MUMBAI: Mel Karmazin, president and COO of media major Viacom, is out. That brief line about sums up the manner in which the announcement of Karmazin’s departure from a company he has served with distinction these last few years was made.
A company release issued a few hours ago states, “The board of directors of Viacom Inc. today announced that (MTV bossman) Tom Freston and (CBS chief) Leslie Moonves have been appointed co-presidents and co-chief operating officers, effective immediately. Freston and Moonves succeed Mel Karmazin, who has resigned.”
Karmazin’s departure follows years of tension between him and chairman and CEO Sumner Redstone, two very strong-willed individuals, who, however, managed to keep their personal differences at bay while driving the company forward.
Karmazin became president and COO in May, 2000, when Viacom bought over CBS. It was in 1997 that Karmazin took charge of CBS by merging his company Infinity Radio into CBS.
Karmazin’s exit from Viacom is the culmination of a series of well calibrated moves that Redstone has made in the last two months that give more than a hint that there is a clear succession plan already in place.
The Heir Apparent
And the heir to the Viacom legacy that Redstone has made into one of America’s biggest media companies is more than likely going to be his daughter, Shari Redstone, 50.
The statement issued by Viacom also clearly indicates that such a plan is in place though no names were thrown out. In announcing the change, Viacom described it as “part of a corporate succession plan, which will provide for the orderly transition to the next generation of senior management.” The statement also goes on to add that Redstone will be relinquishing his role as CEO within three years.
If, as expected Ms Redstone takes over at Viacom, she will inherit a media behemoth that owns, among other things, CBS, MTV, Nickelodeon, Paramount Pictures, and Simon & Schuster publishing.
Until now, she has focused most of her attention on running National Amusements, her family’s privately held movie theater chain based in Boston. However, she has said she plans to spend a third of her time at Viacom starting in the fall.
“It was always my intention that when the kids were grown, I would spend more time and play a more significant role at Viacom,” Ms Redstone told The New York Times in a recent interview. “Next year is the year I intend to start attending meetings more regularly.”
‘India hand’ Tom Freston now COO
Freston and Moonves, meanwhile, will jointly oversee all of the operations of Viacom. In addition to MTV Networks, Freston will be responsible for overseeing the operations of Showtime, BET, Paramount Parks, Simon & Schuster and the motion picture operations of Paramount Pictures. Moonves on the other hand will have charge over Viacom’s broadcast television businesses, as well as Paramount TV, Infinity Broadcasting and Viacom Outdoor.
Freston for one is an old India hand. Not only has he been here quite a few times, he has lived in Delhi for seven-eight years earlier on.
As chairman and CEO of MTV Networks, Freston is responsible for its 96 owned and operated television programming networks, among them MTV: Music Television, MTV2, VH1, mtvU, Nickelodeon/Nick at Nite, Comedy Central, Noggin, TV Land, Spike TV, CMT, and The Digital Suite, which consists of thirteen music and children’s programming services, as well as MTV Networks portfolio of leading Internet properties.
Freston has held a succession of positions with MTV Networks, culminating in his appointment in 1987 as CEO. Since then, he has successfully driven MTV Networks into new markets both domestically and overseas. In addition, MTV has successfully extended its brands into film, books, magazines, toys and a host of other consumer products.
DISNEY KARMAZIN’S NEXT DESTINATION?
And what of Karmazin? The official statement quotes him as saying: “After more than 20 years with the company, for personal and professional reasons, I have decided to leave Viacom and pursue other challenges. Viacom is performing exceptionally well with leadership positions in all of its businesses. The company’s very talented management team will ensure its continued success.
The “other challenge” could well turn out to be be as the next chief executive of Disney, whose board is weighing succession plans for embattled CEO Michael Eisner.
Wherever 60-year-old Karmazin is headed next remains open to speculation but one thing is clear. He leaves Viacom a very rich man.
According to the terms of his contract signed last year, Karmazin reportedly stands to get close to $25 million in salary, deferred compensation and bonus. Additionally, Karmazin holds nearly 11 million shares in Viacom, including options, which are worth more than $400 million based on recent share prices.
