Viacom's Tom Freston Resigns Amid Sweeping Shake-Up

Strategic Insights -

Tom Freston, the veteran chief executive of Viacom, has stepped down after losing the confidence of the company's billionaire chairman, Sumner Redstone. The move comes just weeks after Redstone severed ties with Tom Cruise, citing the star's "eccentric" off-screen behavior. Freston's departure marks the end of a 26-year association with the company, during which he turned the music network MTV into a global name. Redstone's assertion of dominance over the firm has seen the appointment of two of his closest associates, Philippe Dauman and Thomas Dooley, as the new chief executive and senior vice president, respectively.

Key Takeaways:

  • Tom Freston has resigned as the chief executive of Viacom after a 26-year association with the company.
  • The move follows Sumner Redstone's decision to sever ties with Tom Cruise, citing the star's "eccentric" off-screen behavior.
  • Redstone has appointed two of his closest associates, Philippe Dauman and Thomas Dooley, as the new chief executive and senior vice president, respectively.
  • Viacom's shares have fallen by over 5% following the shake-up, while CBS's shares have risen by 13% since the company's demerger.
  • Weak advertising revenue has held back Viacom's cable television channels, including Nickelodeon, Comedy Central, and VH1.
  • The company faces criticism for failing to strike more online deals, particularly in the social networking sphere.
  • Tom Freston is in line for a huge severance package, with details to be disclosed in regulatory filings later in the week.
  • Some commentators have suggested that Redstone's unilateral dismissal of Cruise undermined Freston and other senior executives.
  • Jessica Reif Cohen, an analyst at Merrill Lynch, has said that Redstone's move is likely to be received poorly by the investment community.

Statistics:

  • 26-year association between Tom Freston and Viacom.
  • 5% decline in Viacom's shares following the shake-up.
  • 13% rise in CBS's shares since the company's demerger.
  • $18m in salary and bonuses received by Tom Freston last year.
  • $580m (pounds 305m) paid by News Corp for MySpace last year.

Sources:

  • "Viacom losses chief executive Tom Freston, defects Tom Cruise" by Andrew Clark (London Financial Times, [undated])