Viacom Boss Paints President Into Corner Over Contract Renewal

21 January 2003

Viacom chairman Sumner M Redstone has not survived seventy-nine summers, most of them in the media arena, without acquiring strategic wiles that would outdo Brer Fox.

And, according to a number of investors and analysts whom Redstone has been assiduously courting of late, the veteran’s recent public utterances are aimed at painting Viacom president Mel Kamarzin into a corner with regard to the latter's contract which is due for renewal later this year.

Insists Redstone: “I would lean over backwards to have him stay, and I’m optimistic that he will stay.” But a number of his listeners believe ‘White Man Speak With Forked Tongue,’ an opinion heightened over the weekend when Redstone gave a number of newspaper interviews.

Karmazin, twenty years Redstone’s junior, will have to accept less power if he wants to stay, according to his boss’s overt asides. Referring to the merger in 2000 when Viacom melded with CBS (of which Karmazin was ceo), Redstone said he had made a “supreme sacrifice” in ceding “a fair degree of my power in order to get” a done deal.

That arrangement was only for three years, Redstone told interviewers, adding that Karmazin knew his chairman wouldn’t give up those powers “forever”. This “would have been a little too much to expect from somebody who started with half a dozen drive-in" theatres”.

Redstone laid it on the line, saying he wanted Karmazin “to have all the attributes and the prerogatives” of a “very strong” chief operating officer, while he [Redstone] “still do want to have the prerogatives of CEO”.

Karmazin, meantime, remains silent. But the CBS hard man – a Wall Street favorite because of his blunt talk and iron financial management – has already made it crystal clear that relinquishing his present powers would be “unacceptable”.

It has been public knowledge since the early days of the merger that relations between the two men were terse. The renewal of Karmazin’s contract is theoretically in the hands of a committee of three independent directors formed last year following a media furore over the eyeballing antics of Viacom’s two top executives.

Redstone said he expects the committee will arrange for the two opposed egos to meet “face to face” to talk about the contract “very shortly”.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff