Michael Wolff: How Leslie Moonves Went From CBS Also-Ran to Viacom's Solution (and His Next Moves)

The Hollywood Reporter

Various book proposals that have circulated among publishing houses about the endless Redstone family and Viacom debacle have generally encountered a similarly tepid response: There's no hero in the story. Everybody is reduced by it. Everybody looks bad. Ugh.

But sometimes the hero doesn't step out of the shadows until all the killing has been done.

Now Leslie Moonves takes center stage. The chairman and CEO of CBS Corp., which represents the other half of the Redstone family holdings, has so far been the don't-look-at-me figure in this drama. While his counterpart at Viacom, Philippe Dauman - always much closer to their mutual patron, Sumner Redstone - was fighting Redstone's girlfriends, and then fighting Redstone's daughter, defending and then attacking 93-year-old Redstone's competency, Moonves was remote from the fray. His most public action in the interfamily-intercompany showdown may have been, on one particularly bad day for Dauman late last spring, a very visible lunch at the head table at Michael's. There at the Manhattan media restaurant, the former actor could both innocently shrug amidst the commotion and at the same time look like the cat who swallowed the canary, as he greeted the other lunching media well-wishers.

Last week, years of playing Redstone politics that have often cast Moonves as an also-ran, suddenly elevated him to something like both king and kingmaker. It's a kind of trifecta in which he not only triumphed over Dauman, a longtime antagonist, but positioned his company and his shareholders to best the sibling rival Viacom, and also to achieve a heretofore unimaginable independence from Redstone control.

Moonves threaded the complicated CBS political needle from before Redstone's takeover in 2000 (including a purchase by Westinghouse in 1995 and then a palace coup by Mel Karmazin, whose Infinity Broadcasting had in turn been taken over by CBS). Through the merger with Viacom, through Redstone's active and imperious management years and through a constant rivalry with Viacom managers, Moonves emerged, at the time of the Viacom-CBS split in 2006, as the poor relative in the family. Viacom was to grow as a cable powerhouse. CBS, a broadcast company, was to be managed for cash as it shrank.

Read more: Viacom's Next Steps: Does CBS' Leslie Moonves Hold the Key?

But to his reputation as a gifted programmer (growing over the years into high wizardry), he added tough-guy negotiator, becoming the leading figure in the battle for retransmission fees for broadcast networks. (He would later have another epic negotiation over retrans fees in which he effectively broke Time Warner Cable, helping push it into a sale.)

Still, Dauman - previously pushed out of power, but then restored at Viacom after the split, pushing out Moonves' other rival Tom Freston - was the chosen heir. Not only did he run the preferred company, he was Redstone's personal lawyer and favored confidant, installed not only over Moonves, but over his own daughter Shari as the ultimate keeper and ruler of the Redstone legacy. Apr??s Sumner, he'd be Moonves' boss.

As Redstone aged, Dauman worked to protect his own ultimate position. He did this in what turned out to be a disastrous effort to buoy his share price in a stock buyback, and in fiercely fighting anybody who might have a claim on Redstone's favor, including two girlfriends and Shari.

Viacom, run on the basis of financial engineering and political infightings, became toxic, while CBS, keeping arm's length from the Redstones, became a Wall Street darling.

Still, Viacom's weakness presented a significant threat to CBS - a remerger at the expense of CBS shareholders. This was rumored to be Dauman's plan if he achieved ultimate control (one in which he would force Moonves out); it was the plan pushed by Viacom's shareholders; and it became Shari's ultimate solution, save Viacom with CBS stock.

But without public protestations, indeed hardly with any press ripples at all (quite extraordinary in the Redstone universe), it spread through investment and industry circles that Moonves would never do it. The negotiator, many assumed, was negotiating, but it was from a position of ever-growing strength. He merely got stronger as the Viacom debacle grew more dire. He was the sane, skilled, high-functioning leader, untainted by controversy. Everybody else was part of the insanity.

Read more: CBS-Viacom Merger Analyst: "Wall Street Wants Brad Grey's Head"

The narrative shifted from merger as the solution, to Moonves as the solution. In a world largely predicated on the fungibility of manager employees, Moonves had risen to irreplaceable proportions.

Viacom, in the six weeks since Dauman's ouster, has failed to offer a turnaround plan, and its new board, by some reports, is finding an even more desperate condition than had been imagined. It appears not even to have begun a formal search for a new CEO, with Kremlin-like rumors flying and promising even more destabilizing politics and with its interim CEO, Dauman lieutenant Tom Dooley, leaving on Nov. 15. Moonves has become the singular option.

Last week, National Amusements Inc., the Redstone family holding company, instructed the boards of both CBS and Viacom to consider joining the companies. Since this is something of an order, with the implicit mandate being that CBS will be the dominant entity and Moonves the necessary leader, it is, for Viacom, something of a distress sale. It has to be done, and it has to be done to Moonves' liking - that is, protecting and benefiting CBS' shareholders. In this, observers see a process - a one-bidder process - in which Viacom's assets are valued strictly according to their value to CBS. This will be, too, an implicit process of culling the herd - judging what parts of Viacom CBS will keep and what parts it will look to sell. Compounding the nature of the distress, it's an agreement that has to be reached quickly. That is, Viacom has to make Moonves happy fast.

The other part of doing the deal quickly is that the Redstones have to keep Moonves happy. The overriding issue in managing a Redstone company, which Redstone executives have long and unsuccessfully tried to find their way around, is the family's dual class share voting control. Where there had been the difficulties of dealing with an imperial Sumner Redstone, a dealmaker without operational interest in the media business, now there was the prospect of his daughter, with limited experience and interest in media, calling the shots - and calling them to Moonves, who, in the years of Viacom Sturm and Drang, has mostly had a free hand.

Read more: National Amusements Proposes Viacom, CBS Reunion, Cites "Substantial Synergies"

Asked to comment about discussions regarding Moonves' power in this new arrangement last week, a hedge fund manager who has unloaded his position in Viacom in favor of CBS, said, "How about absolute?"

The National Amusements letter restated the Redstones' commitment to control, but at the same time a report floated last week offered a face-saving workaround: NAI would agree to vote its shares with Moonves until his retirement.

Turning 67 this week, that could, of course, be soon. But it could also be that Moonves, part of a new generation of media executives in their 60s who see something of an ever-extending future for themselves, is just now making his breakout move.