Here is a smattering of reactions to the Freston ouster at Viacom from Wall Street analysts. Generally, the view is hostile. The Street hates uncertainty and volatile shakeups certainly qualify. But technological change is hitting this industry fast and it is only natural to expect a great deal of volatility in the board room as well as on the stock ticker. One interesting piece of speculation – will Viacom do a quick deal with a significant internet player (can you say Yahoo!) to counter the apparent advantage that Murdoch/Fox gained with the (pricey!) acquisition of MySpace. Keep in mind that Terry Semel, CEO of Yahoo!, has an extensive Hollywood background, including stints with Warner, Disney and CBS (the latter a recent spin-off from Viacom).
The Hollywood Reporter interviewed Sumner Redstone today on the dramatic changes underway at Viacom of late. The dismissal, first, of Tom Cruise and now of CEO Tom Freston points to an aggressive and creative effort of Redstone to respond to changing technology in the industry. In the interview Redstone sidesteps, smartly, questions about Cruise and, of course, sheds tears about losing Freston. But business pressures won out and those clearly dictate a shift away from star dominated product to new forms of digital delivery.
The connection may not be immediately clear, but the fact that Viacom lost out on the battle to purchase MySpace (which went to the Aussie who dominates American entertainment) clearly lies behind the change. MySpace is emblematic of the potential of new digital consumer driven platforms for entertainement and media products. Those products are likely to be shorter than today’s feature films and may not be simply the vehicles for a handful of stars like Tom Cruise or Tom Hanks as many films have been of late.
Of course, getting this right is no easy task and the new dual leadership has something to prove to Wall Street which rewarded the announcement by dumping Viacom stock. This is ironic since the new leaders, Dauman and Dooley, have been running an investment firm for the last few years.
Redstone talks about reasons he tapped Dauman