The first shoe has dropped at Sumner Redstone’s media empire. The 92-year-old billionaire, who controls the voting shares at both CBS and Viacom, has stepped down as executive chairman of CBS and been replaced by CEO Leslie Moonves, according to a company statement.
Media insiders say the second shoe may drop as soon as Thursday, when the ailing media mogul is expected to resign as chairman of Viacom at a board meeting. Viacom (VIAB) shares jumped more than 10% in after-hours trading following the news, and shares of CBS (CBS) also rose.
Until recently, Viacom CEO Philippe Dauman might have been seen by some as a shoe-in for the chairmanship of the media company, but he has been under a cloud recently, partly because of criticism of his compensation. Last year, he made more than $44 million, even as Viacom’s stock was plummeting.
Shari Redstone, the billionaire media mogul’s daughter—who is vice-chairman of both CBS and Viacom—said in a statement that whoever succeeds her father as chairman “should be someone who is not a trustee of my father’s trust.” Philipe Dauman is a director of the Redstone trust, as is Shari Redstone.
The senior Redstone has been in failing health for some time, sources close to Viacom say, but his exact mental and physical state is unknown. In fact, his ability to make decisions either for himself or for the companies he controls is currently the subject of a heated legal battle between his former girlfriend, Manuela Herzer, and Dauman.
“I am honored to accept the chairmanship of this great company,” Moonves said in a statement released by CBS. The new position makes Moonves president, CEO and chairman of CBS, which is a significant amount of power to be concentrated in a single executive.
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Moonves also said he wanted to thank Redstone for “his guidance and strong support over all these years,” and that he was glad the billionaire’s daughter had agreed to continue as vice-chairman of CBS.
According to a number of reports, Shari Redstone and Moonves had an understanding that the CBS president and CEO would become chairman when her father became too ill to do so. That these moves are happening now has increased speculation that Redstone could be near death.
When Redstone dies, his control over both Viacom and CBS—which he exercises through a family holding company known as National Amusements—passes to a family trust, managed by a board that includes both Shari Redstone and Dauman. How (or even whether) power will be shared between the billionaire’s daughter and Viacom’s CEO remains to be seen.