Power Sheet – February 4, 2016


Let’s update four leadership dramas playing out this week, some of them with developments today. They’re all worth keeping an eye on.

Produced by Ryan Derousseau

-House Speaker Paul Ryan’s leadership is about to get tested in two ways. He was hailed as the great healer of fractured Republicans when he reluctantly took the job last fall, but the honeymoon is over, and now we’ll see if he can really work magic. He met yesterday with the Freedom Caucus, the group of conservative House Republicans who forced former Speaker John Boehner out, and tried to win their support in a coming vote on the annual budget resolution. Apparently he did not get the ball across the goal line. He’s also working with President Obama to expand the earned income tax credit, an element of the tax code that has long been supported by both parties. But it’s already clear that some Republicans will be opposed because it will cost an estimated $65 billion over the next decade. At his meeting yesterday, Ryan quoted William Wallace in Braveheart: “We have to unite the clans.” But maybe he can’t, and maybe nobody can.

-The board of Viacom is scheduled to meet today and will reportedly discuss a successor to Sumner Redstone as executive chairman. The 92-year-old mogul resigned yesterday as executive chairman of CBS, the other main part of his empire, and was succeeded by CEO Leslie Moonves, but whether he’ll be succeeded at Viacom by CEO Philippe Dauman is far from clear. This is a particularly messy situation involving a self-made billionaire who has said he will live forever and would never retire, a lawsuit by his ex-girlfriend asserting that he’s mentally incompetent, public fights with his daughter, Shari Redstone, who is vice chairwoman of CBS and Viacom, and complex succession rules that he laid down. Governance mayhem is not rare at companies that rise to greatness from modest beginnings, in this case a theater chain started by Sumner Redstone’s father, under one leader. Whatever happens, we can be nearly sure that this story won’t end happily.

-Defense Secretary Ash Carter on Tuesday described his proposed 2017 defense budget – it will be released in full next week – and it continues his pattern of shaking up the Pentagon and the defense establishment. He has already made high-profile efforts to work more closely with Silicon Valley, has made women fully eligible for combat, and last week announced uniform 12-week maternity leave across all branches of the military. His new budget doubles spending to fight Islamic State and quadruples spending to counter possible Russian aggression in Europe. Carter is an aggressive leader, but his vision’s future is unclear because, as he observed, the presidential election means this will likely be his last budget.

-Former Turing Pharmaceuticals CEO Martin Shkreli is scheduled to testify to a congressional committee today. If he shows up, he’s unlikely to say anything beyond asserting his Fifth Amendment privilege to say nothing. But that probably won’t stop committee members from competing to see who can lambaste him most scathingly for raising the price of a life-saving drug 50-fold. As I’ve said before, Shkreli’s story is pretty much over. Today’s bit of Washington theater is all about legislators producing video of themselves for the evening news back home.

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What We're Reading Today

Sumner Redstone resigns as CBS chairman

CEO Leslie Moonves replaces Redstone, 92, who has struggled with his health in recent months, leading to questions from investors about his role in the company. He may also step down as chairman of Viacom (he controls both companies) as early as today. Redstone's daughter, Shari Redstone, vice chairman of both companies, does not want CEO Philippe Dauman to replace him at Viacom. Shari Redstone argues the person to replace her father should not have a connection to his trust, of which both she and Dauman are trustees. Fortune

Panel to rule in favor of Assange

A UN panel will say that Wikileaks founder Julian Assange has been "arbitrarily detained." The ruling goes against the United Kingdom and Sweden, which have sought to extradite him to Sweden to face rape charges. Assange has been living in the Ecuadorian embassy in London since 2012. The British authorities signaled that they would not accept the ruling, which won't officially come until tomorrow. Assange said he would accept the decision either way and will step outside the embassy at that time. BBC

Obama urged to fight ISIS in Libya

Advisers to the President are warning him that the number of ISIS fighters in Libya has grown to between 5,000 and 6,500, which is more than double the amount reported last year, and are urging him to authorize the use of military force there. Obama is wary of opening another front against the group in an unallied country and has ordered his aides to step up efforts to help build a unity government. The Pentagon will also advance plans for potential airstrikes or raids.  NYT

McGraw Hill to change name 

It will become S&P Global if shareholders approve the change in April. Removing "McGraw" from the name for the first time in 128 years acknowledges the company's shift away from publishing. CEO Douglas Peterson sought to create more recognition of its Standard & Poor’s unit and has support from chairman emeritus Harold McGraw III. WSJ

Building a Better Leader

Having "safe spaces" in the office for venting...

...can build trust and transparency among coworkers. But what's said there should stay there. Training Mag

Powerful television producer vows to improve hiring... 

...of women and people of color. Ryan Murphy, creator of Glee and American Crime Story, will ensure 50% of directors of his shows will be women, people of color, or members of the LGBTQ community. Fortune

Are you a startup strapped for cash?

Then why not move to Mexico? Wired

Tricky Partnerships

Google gives Google Fiber away

It's a joint effort between Google and the Department of Housing and Urban Development to offer Fiber to public housing residents for free. Larry Page's company will provide the free high-speed internet service to all nine cities in which Fiber is operational. The effort makes Fiber one of the largest expenses for Alphabet, Google's parent. Re/Code

U.S. Soccer sues women's national team 

In a preemptive attack over a new collective bargaining agreement, the U.S. Soccer Federation filed the lawsuit to prevent the team from striking just before the Olympics. It claims that the executive director of the Women's National Team Players Association, Richard Nichols, has stated his opinion that no CBA is in place. The two sides agreed to an extension of a 2005 CBA that runs through Dec. 31, 2016, but Nichols argues that the extension can be terminated at the Players Association's  discretion.  ESPN FC

The dual role of Theranos' lawyer 

Troubled blood testing lab Theranos hired David Boies as counsel when regulators began questioning the company's technology. He's now also a director of the company. This means he has two roles: Protector of the company as a lawyer and protector of  investors as a director. The conflicting roles could become impossible if it turns out founder Elizabeth Holmes's technology doesn't work and investors sue.  NYT

Up or Out

Delta CEO Richard Anderson will step down in May and become executive chairman. He will be succeeded by president Ed Bastian. Financial Times

Google's head of search, Amit Singhal, will step down. Fortune

Fortune Reads and Videos

Honda recalls 2.2 million vehicles... 

...due to defective Takata airbags. It also stopped selling some new Civics because of the issue. Fortune

Cure for diabetes gains momentum 

Johnson & Johnson has teamed up with ViaCyte to test the first prospective cure for diabetes to make it to human trials. Fortune

At a Democratic town hall...

...Hillary Clinton defended her high-priced speeches to Wall Street firms. Fortune

Billionaire Hank Greenberg may bail on Jeb Bush...

...to support Marco Rubio. Fortune

On this day...

...in 2004, Facebook was launched by Mark Zuckerberg as a website that only Harvard University students could access. Wired

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