Sumner Redstone had already decided to fire Viacom CEO Tom Freston a week before he got rid of Tom Cruise, according to reports that came to light Tuesday. Philippe Dauman, who was selected to replace Freston, told today's (Wednesday) Daily Variety that he received an offer from Redstone three weeks ago. (Only a few weeks earlier, Redstone had told the Wall Street Journal that "he could imagine 'no circumstance' under which he would dismiss Mr. Freston.") When Redstone severed ties with Cruise on Sept. 22, news reports made much of the fact that neither Freston nor Paramount Chairman Brad Grey appeared to have been aware of the action and both remained silent about it for days. Redstone said Tuesday that his decision to fire Freston "has nothing to do with Tom Cruise." [UBS media analyst Aryeh Bourkoff told today's New York Daily News that the "Cruise situation showed Sumner Redstone getting more involved with managing Viacom.] Rather, he said, he was concerned with Viacom's stagnant stock price and Freston's conservative approach to the Internet. Daumon, he maintained, will be "better able to navigate the digital transition." Analysts were mostly critical of Redstone's action. "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," Merrill Lynch analyst Jessica Reif Cohen told clients. Bear Stearns analyst Spencer Wang said that he was "surprised by this announcement and somewhat disappointed as we view Tom Freston as a very strong operator with a very solid track record." Anthony Valencia, with TCW Group, told the Los Angeles Times that he believed Freston's ouster was "premature." He added, "Every company needs to have a long-term, consistent strategy, and getting rid of your senior executives every few years by definition prevents that from happening." Redstone had previously got rid of Frank Biondi in 1996 and Mel Karmazin in 2004. Bruce Greenfeld, professor of finance at Columbia, told the New York Times, "Sumner has just lost it. ... This guy [Freston] has been working for him for 20 years. He has one bad year and he gets rid of him." Investors seemed to agree with the analysts as Viacom stock plunged 5.6 percent to $34.89 on the news, and continued falling today to $33.94 at midday.




06/09/2006