In his 2010 memoir, “A Passion to Win,” billionaire media mogul Sumner Redstone credited Tom Dooley for playing "a major role in my early education at Viacom."
Nearly 40 years into their professional relationship, Redstone, the 93-year old controlling shareholder of Viacom, is turning to Dooley once again for a desperate intervention.
After months of legal fighting, Redstone, joined by his once-estranged daughter, Shari Redstone, came to a settlement Thursday with Viacom's chairman and CEO Philippe Dauman. In their truce, Dauman next month will leave the company that he’s served as CEO since 2006. Viacom’s board of directors voted for the change on Thursday, according to two people who are familiar with the development. They spoke anonymously because the change is not ready to be revealed publicly.
The management overhaul calls for Dooley, 59, to step up from his COO office to replace Dauman as CEO on an interim basis until the end of the fiscal year on Sept. 30, at which point the board – firmly controlled by the Redstones now – will decide whether to keep him on permanently.
It's not a lot of time for Dooley to leave his mark at the company, which owns Paramount Pictures, Nickelodeon, Comedy Central, MTV and VH1. But the breath of fresh air blowing through Viacom's headquarters and the potential end to the governance issue were welcomed by investors. Shares of Viacom rose 1.5% Friday despite rumors ongoing for weeks that Dauman was on his way out.
"At the very least, he's a good pick for the interim," says James Dix, a media analyst at Wedbush Securities. "He's well regarded. (Wall) Street likes him. It reduces a level of uncertainty.”
The house-cleaning that comes at the end of the fiscal year will keep Dooley busy with a host of administrative tasks: setting the budgets for next year; ensuring that the five new board members – selected recently by Redstone — get up to speed; diplomatic oversight of the awkward transition that calls for Dauman to stick around as a board member until Sept. 13.
But Dooley's most urgent task may be the handling of the Redstones' reassertion of their ownership powers within Viacom's corridors. Whether he stays on permanently "comes down to how he manages the relationship with the Redstones," Dix says.
The Redstones own National Amusements, the Massachusetts-based theater company that owns 80% of Viacom and CBS Corp. Dissatisfied with Dauman's performance, the Redstones have been seeking to oust him for months.
Earlier this year, Sumner Redstone removed Dauman and board member George Abrams from his trust. He then named five new board members, seeking to have them replace Dauman, Abrams and three others on the board.
Dauman has legally fought back at every juncture, arguing that Sumner Redstone is not mentally capable of making his own decisions and that Shari Redstone is unduly influencing her father.
In settling their lawsuits and forcing Dauman out with a lucrative severance package, the Redstones – with Dooley nominally in charge – will have to redefine Viacom's priorities. And a host of operational challenges await them in all their main business units.
Dauman will stick around long enough to present to the board his proposal to sell a 49% stake of Paramount, which has struggled to generate box-office hits. Chinese conglomerate Dalian Wanda Group is said to be interested, and a deal will provide Viacom much needed cash and a key partner in the country. But the Redstones, said to be reluctant to give up so much control, will have to remove the uncertainties hanging over the film studio.
In a blog post, Michael Nathanson, a media analyst at MoffettNathanson, urged the Redstones to consider selling the entire studio. "Short of firing the entire Paramount leadership team, there is little a new CEO could do quickly to improve its film pipeline," he wrote. "The best Tom Dooley can do is sell 100% of Paramount to the highest bidder. We are shocked that the board or the Redstone family doesn't see the obvious need to deliver Viacom cash ahead of its looming debt refinancing cycle."
Any deal for Paramount would require a unanimous approval from the board, a difficult proposition given that it will be enlarged to 16 members. “I'm skeptical they will approve it (in September), but it doesn’t mean it’s off the table indefinitely,” Dix says.
Urgent turnaround plans are needed at its cable networks as well. Sluggish ratings, an exodus of creative talent, sour relationships with some pay-TV distributors, and a lack of coherent strategy for cord-cutting customers have hampered its revenue growth in recent years, analysts say.
But the division is still Viacom's largest business unit in revenue. And there are some "low-hanging fruits" Dooley can tackle to emit encouraging signs to investors, Dix says, mentioning an elapsed licensing deal with an unnamed video streamer that was mentioned in a recent quarterly earnings report.
"It's an interesting opportunity because their (cable network) brands still do mean something," Dix says. "They're fixer uppers. You don't need that many, but if you get a big (hit), you use that to pull in advertisers. It doesn't take that much.”
Follow USA TODAY media reporter Roger Yu on Twitter @ByRogerYu.
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