "successfully and productively worked together for more than two years since the announcement of the CBS merger."
Reports of a rift between Redstone and Karmazin have been rampant since almost immediately after Viacom completed its $37.3 billion merger with CBS Corp. in 2000. Karmazin had been the CBS chief.
"Neither Mr. Redstone nor Mr. Karmazin have stated their intentions beyond the end" of Karmazin's contract, Viacom said.
Karmazin and Redstone jointly said in the statement: "We are committed to Viacom and its shareholders, we each have a significant stake in the success and growth of the company and we are looking forward to working together productively in the ensuring years."
Redstone and Karmazin attended a dinner for investors hosted by Bear Stearns & Co. Thursday night, possibly as a show of unity.
In a research note on Friday, Bear Stearns analyst Ray Katz said both men stressed their commitment to work together through the end of Karmazin's contract.
"There was a lot of speculation from day one," said Sanford Bernstein analyst Tom Wolzien. "I always thought that these were two entrepreneurs that are really cut from the same cloth, but had a bit of an age difference.
"It actually makes sense that they should be able to get along and make it work. But these reports would certainly indicate otherwise."
Redstone is 78 years old and Karmazin is 58.
Late last week, Viacom's board, at a regularly scheduled meeting, ordered the two headstrong executives to work out their differences, according to published reports.
A report in last Friday's New York Times
said Redstone informed the board he would not renew Karmazin's contract, which ends next year.
To fire Karmazin before then, Redstone would need to convince 14 of the board's 18 members to agree — an unlikely scenario, since eight directors have ties to Karmazin and CBS.
"Mel has a strong Wall Street following," Wolzien said. "On the other hand, there is a strong bench in Viacom management."