NEW YORK – Viacom chairman-CEO Sumner Redstone Tuesday rebuffed speculation of a rift with his second in command, Mel Karmazin, and said the implications of Karmazin’s recent sale of Viacom stock have been “vastly overblown.”
“Our cultures may be different, but Mel and I have never had a single difference of opinion on any significant issue and we both understand that any friction between us would be bad for Viacom,” Redstone told Daily Variety.
Wall Street sure thinks so.
“Mel is critical to the company. He’s liked, admired and respected,” said Merrill Lynch entertainment analyst Jessica Reif Cohen. She and others believe Karmazin’s departure would be disastrous for the stock.
Redstone insisted “there’s not a chance” of Karmazin leaving his post within the 18 months remaining on his contract.
The media, the Street and execs within the company have all kept an ear to the ground for any tensions between the two ever since Viacom and CBS merged in the spring. The two execs have very different personal styles. And although Karmazin has day-to-day operating control, Redstone is said to be reluctant to take a back seat at the company he built and which he and his family control.
Redstone himself hasn’t helped matters by refusing to publicly acknowledge Karmazin as his successor. In fact, rumors of tension between the two bubbled over during a bout of interviews Redstone gave in June to talk up his recent autobiography “A Passion to Win.”
Asked point blank about his age (78) and Viacom’s succession plan, Redstone mentioned just about everyone but Karmazin — from operating division heads, to his daughter Shari Redstone, to former top Viacom execs Philippe Dauman and Tom Dooley.
Speculation simmered again over the weekend after news that Karmazin had sold a hefty $35 million worth of Viacom shares.
Word is he did it for personal reasons, possibly related to his recent marriage. But it jolted investors since Karmazin has been a tireless cheerleader for Viacom stock and the top showbiz exec to argue that the weak economy and ad market will soon reverse.
People close to the company say the issue isn’t Karmazin but rather Redstone’s chronic resistance to acknowledging that a time may come when he’ll have to pass the torch.
Others, however, think the rumors may reflect deeper tensions.
While Redstone and his family own 67% of Viacom’s voting stock, the company’s bylaws clearly state that Karmazin would take over if Redstone steps down for any reason. And the board of directors, with 10 appointees from Viacom, eight from CBS and two independents, would need an unlikely number of CBS votes to ever oust Karmazin.