UPDATED: The corporate earthquake around Viacom and the attendant review this week of the conglomerate’s Paramount Pictures had made many observers believing that Brad Grey, chairman and CEO of the struggling studio, was on the verge of losing his job.
But Viacom, its new interim CEO, Tom Dooley, and Shari Redstone, a crucial board member and daughter of corporate patriarch Sumner Redstone, issued a statement Friday offering Grey what sounded like a ringing endorsement.
“Shari, Tom and the Board remain fully supportive of Brad and his leadership of the studio,” the statement said. “Under Brad’s leadership, Paramount has taken significant, successful steps to broaden and strengthen its business, and we are confident that Brad and his team have the skills, relationships and resources necessary to return Paramount to success in its movie business and continue its rapid growth in television.”
One individual familiar with the situation said that Grey and other Paramount executives made a presentation to the Viacom board this week about the studio’s performance and future prospects. While many around Hollywood have held Grey responsible for Paramount relatively small slate of films and for consistently lackluster box office results, Dooley and the rest of the board, including Shari Redstone, were not displeased with what they heard. (The source did not give the timing of the meeting, or where it occurred.)
The outcome likely will surprise many around Hollywood, who have been following Paramount’s slumping performance for years. The recent release of “Ben-Hur” to an opening weekend of just over $11 million (after production costs, shared with MGM, ballooned to over $100 million) did little to stem the sense that the studio can’t pick winners. Recent past laggards: “Teenage Mutant Ninja Turtles: Out of the Shadows,” “Zoolander 2,” “Whiskey Tango Foxtrot” and “Florence Foster Jenkins.”
Analyst Michael Nathanson of MoffettNathanson Research, recently called Paramount’s un-corrected failings “truly shocking,” adding: “Short of firing the entire Paramount leadership team, there is little a new CEO could do quickly to improve its film pipeline.”
Its regulatory filings suggested Viacom would not only ask for a performance update, but that it might impose tougher cost controls. It even pondered requiring board approval for talent contracts and for deals to finance production. If any of that was ordered, it was not indicated in the short statement of approval issued Friday.
“The problem at Paramount is truly shocking,” MoffettNathanson Research analyst Michael Nathanson said in a report last week. “Short of firing the entire Paramount leadership team, there is little a new CEO could do quickly to improve its film pipeline.”
The statement is one of the first major actions taken by Dooley since he became CEO last week as part of a settlement of a long-running battle over Viacom’s corporate governance. He won the seat as CEO immediately, soon to add the chairman’s title and will hold both through Sept. 30. He is expected to face f tough fight to keep the posts, though Viacom has indicated he is one of the candidates to serve as chief executive for the long haul of the company that also controls VHI, Comedy Central, BET and MTV.
The case settled last week pitted corporate patriarch Sumner Redstone, 93, and his daughter, Shari, on one side, and Dauman and his allies on the Viacom board, on the other. The Viacom team alleged that Shari Redstone effectively had mounted a palace coup when Dauman was ejected from the board of a company that oversees Redstone family holdings and from another panel that will decide the fate of the billionaire’s holdings after this death. But Sumner Redstone’s representatives said he made a rational decision to toss Dauman off the two panels that govern National Amusements Inc. and to subsequently add five new members to the Viacom board. The magnate felt he had to make a change after Dauman disrespected him by not keeping him up to speed on corporate actions, particularly his push to sell as much as a 49% stake in Paramount, Redstone’s allies said.
Dauman said he always made conscientious efforts to keep his long-time friend and mentor informed but that the task became more difficult as Redstone’s health deteriorated. He said he pushed the Paramount sale only because he believed it was one of the best ways to pump up the value of the parent company. Talks with China’s massive Dalian Wanda Group have produced an offer that would value Paramount at up to $10 billion, according to the Wall Street Journal.
While the Redstones are said to still oppose a sale of part of Paramount, they also have sent signals that they would be willing to hear about the benefits of a sale. As part of his severance agreement, paying him at least $72 million, Dauman will be given a chance to make his case why at least a part of Paramount should go to another owner.
Dauman immediately lost his CEO title in last week’s legal settlement, but remains as chairman of Viacom until Sept. 13. He has until Sept. 7 to update the board on potential deals for the studio. A vote on the matter could come Sept. 10.