Michael Wolff on Shari Redstone and the Competing Narratives of Viacom's Future

Firmly in charge but without a clear plan, she must find a CEO (Katzenberg? Chernin?), earn Wall Street trust ("She's flailing around like a fish") or convince Leslie Moonves to fix everything.

There's an "A" narrative and a "B" narrative to the future of Viacom — both seeming to come from the same source.

In the A narrative, the board of the beleaguered media company will emphasize good governance principles in its search for a new CEO after the ouster of Philippe Dauman and the Sept. 21 reveal that the company will look beyond interim CEO Tom Dooley. National Amusements, Sumner Redstone's family company that controls the voting shares and which now is controlled by his daughter, Shari, will not meddle in operations. Installing management that can lead a Viacom turnaround is the primary goal in what everyone recognizes will be a long fight. In the B narrative, it's all about the inevitability that Viacom will be slammed together with its sibling CBS, whose leader, Leslie Moonves — whether he wants to or not — will solve everybody's problems.

While both of these narratives trace back to Shari Redstone and by their nature are quite contradictory, nobody is necessarily dissembling here. Rather, Shari, for so long kept at light-years' distance from her father's universe, is now, however unprepared, the master of it — and enjoying her power to do almost anything. "She's flailing around like a fish on the dock but is as happy as a clam in deep water," says one observer. Or, in another estimation, “She’s talking to everybody, and everybody wants to talk to her, and she’s strongly influenced by the last person she spoke to — so you can’t know what’s going to happen because you can’t know who will truly be the last person.” Or, more generously, from a former Viacom executive, "She's been intrepid enough to dive into the mess, and the fact that she's taken the dive without a plan is actually fairly courageous on her part, albeit not necessarily comforting." (Sources are masked here because Redstone reps, with something of a purge mentality, are actively trying to ferret out anybody who might not be with the program, even though there isn't yet a program.)

While the variables begin with Shari's own apparently conflicting inclinations, they expand with each decision she has to make, with many of these decisions structured to preserve both the A and B narratives. Appointing a high-profile, Wall Street-wowing CEO — the favorites in this scenario include former DreamWorks Animation CEO Jeffrey Katzenberg or former News Corp. COO Peter Chernin — would demand assurances of a long-term future and pretty much take a CBS merger off the table. Hence, it's seen as an unlikely move. But a variation on that move turns Thomas May — who took the chairman's job after Dauman was ousted — into only an interim chairman. He would be replaced, as part of a good governance approach, with a well-known big-foot mogul with time on his hands. The potential lineup here includes former Disney CEO Michael Eisner, former Viacom CEO Tom Freston as well as Katzenberg and Chernin.

Some smart money puts Freston, although he's publicly demurring, as top man here, in part because he and Shari are said to have bonded over their mutual exile by her father and, too, because his close friend, venture capitalist and major behind-the-scenes New York player Ken Lerer, is now a leading voice on the board; indeed, many believe he took the board job at Freston's behest and with an eye on Freston's interests. (Lerer is said to have encouraged the shift from Brunswick, Viacom’s traditional PR firm, to Finsbury, which merged with Lerer’s former firm and is aggressively advocating the good governance narrative.)

While strengthening the clout of the board with a big-foot chairman with personal independence (all the above candidates are rich in their own right) is a significant good governance move, it also arguably is part of a not-so-good governance strategy to implement the B narrative, the CBS slam-up.

In this, a more independent chairman paves the way for a less independent CEO, likely one of three internal candidates, who would be more willing than a big foot to be an interim figure awaiting savior Moonves:

Cyma Zarghami, who is aligned with Katzenberg, now leads Nickelodeon, Viacom's most successful business, one with a global brand, a big consumer products division and meaningful IP franchises (SpongeBob and Kids' Choice Awards). She's the only creative executive in the bunch (the company's other main creative, Doug Herzog, is considered highly vulnerable). And she's a woman. Her downside is she is famous for her tyrannical behavior and management brutality. Other top managers likely would flee if she became CEO.

Bob Bakish, said to be most closely aligned with Freston and the MTV old guard, is the CEO of Viacom International, the fastest-growing part of the company. He's a fixer. An operations guy. A safe but not inspirational choice.

