As she seeks to combine CBS and Viacom into a single company, media mogul Shari Redstone risks losing her most talented executive, whose leadership could be critical to ensuring the proposed merger succeeds.
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Shari Redstone, Vice Chair of CBS and Viacom and Co-Founder of Advancit Capital, speaks during the New York Times DealBook conference in New York, Nov. 10, 2016.
Such is the difficulty facing Redstone. Her long-time friend and business ally, powerful CBS chief executive Les Moonves, has emerged as one of the biggest obstacles to a potential CBS-Viacom tie-up, according to people familiar with the matter. Concerns are that his objections could either doom the transaction or that he might not lead the new entity, the people said.
Moonves is chafing at Redstone's insistence on installing Viacom's CEO as his second-in-command and likely successor of a merged company, the people say. CBS and Viacom announced in February that they were exploring a potential deal and in recent weeks have begun negotiations.
At stake is the future of Redstone's media empire, which is facing pressure to scale up at a time when competitors are gobbling rivals to stay relevant. Her family's company, National Amusements, controls both CBS and Viacom. Redstone favors merging the two to gain size and leverage in negotiating better programming prices from traditional cable and satellite customers, and to better compete with emerging players such as Netflix, the people said.
But she may have to decide if she is willing to do it without her top captain to steer the ship.
Redstone wants Moonves to run the combined company, according to the people familiar with the situation, all of whom wished to remain anonymous because discussions are confidential. But she is contemplating moving forward without him at the helm if no agreement can be reached to keep him aboard, said one of the people close to the situation.
With over 25 years at CBS and more than a decade as CEO, Moonves has proven adept at navigating a difficult media landscape. Under his leadership, CBS has been a top performer in its sector with some of the most popular shows on television. CBS stock is up over 116 percent on his watch. At 68, Moonves is an industry legend and still at the top of his game.
Still, Redstone is concerned about succession planning, the people said. She wants 54-year-old Bob Bakish, whom she chose two years ago to lead a turnaround at Viacom, to be president and chief operating officer of the combined company; Bakish would report to Moonves, with the expectation of succeeding him, the people said.
"Shari values Les, but we are now in a world of: 'what happens after Les?"' said one of the people close to the situation.
Redstone, Moonves and Bakish declined to comment through spokespeople. Viacom and CBS declined to comment.
Moonves, meanwhile, wants his long-time lieutenant, CBS chief operating officer Joseph Ianniello, to take the No. 2 spot at the combined company, according to people familiar with his thinking.
The men have forged a successful working relationship that could prove key to melding two very different entities. Moonves and Viacom's Bakish, in contrast, have met just a handful of times, according to people familiar with the situation.
"Les is saying 'I want to make this successful. ..but let me have my team,"' one of the people said.