Ever since News Corp., headed by mogul Rupert Murdoch, snagged MySpace, the media world has privately and publicly dissed youth-oriented Viacom’s failure to grab the social networking meteor. The murmurs have only gotten louder lately given how successfully News Corp. has exploited MySpace to generate gobs and gobs of cash. (Google, for example, has agreed to spend $900 million at MySpace over the next three years.)
Viacom, headed by another media mogul, Sumner Redstone, had been in the running to buy MySpace and somehow lost out to News Corp. Redstone was personally eager to acquire MySpace, and company CEO and long-time employee Tom Freston has taken the public, and allegedly private, heat for failing to snap up the social networking jewel.
Freston’s now out of the picture, according to this bit in The Wall Street Journal. Freston has resigned as CEO of Viacom Inc. and will be replaced by board member and former executive Philippe Dauman. The company has named another board member, Thomas E. Dooley, to the new position of senior executive vice president and chief administrative officer.
Both Dauman and Dooley come from DND Capital Partners, L.L.C, a private equity firm specializing in media and telecom investments. Given their work at DND, both Dauman and Dooley are no doubt well-versed in the sweeping changes that are reshaping the media marketplace. Freston, on the other hand, made his bones in the era of cable television’s ascent, co-founding and then ultimately running MTV.
Update: Reuters has this piece on Freston’s resignation in which UBS analyst Aryeh Bourkoff is quoted as saying that running a company “in an increasingly fragmented media sector requires a new way of thinking.” Freston’s departure is clearly a sign that Viacom wants “out with the old, in with the new” in naming two investors, who no doubt have their fingers on the pulse of the marketplace, as the company’s new stewards.
Update: The WSJ has more coverage of Freston’s departure, and much of it is not pretty for Sumner Redstone, who claims that Viacom needed new management blood to get the stock prices up again. Wall Street analysts, in particular, are upset about the well-liked Freston’s shove out the door. Here’s a quote from Merrill Lynch’s Jessica Reif Cohen:
This change is unexpected and is not likely to be well-received by the Street or the creative community. Mr. Freston had spent over 25 years with MTV and was a key figure in building it into one of the premier entertainment franchises globally. Mr. Dauman and Mr. Dooley, both of whom currently serve on Viacom’s board of directors, are confidants of Viacom Chairman Sumner Redstone, but do not have significant experience in running a major entertainment company. Furthermore, they were deeply involved in Viacom’s attempts to turn around Blockbuster, which [were] not successful. We think this move is likely to be regarded as an attempt by Mr. Redstone to reassert himself in an operating role, a development that is not likely to be warmly received in the investment community, in our view.
Cynthia Brumfield at 8:39 AM|Comments(0)
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