Viacom Inc. Chief Operating Officer Tom Dooley was huddled in
his office with Chief Executive Philippe Dauman late on June 16
when he got an unexpected call from Shari Redstone.
Ms. Redstone is president of National Amusements Inc., the
controlling shareholder of Viacom that earlier that day had made a
dramatic move to overhaul the media giant's board with five new
directors and was pushing to oust Mr. Dauman as CEO and chairman.
The two sides were in a pitched battle.
Nevertheless, she told Mr. Dooley she wanted him to be the
interim chief executive after Mr. Dauman left, saying that she and
her 93-year-old father, ailing mogul Sumner Redstone, had faith in
him, people familiar with the call said. Mr. Dooley would be a
curious choice as a change agent, given he has ties to Viacom
dating back to 1980, but she said he could "get Viacom back to
where it needs to be."
Mr. Dooley said yes and hung up. He then relayed the gist of the
conversation to Mr. Dauman. "If that's her plan, that's her plan,"
Mr. Dauman said, according to a person familiar with the call.
The fighting was far from over. Over the next two months there
were lawsuits waged in two states, on-again, off-again settlement
talks and lots of insults exchanged between Viacom's side and
National Amusements.
Finally, on Saturday the two sides announced a detente. Under
the settlement, Mr. Dauman will exit as CEO after a decadelong run
and five new National Amusements-appointed directors will join
Viacom's board—including Eversource Energy Chairman Thomas May, who
is expected to take over for Mr. Dauman as chairman after Sept.
13.
Just as Ms. Redstone indicated was her intention in that
mid-June call, the interim CEO title will go to Mr. Dooley through
Sept. 30—when the company's fiscal year ends—putting him in charge
of an empire stretching from cable networks like MTV and Comedy
Central to the Paramount Pictures film studio.
The 59-year-old, a numbers guy who speaks Wall Street's
language, has, along with Mr. Dauman, been one of Mr. Redstone's
closest advisers. The pair helped orchestrate the acquisitions of
Paramount and CBS Corp.
Mr. Dooley, a Brooklyn, N.Y., native and father of five who
loves country music and has an interest in meditation, is in the
running for the permanent CEO job. His task is to show the newly
constructed board he can break from the past—despite being part of
a management team that has overseen Viacom's slide, with shrinking
viewership at its cable networks and poor box-office results for
Paramount.
At least one of Viacom's new board members is already sold on
Mr. Dooley.
"He's a terrifically talented executive," said Kenneth Lerer, a
venture-capital investor who has known Mr. Dooley for about 20
years and is one of the five new Viacom directors. "He'll take out
any uncertainty that exists."
Until a few weeks ago, Mr. Dauman and Viacom were determined to
fight the Redstones. When he and fellow Viacom director George
Abrams were removed in May from the trust Mr. Redstone established
to oversee his controlling stakes in Viacom and CBS after he dies
or is declared incapacitated, the two men sued in Massachusetts to
be reinstated. They argued Mr. Redstone was no longer mentally
competent and was being manipulated by Ms. Redstone. She denied
that charge.
Then in June, after National Amusements sought to replace the
five Viacom directors, the media company's lead independent
director, Frederic Salerno, sued in Delaware to block the move.
Notably, Mr. Dooley wasn't on the list of directors to be
removed. But his path to becoming CEO was still foggy at best.
Viacom's board had staunchly defended Mr. Dauman despite a 46%
drop in the stock over the past two years. But when Viacom lowered
its third-quarter earnings forecast in June because of the dismal
performance of the Paramount movie "Teenage Mutant Ninja Turtles:
Out of the Shadows," board members including Mr. Salerno started to
change their thinking about the need for a leadership change,
according to people familiar with the matter.
Mr. Dauman saw the writing on the wall and had his lawyers reach
out to the Redstone legal team to explore a settlement. That
channel didn't yield real progress, but others eventually did.
A key meeting took place on the lawn of Mr. Lerer's Quogue,
N.Y., residence on Aug. 7. Over muffins, Messrs. Lerer and Salerno
and investment banker Aryeh Bourkoff—who arranged the
get-together—reached an accord, people familiar with the gathering
said. Negotiations and final approval from all parties took two
more weeks.
In a statement, Mr. Dauman said the new agreement "will give the
company and its employees the best opportunity to continue a smooth
evolution into the future." He added that he is "delighted Tom has
been appointed interim CEO." Mr. Dauman, who was one of the
highest-paid chief executives in the country for the past decade,
has an exit package valued at $72 million.
Mr. Dooley first joined Viacom in 1980 and has been part of
every twist and turn in the media company's story since then. He
and Mr. Dauman left in 2000 to start a private-equity firm
specializing in media and telecom investments after Viacom acquired
CBS for $37 billion. The duo returned in 2006. The next year Mr.
Dooley was appointed CFO and he became COO in 2010.
Mr. Dooley's campaign to have interim removed from his CEO title
will begin this week with meetings with staff and board members to
map out a strategy, people close to him said. Mr. Dooley's exit
package calls for him to receive three times his base salary and
bonus if he doesn't ultimately succeed Mr. Dauman as chief
executive. Also, under a new clause, Mr. Dooley can exit the
company prior to Sept. 30 and still receive his original severance
package.
"I love the place. I'll do anything I can to make the company
better," Mr. Dooley said in an interview. He recognizes that the
company's cable networks may not all survive in the cable TV bundle
over time, but believes that there will be business models to
support them.
"We have to begin dealing with consumers on a one-to-one level.
It's the next evolution of the business," Mr. Dooley said.
He was involved in Mr. Dauman's recent efforts to court an
investor for Paramount, an arrangement the incoming board has
agreed to review if such a deal is on the table before Mr. Dauman
departs.
Some former Viacom executives question whether Mr. Dauman's
right-hand man for the past decade is the right choice to lead the
company into the future, especially given the exodus of creative
talent that has plagued the company.
"I get a lot of feedback from people at the company. I know the
frustration. We have a lot to do," Mr. Dooley said.
Ken Solomon, chief executive of the Tennis Channel, which once
received an investment from Messrs. Dauman and Dooley, praised his
experience and temperament, noting that while Mr. Dauman could be
buttoned-up, Mr. Dooley is "very approachable" and "Socratic" and
"makes you feel we're all on the same team."
As the dust settles at Viacom, attention will likely turn to the
possible recombining of the company with CBS Corp., an idea many on
Wall Street believe would boost Viacom.
However, CBS Chief Executive Leslie Moonves, who has the ear of
Ms. Redstone, isn't sold on the idea and has said numerous times he
is happy with the hand he has now.
People close to Ms. Redstone say that a CBS deal isn't first and
foremost on her mind either.
Joann S. Lublin
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
August 21, 2016 21:55 ET (01:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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