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Tuesday, September 05, 2006

Viacom: It Does Not Matter Who Is CEO

Stocks: (VIA)(CBS)

Viacom's board axed Tom Feston as CEO. The board was unhappy with the stock price and the pace of acquisition, according to the WSJ.

Well, meet the new boss, same as the old boss. Viacom's stock is down over 10% this year to $34.68. The stock is down about 6% today. Because, no matter who has the title, Sumner Redstone runs the company.

If Feston was such a liability, Wall St must wonder why the stock would fall as he leaves. It is simply because Redstone is still there, and his decisions have lead to the stock's drop. Feston was a nice No. 2, but that is all.

Redstone has stayed too long at the fair. The other half of his media empire, CBS, has had a lackluster performance. Les Moonves, the CBS CEO, is no more independent that Feston was, so the prices of both stocks can he laid at Redstone's feet.

CBS and Viacom both suffer from "old media" disease. Cable channels like MTV, television networks, and studios are not hot commodities on Wall St. Looking at News Corp, most of the publicity the company receives is for its gigantic online operation, MySpace, which claims to have 100 million registered users.

If Viacom has made progress on the internet, it is a minor part of its operations. And, Mr. Redstone will either fix that or keep replacing "CEOs".

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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