Karmazin resigns from Viacom
Redstone picks Moonves, Freston to compete for top job
By Jon Friedman & Steve Gelsi, CBS.MarketWatch.com
Last Update: 5:18 PM ET June 1, 2004
NEW YORK (CBS.MW) -- Mel Karmazin stepped down Tuesday as president and chief operating officer of Viacom, ending months of well-publicized bickering with Chief Executive Sumner Redstone and clearing the way for two new co-presidents to compete for the top job.
Setting the stage to succeed Redstone, Viacom senior executives Tom Freston and Leslie Moonves were promoted, with each holding the titles of co-president and co-chief operating officer.
Freston currently heads Viacom's MTV Networks unit, a position he has held since 1987. Moonves, the CEO of CBS since 2003, joined the network in 1995 as the president of its entertainment division.
Redstone, 81, said he'll step down as chairman and CEO by 2007, with one of the new co-presidents likely succeeding him.
During a conference call with analysts, Redstone said he would be "amazed" if an outside executive took control of the company.
The chilly relations between Redstone and the No. 2 executive, Karmazin -- who came to Viacom (VIA: news, chart, profile) (VIAB: news, chart, profile) when it acquired CBS in 2000 -- prompted frequent reports about management clashes. However, Redstone dismissed any suggestion Karmazin, 60, was forced out.
"Nobody asked for Mel's resignation," Redstone said. He added Karmazin was "frustrated" about the stock price of Viacom, which sank to a one-year low of $35.69 after the announcement. The stock recovered somewhat and was closed off 46 cents at $36.81, with a volume of 11 million shares. Viacom's stock has declined some 20 percent in the past year.
Karmazin will receive a $31 million payout over the next two years, according to an individual with knowledge of the arrangement