By Bloomberg
September 10, 2018

Les Moonves, who led CBS to the pinnacle of the TV industry with shows like The Big Bang Theory and N.C.I.S., will step down from the business he’s run for more than 20 years after being accused of sexual harassment and running afoul of his biggest investor.

Moonves, 68, will relinquish the titles of chairman and chief executive officer of CBS immediately, CBS said in a statement on Sunday. Chief operating officer Joseph Ianniello was appointed his interim successor while the company searches for a permanent leader.

The media mogul’s exit was accelerated by explosive allegations in the New Yorker, which reported that he sexually harassed a dozen women and tried to harm their careers. The board also ended a separate legal fight with majority shareholder National Amusements Inc. on Sunday after trying to dilute its 80% voting stake in a fight for control of the company.

Investors had long respected Moonves. He was regarded as one of the most capable programming executives in television, and one of the highest-paid as well. But the New Yorker stories — including a new set of accusations on Sunday — vaulted him squarely into the #MeToo movement. And the returns on CBS shares have lagged behind those of a wider media-stock index, especially as mergers swept through the industry.

As part of his split, Moonves and CBS will donate $20 million to one or more groups that support “the #MeToo movement and equality for women in the workplace,” the company said.

CBS shares rose in recent days as the prospect of Moonves’s exit — and the settlement of the broadcaster’s dispute with the Redstone family — suggested the company would enter a period of calm. National Amusements, controlled by Shari Redstone and her ailing father Sumner, had proposed that CBS combine with Viacom Inc.. With the investor agreeing not to pursue that for years, CBS could seek other transactions — or potentially be acquired.

With merger speculation swirling around the media industry, CBS’s shake-up could catch the attention of potential suitors. The idea of CBS merging with Viacom, meanwhile, was less attractive to investors.

“The clear positive is that the current uncertainty is lifted and that there will be no immediate merger between Viacom and CBS,’’ analyst Michael Nathanson said in a note before Moonves stepped down.

Revamped Board

Six board members who voted to dilute the Redstones’ control will step down, ceding the spots to new directors. The new board will have 11 independent members and two who are affiliated with National Amusements. The changes will bring in women, as well as high-profile corporate chieftains, such as Hasbro CEO Brian Goldner.

The investor also reaffirmed that it would not pursue a merger of CBS and Viacom, another company it controls, for at least two years. The idea of such a deal had been a source of tension for CBS management.

Moonves has for years ranked among the most richly rewarded bosses in the U.S. His awarded pay of $98.5 million last year put him 13th nationwide among public company executives, according to the Bloomberg Pay Index.

That compensation has rankled activist groups, which have rallied to the cause of women routinely subjected to harassment in the entertainment industry. Moonves is one of a number of powerful men in movies and TV, including Charlie Rose and Harvey Weinstein, who have been accused of behavior ranging from boorish to criminal.

Pay Package

The question now is how much of an exit package Moonves may get. The executive was due as much as $180 million, but the payout is now dependent on the outcome of an ongoing investigation into Moonves’s alleged behavior, people familiar with the matter have said.

“A man accused of rigorously reported allegations of harassment should not be rewarded with a golden parachute,” said Time’s Up, the group that sprung from last year’s outpouring of workplace harassment claims.

CBS said that Moonves won’t receive any severance for now, other than some of his vested compensation and benefits. “Any payments to be made in the future will depend upon the results of the independent investigation and subsequent board evaluation,” the New York-based company said.

The pressure mounted on Sunday when six additional women came forward to accuse Moonves of harassment or assault in a story published in the New Yorker. The latest reported incidents occurred in the 1980s and early 2000s and include claims that the executive forced women to perform oral sex on him, exposed himself, and used intimidation and physical violence, according to the New Yorker story. The author was Ronan Farrow, whose reporting previously helped topple Weinstein. Moonves, in a statement to the New Yorker, acknowledged three of the encounters, while maintaining that they were consensual. “The appalling accusations in this article are untrue,” the executive said, adding that he has “never used my position to hinder the advancement or careers of women.”

Twenty-Year Veteran

Moonves has worked at CBS since 1995 and has been CEO since the company was separated in 2006 from Viacom. The company is still full of executives who have been loyal to Moonves. Kelly Kahl, the had of CBS Entertainment, and David Stapf, the head of CBS’s studio, have worked with Moonves since before he joined the company. Jo Ann Ross, the head of advertising sales, has worked at CBS for 25 years.

Sumner Redstone, the now-incapacitated patriarch of both companies, is famous for dismissing lieutenants, and his daughter Shari followed in his footsteps by orchestrating the 2016 ouster of Viacom CEO Philippe Dauman.

Moonves had repeatedly sought written assurances that he could operate CBS without too much interference from the Redstones. He and the board moved to dilute the Redstones’ control when they feared the family would replace current directors to force a merger with Viacom.

The litigants had been scheduled to face off in court next month. The resolution of that fight included the board overhaul, which expelled six stalwarts viewed as loyal to Moonves in favor of fresh blood. All the departing board members, including Moonves, served on the board for more than a decade and voted to dilute the Redstone family’s controlling stake in CBS earlier this year.

The six new board members, three men and three women, hail from different sectors of corporate America. Candace Beinecke is a lawyer, and Barbara Byrne a banker, while Strauss Zelnick is the CEO of video-game company Take Two Interactive. Susan Schuman is a management consultant.

Richard Parsons, the former CEO of Time Warner, had already planned to join the board.

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