Wade Davis, aligned with Chernin, is the company CFO. He's the internal favorite and a possible straddle between narratives A and B. That is, he could move the company closer to CBS, and is perhaps the only person who has a grasp on Viacom’s Byzantine dividend and buy-back programs and the structure of its complicated debt. But he’s also a risk taker and the executive who has led, even as turmoil engulfed the company, the internal turnaround plan. Oft he internal candidates, he could most credibly run an independent Viacom if the CBS merger path isn't taken. Still, if the issue is how to emerge from one of the deepest corporate quagmires going, you probably don't choose anybody who, no matter their talents, has been part of the quagmire. If the emphasis is truly on leading a Viacom turnaround, you go to an outsider. Except if the outsider is Leslie Moonves and you're merely waiting for him to get enthusiastic about saddling his successful company with a crappy one.

Moonves, when the Redstone properties were divided in 2006, was relegated to a diminished CBS but then emerged as a mogul for all seasons. In this path, the solution to the Viacom problem is to let Les solve it. The snag is that you do this at the expense of CBS shareholders, who would have to absorb the cost of a Viacom turnaround (CBS shares have already taken a big hit at the mere rumor of the recombination). Or you do it at the expense of Viacom shareholders, who would have to take a vastly larger haircut than they've already taken to make it worthwhile for CBS shareholders, Moonves chief among them.

Confusingly, the Redstone interests here are different from the interests of Viacom shareholders or of CBS shareholders because the Redstones hold equal amounts of both companies. If Viacom takes the hit in favor of CBS, or vice versa, the Redstones still benefit.

It is hard to argue a fair-minded, good governance case for the B narrative and the re-merger. That's partly why analyst Rich Greenfield, with ties to Shari, seems to have been delegated to do it: "If I were in Shari Redstone's shoes, I'd want Les Moonves … to run the combined company," he recently pronounced. No matter what Moonves wants.

This then is the point at which the narratives collide in open contradiction. Indeed, Dooley is said to have bailed on extending his CEO status over irreconcilable differences with Shari — likely that the agenda would have been hers and not his. On Sept. 23, not waiting for a new CEO and despite the A narrative of not getting involved in operations, Shari dived into the mess at Paramount and fired vice chairman Rob Moore. Peculiarly, she left in place chairman Brad Grey, presumably for Viacom's new CEO to fire.

Indeed, running Paramount is another job of probably an interim nature. If there is a re-merger, Moonves likely would want his own studio head. And, if there isn't a re-merger, then, even though the sale of a minority stake in Paramount was a flashpoint issue in Dauman's ouster, a sale of the entire studio — some believe it could fetch as much as $10 billion — remains an obvious part of a Viacom turnaround solution. (“Shari,” says an executive who has known her for many years, “is not a sentimentalist. If she could turn everything into cash, she probably would.”)

The smart money believes former Fox film head Jim Gianopulos not only is among the most talented movie execs available (his unexpected recent ouster from Fox is said to have occurred because the Murdoch sons wanted more direct control of the studio) but that he might be agreeable to a temporary, albeit lucrative, appointment. If that's so, he, too, may be useful as an even bigger hedge.

This comes back to the Moonves wild card. What happens if Shari makes the decision to recombine Viacom with CBS but Moonves won't go along? Currently, Moonves holds all the cards. Except if there were a credible Viacom CEO. What you'd uniquely need is a CEO who would gracefully bow out if Moonves accepted a merger, but, about whom, if necessary, you could credibly argue has the bona fides and chops to take the ultimate job — you really do need this anyway as negotiating leverage with Moonves. So Gianopulous, perhaps. Or possibly Tom Staggs, the former COO at Disney, who was being groomed as Bob Iger's replacement until the board got cold feet. Or the fabulously well-connected Shari friend, Hillary Clinton confidante, new Viacom board member and former Sony president Nicole Seligman. Big feet who are not so big as the biggest feet.

But in the end, even with every possible outcome still in play, and with a fair portion of the top talent in the media industry either wanting a say or wanting to play a part, and with Leslie Moonves having established for himself something near an ultimate bargaining position, the lesson may yet be the same as it has always been: The only name that really counts in the Redstone-controlled universe is Redstone.

A version of this story first appeared in the Oct. 14 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

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