By Joe Flint and Sarah Rabil
Viacom Inc. Chief Operating Officer Tom Dooley announced a
settlement has been reached to end the drawn-out power struggle at
the media giant that involves the exit of Chief Executive Philippe
Dauman and the expansion of the company's board.
In a memo to employees Friday evening, Mr. Dooley confirmed he
would become interim president and CEO through September, which is
when Viacom's fiscal year ends. Mr. Dooley said he and the board
will have made a decision on succession plans by then.
The boards of Viacom and National Amusements Inc., through which
93-year-old Sumner Redstone controls an 80% voting stake in the
media company, have approved the agreement to settle their dispute,
and the final deal is expected to be signed shortly, Mr. Dooley
wrote.
Mr. Dauman, who has been CEO for almost a decade, is slated to
receive an exit package valued at about $72 million and will remain
as nonexecutive chairman until Sept. 13.
Under terms of the deal, the two sides will cease litigation
over control of Viacom and National Amusements. Mr. Dooley
confirmed five directors nominated by National Amusements will join
Viacom's board.
Those directors include Thomas May, chairman of Eversource
Energy, who is expected to be named chairman after Mr. Dauman
leaves that role, according to a person familiar with the matter.
Three Viacom directors will depart the board after the annual
meeting under the deal, people familiar with the matter have
said.
The removal of Mr. Dauman completes the ascension of Mr.
Redstone's daughter Shari Redstone, a Viacom director and president
of National Amusements. Often at odds with her now-ailing father,
she is poised to take over the driver seat in his empire.
Ms. Redstone will now have far more influence over the
reconstructed boards of Viacom and National Amusements than in the
past. She also will have effective control of the seven-member
trust her father established to manage his assets after he dies or
is declared incapacitated.
In selecting Mr. Dooley as chief executive, National Amusements
is, at least for now, going with someone inherently familiar with
the inner workings of Viacom. Mr. Dooley has ties to Viacom that
date back to 1980, and he played a key role alongside Messrs.
Redstone and Dauman in most of the company's major acquisitions,
including Paramount Communications and CBS Corp.
The 59-year-old, who is well-regarded on Wall Street, is
considered a top candidate for the full-time CEO role, people
familiar with the matter have said. But Mr. Dooley will have a
short period to show he has a plan to right the ship. Viacom's
profits have been falling as ratings have declined because of
cord-cutting, cord-shaving and the rise of streaming competitors.
Paramount Pictures has struggled at the box office, and Viacom's
stock price is down more than 40% in the past three years.
In addition, Mr. Dooley will have to convince the company that
he is committed to creativity and risk-taking. Under Mr. Dauman,
many top creative executives have left Viacom complaining that a
company once known for innovation had become staid and
complacent.
In his memo to staff, Mr. Dooley said, "I truly believe that
Viacom's greatest accomplishments are still ahead. It is a
privilege and honor to be your CEO and I pledge to do everything I
can to build on all your hard work and success."
Mr. Dooley had kind words for Mr. Dauman and acknowledged his
contributions to the company in the decade since it split from CBS
Corp. "During his 10 years as CEO, Philippe supported and nurtured
our brands and empowered our creative and business leaders every
step of the way," Mr. Dooley wrote. "He invested billions of
dollars to fund new original content, expanded our distribution
footprint in the U.S. and around the world, and bought and built
thriving new businesses."
As part of the settlement, Mr. Dauman will have a chance to
present the board with plans to sell a stake in Paramount Pictures,
people familiar with the situation say.
What the settlement appears unlikely to resolve, once and for
all, is the status of Mr. Redstone, whose mental competency has
been a matter of debate throughout the ordeal. Trials had been
slated for this fall in Delaware and Massachusetts over National
Amusements' ouster of Viacom board members and Mr. Redstone's
dismissal of Mr. Dauman and another Viacom director from his trust.
Those trials could have forced testimony or medical examinations to
clarify Mr. Redstone's condition for investors and observers.
With the leadership battle resolved at Viacom, speculation will
likely heat up about the future of CBS, which is also controlled by
National Amusements. Viacom acquired CBS in 2000 and spun it off in
2006. Some analysts and Viacom investors have pushed for the two
companies to recombine.
CBS Chief Executive Leslie Moonves has resisted the idea in the
past and isn't sold on it now, according to people familiar with
his thinking. The company is doubtful a deal could be reached that
could pay CBS shareholders an adequate premium, the people
said.
Last month on a call with analysts and investors, he declined to
answer a specific question about Viacom but reiterated that, "we
feel very complete, we have everything we want."
Amol Sharma contributed to this article.
Write to Joe Flint at joe.flint@wsj.com and Sarah Rabil at
Sarah.Rabil@wsj.com
(END) Dow Jones Newswires
August 19, 2016 19:58 ET (23:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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