CBS CBS Corp

By Joe Flint and Sarah Rabil 

Viacom Inc. Chief Operating Officer Tom Dooley announced a settlement has been reached to end the drawn-out power struggle at the media giant that involves the exit of Chief Executive Philippe Dauman and the expansion of the company's board.

In a memo to employees Friday evening, Mr. Dooley confirmed he would become interim president and CEO through September, which is when Viacom's fiscal year ends. Mr. Dooley said he and the board will have made a decision on succession plans by then.

The boards of Viacom and National Amusements Inc., through which 93-year-old Sumner Redstone controls an 80% voting stake in the media company, have approved the agreement to settle their dispute, and the final deal is expected to be signed shortly, Mr. Dooley wrote.

Mr. Dauman, who has been CEO for almost a decade, is slated to receive an exit package valued at about $72 million and will remain as nonexecutive chairman until Sept. 13.

Under terms of the deal, the two sides will cease litigation over control of Viacom and National Amusements. Mr. Dooley confirmed five directors nominated by National Amusements will join Viacom's board.

Those directors include Thomas May, chairman of Eversource Energy, who is expected to be named chairman after Mr. Dauman leaves that role, according to a person familiar with the matter. Three Viacom directors will depart the board after the annual meeting under the deal, people familiar with the matter have said.

The removal of Mr. Dauman completes the ascension of Mr. Redstone's daughter Shari Redstone, a Viacom director and president of National Amusements. Often at odds with her now-ailing father, she is poised to take over the driver seat in his empire.

Ms. Redstone will now have far more influence over the reconstructed boards of Viacom and National Amusements than in the past. She also will have effective control of the seven-member trust her father established to manage his assets after he dies or is declared incapacitated.

In selecting Mr. Dooley as chief executive, National Amusements is, at least for now, going with someone inherently familiar with the inner workings of Viacom. Mr. Dooley has ties to Viacom that date back to 1980, and he played a key role alongside Messrs. Redstone and Dauman in most of the company's major acquisitions, including Paramount Communications and CBS Corp.

The 59-year-old, who is well-regarded on Wall Street, is considered a top candidate for the full-time CEO role, people familiar with the matter have said. But Mr. Dooley will have a short period to show he has a plan to right the ship. Viacom's profits have been falling as ratings have declined because of cord-cutting, cord-shaving and the rise of streaming competitors. Paramount Pictures has struggled at the box office, and Viacom's stock price is down more than 40% in the past three years.

In addition, Mr. Dooley will have to convince the company that he is committed to creativity and risk-taking. Under Mr. Dauman, many top creative executives have left Viacom complaining that a company once known for innovation had become staid and complacent.

In his memo to staff, Mr. Dooley said, "I truly believe that Viacom's greatest accomplishments are still ahead. It is a privilege and honor to be your CEO and I pledge to do everything I can to build on all your hard work and success."

Mr. Dooley had kind words for Mr. Dauman and acknowledged his contributions to the company in the decade since it split from CBS Corp. "During his 10 years as CEO, Philippe supported and nurtured our brands and empowered our creative and business leaders every step of the way," Mr. Dooley wrote. "He invested billions of dollars to fund new original content, expanded our distribution footprint in the U.S. and around the world, and bought and built thriving new businesses."

As part of the settlement, Mr. Dauman will have a chance to present the board with plans to sell a stake in Paramount Pictures, people familiar with the situation say.

What the settlement appears unlikely to resolve, once and for all, is the status of Mr. Redstone, whose mental competency has been a matter of debate throughout the ordeal. Trials had been slated for this fall in Delaware and Massachusetts over National Amusements' ouster of Viacom board members and Mr. Redstone's dismissal of Mr. Dauman and another Viacom director from his trust. Those trials could have forced testimony or medical examinations to clarify Mr. Redstone's condition for investors and observers.

With the leadership battle resolved at Viacom, speculation will likely heat up about the future of CBS, which is also controlled by National Amusements. Viacom acquired CBS in 2000 and spun it off in 2006. Some analysts and Viacom investors have pushed for the two companies to recombine.

CBS Chief Executive Leslie Moonves has resisted the idea in the past and isn't sold on it now, according to people familiar with his thinking. The company is doubtful a deal could be reached that could pay CBS shareholders an adequate premium, the people said.

Last month on a call with analysts and investors, he declined to answer a specific question about Viacom but reiterated that, "we feel very complete, we have everything we want."

Amol Sharma contributed to this article.

Write to Joe Flint at joe.flint@wsj.com and Sarah Rabil at Sarah.Rabil@wsj.com

(END) Dow Jones Newswires

August 20, 2016 02:47 ET (06:47 GMT)

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