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What's going on?
A huge power struggle at one of Americas biggest media companies, Viacom, appears to have come to an end as a settlement was reached between its outgoing CEO and its controlling shareholder. With that out of the way, investors hope that Viacom can move on to addressing its lagging advertising revenue and other challenges.
What does this mean?
Viacom owns the movie studio Paramount Pictures as well as cable TV channels such as MTV and Comedy Central. The company had been in a legal fight which had effectively pitted Shari Redstone, the daughter of Viacoms 93-year old controlling owner, against its CEO (and others) for control of its board. Under the settlement, the CEO is leaving with an exit package worth a reported $72 million. Viacoms Chief Operating Officer will take over the CEO role in the interim and could be appointed to the post full-time with the support of Shari Redstone (who, essentially, “won” the fight).
Why should I care?
For the stock: Viacom needs to figure its business out now.
We can thank Comedy Central for Jon Stewart, but thats in the past. Viacom must figure out how to monetize its channels in a new world adept at online streaming and used to comedic snippets that are freely available (think: the Daily Show highlight on your Facebook News Feed). Viacom has a good role model in CBS, which has been successful with its content-centric strategy and was part of the same company until 2006 (some Viacom shareholders are hoping for a re-merger). In short, Viacoms turnaround (if there is to be one) begins now.
The bigger picture: Viacoms executive pay has faced criticism in recent years.
Viacoms outgoing CEO has received more than $400 million in compensation since his appointment in 2006 despite the companys significant struggles (its share price is down 50% in the past two years). Shareholder groups have routinely criticized outsized pay packages that, they argue, arent closely enough tied to companies performances. The media industry, where executive pay is relatively high, has been a particularly popular punching bag for such criticisms.
Originally posted as part of the Finimize daily email.
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