Top Viacom Ad Exec Out Over Alleged Kickbacks (Exclusive)

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A senior Viacom advertising executive has exited the company following an investigation into allegations of a kickback scheme involving millions of dollars over a period of years.

Brian Fays was senior vp at MTV Networks, overseeing direct-response advertising and paid programming for Viacom’s 17 ad-supported cable networks, including MTV, VH1, Comedy Central and Nickelodeon. According to sources, Fays allegedly offered discounted advertising to certain direct-response sellers, whose wares often include skin-care products and DVD collections. But he allegedly sought kickbacks in cash — sometimes delivered in briefcases.

Viacom declined comment. Reached on his cell phone, Fays said The Hollywood Reporter should be “very, very careful” about reporting these allegations before he hung up.

Fays, 40, joined MTVN in January 2005, leading to what the trade magazine Response called “an unprecedented surge” in direct-response revenue. In a 2007 profile, the magazine reported that Fays had taken an active role promoting the importance of direct-response advertising to the cable TV business, working his way up at three leading cable-network families — Lifetime Networks, USA Networks and MTV Networks. He reported to Jeff Lucas, MTVN’s head of sales.

A source says that 15 months ago, direct-response advertisers representing $200 million in annual business with Viacom networks brought these allegations to the attention of company executives. Around the beginning of September, this person says, Viacom “locked down every single person’s computer in the ad sales department.” The company then allegedly went through staffers’ e-mails and “grabbed BlackBerrys out of people’s hands.” A company investigation is said to be ongoing.

Viacom had $8.6 billion in global revenue in fiscal 2010. A company source says direct-response advertising accounts for less than 10 percent of the Viacom’s ad revenue, though another source puts that number significantly higher.

E-mail: Kim.Masters@thr.com; Daniel.Miller@thr.com
Twitter: @KimMasters; @DanielNMiller