With Mel Karmazin's abrupt
resignation yesterday from Viacom, all the talk has been over where he
would plop next with his considerable talents.
But for media buyers the more immediate concern is what his
departure might mean for CBS.
Under the new order announced by Viacom chairman Sumner Redstone,
CBS's Les Moonves and MTV Networks' Tom Freston will serve as
co-presidents and co-chief operating officers of Viacom, reporting
directly to Redstone, each with expanded management purviews.
Moonves will continue to run CBS and
the station group but also inherits the radio and billboard operations,
which have been sagging, as well as Paramount Television.
Freston will continue to run the MTV Networks but will also oversee
Showtime, Simon & Schuster, Viacom's book unit, and Paramount
In the short term, concerns among media buyers regarding CBS
are minimal, certainly as the upfront market gets underway.
"There will be no effect on the marketplace," says one
media director, "because the marketplace isn't run by CEOs or COOs.
It's economic supply and demand, and half of their business is already
Longer-term, CBS's fate is more problematic, and here perhaps
Moonves' biggest challenge, as he takes on additional responsibilities,
will be to keep CBS free of the sort of interference that has hurt both
ABC and NBC over the years, when corporate chieftains stooped to impose
their programming savvy--or more often their lack of--on the creative
minds responsible for coming up with new shows.
Caught by surprise by yesterday's announcement of Karmazin's
departure, media people were reluctant to speak on the record about their
concerns for CBS. As one media director put it bluntly, responding to a
query from a Media Life reporter, no one is going to talk on the record
about the Viacom changes, at least now.
But the sense calling around was that there's some trepidation
about changes that could come with Redstone's consolidation of
"The Viacom people were doing pretty well on their own, but I
think a lot of people are just waiting to see what happens over the next
few months," offered one top media buyer.
Some on Wall Street echoed that concern.
"We view this announcement as a very significant
negative for Viacom as this represents the loss of an extremely talented
operating executive," said Merrill Lynch analyst Jessica Reif Cohen
in a note to investors yesterday morning.
Cohen, a longtime Karmazin supporter, made special note
of the departing executive's willingness to buck Redstone.
"Mel Karmazin is talented and importantly, a very
strong executive, capable of saying 'no.'
"Although we believe that the company's remaining executives
also possess a keen sense of financial discipline, we view Mr. Karmazin's
ability to hold firm as unique."
Just what the chances are that Redstone will begin meddling
with CBS is a big unknown.
Arguing against it are several major factors, and not the least is
the huge success of CBS in whittling away at NBC dominance under Moonves
and Karmazin. Even the most meddlesome top executives are reluctant to
interfere in operations that are running smoothly.
Moreover, the conflicts between Redstone and Karmazin were personal
and had almost entirely to do with control over the destiny of Viacom, far
less to do with how the conglomerate was managed under Karmazin in his
role as chief operating officer. Redstone was never one to cede
operational control to another executive in the years he built up Viacom.
Further, with his adversary now out, Redstone must prove to a
doubting Wall Street that he can manage through his chosen lieutenants.
And that means letting them do their jobs.
Another argument against Redstone's meddling is the personality of
Moonves, a hands-on and feisty manager in his own right, one strong
enough to work for the relentlessly demanding Karmazin. He's no pushover.
But all that said, there's no telling what Redstone will do
now that his path to total control has been cleared. He's unpredictable, irascible
and used to getting his way.
And that alone opens up all sorts of possibilities for interference
in the running of CBS.
That could mean lots of trouble for CBS.
ABC and NBC have both endured such meddling, resulting in a free
fall for the former and a gradual weakening of the latter.
Indeed, in the opinion of many media folks, the rise of CBS had
less to do with its improved programming than with the decline of NBC with
the departure of talent to other networks.
The network has paid a hefty price with the steady decline of its
dominance on Thursday night and the lack of a breakout hit comedy since
"Will & Grace."
Under the Disney regime, ABC has had a rotating door of
executives, 13 in the seven years since the merger. Each one has had to
deal not only with a mess of a schedule, but an unclear chain of command
that ultimately led to Michael Eisner and made it nearly impossible to
tell who was really making often disastrous programming decisions.
CBS is now considered the most stable of the networks
this year, having a schedule media buyers and planners recently voted tops
for the fall in a Media Life poll.
Under Moonves' direction, CBS has won six straight
sweeps periods among households and total viewers, and finished No. 1 this
season in adults 25-54 for the first time in a year when CBS did not carry
the Olympics since 1981.
Moonves' challenge will be to keep that momentum without Karmazin