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More or Les

21 September 2016 By Jennifer Saba

Viacom is back on the hunt for a new chief executive. The man for the job could be a member of the extended family: CBS boss Leslie Moonves.

Interim CEO Tom Dooley told the board he won’t stick around past mid-November. He had stepped in to lead Viacom after Philippe Dauman left last month as controlling shareholder Sumner Redstone decided to shake things up again. A decade ago, he split Viacom and CBS partly because he couldn’t decide on who should run the whole empire.

A refreshed board at Viacom has been busy trying to clean up a giant mess that just prompted another profit warning on Wednesday. Directors opted to slash the dividend to help pay down the $12 billion debt load. Directors also shelved Dauman’s swan-song plan to sell a minority stake in movie studio Paramount Pictures.

Finding a new chief will be a challenge. Redstone’s firm grip on the company, alongside his increasingly involved daughter Shari, and his fickle tendencies will scare away many candidates. For years, he heaped praise on Dauman and paid him huge sums of money to show his appreciation. A spate of lawsuits and bad business ultimately fractured the relationship.

Alternatively, Viacom insiders may be tarnished. While there may be talented executives at the company capable of doing the job and advantages to hiring a CEO who already knows the ins and outs of a company, performance has been so bad in so many areas at the $15 billion owner of MTV and other cable networks, that it’s not obvious how a senior manager there could effectively make big changes.

That’s why Moonves may be the best option. When Redstone separated his media conglomerate, it was to give faster-growing Viacom room to run without the sleepier CBS holding it back. It has turned out that CBS is the better-managed operation, delivering a far superior return to shareholders.

Moonves did it with a keen eye for hit shows like the “The Big Bang Theory” and securing rights to National Football League games. A creative spark is needed at Viacom as the media landscape lurches through difficult transitions. Structuring a financially sound merger of the two TV broadcasters may be tough, but the strategic rationale of putting Moonves in charge of a combined company at least would make sense.

 

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