Viacom hasn't fully delivered on grand plans for cross-division ad deals, and the stock has underperformed the market, News Corp. and even Walt Disney Co. since Viacom and CBS announced a merger five years ago. But CBS is now the network to beat, cable is doing well, and there is great opportunity for broadcast and cable divisions to work together to serve advertisers and viewers.
Redstone had plenty of time to evaluate the performance of two potential chieftains, MTV's Tom Freston and CBS's Les Moonves, now co-presidents and co-COOs. Redstone should have anointed a successor. His decision to stage a public audition sends the wrong message: Freston (cable and movies) vs. Moonves (broadcast, radio, outdoor).
When Redstone's Viacom bought CBS, then-CBS boss Karmazin was guaranteed to become CEO if Redstone couldn't serve. Viacom changed governance rules in May 2003, taking away the guarantee. Karmazin was and is CEO material, but he didn't get along with the chairman, and so he's gone.
Blather from Viacom's corporate-governance guidelines outlines how Redstone is to give the board "recommendations and evaluations of potential successors" at least once a year. All of that is moot since 81-year-old Redstone owns 11% of Viacom but controls 71% of voting stock and gets to pick both directors and his successor.
Viacom revised its bylaws on Karmazin's exit, giving the CEO tighter control by eliminating a phrase about "consultation with the president and chief operating officer." Fair enough. The buck stops and the succession plan starts with Redstone. He blew a chance to get it right.