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Media Firms Will Need Moguls Who Can Succeed

Finding a top executive who can navigate Hollywood and Wall Street is a challenge.

June 02, 2004|Meg James and Richard Verrier | Times Staff Writers

It's hard to find a good media mogul these days.

That's the predicament faced by three of the big five media conglomerates, a vacuum highlighted by Tuesday's resignation of Viacom Inc. President Mel Karmazin and the graying of the industry's entrenched titans.

Viacom Chief Executive Sumner Redstone -- who battled with Karmazin over control -- is 81. Rupert Murdoch, chairman of News Corp., is 73. And although Walt Disney Co. Chief Executive Michael Eisner is only 62, his contract expires in two years and dissident shareholders have been calling for him to leave sooner.

"This is a real challenge for these very diversified media companies," said Lowell Singer, a media analyst at investment banking firm SG Cowen. "There are very few executives with experience in the myriad of businesses that these companies now compete in. There's not a long list of executives" positioned to replace the incumbents.

The top job is particularly hard to fill, industry observers say, because a successful executive must be adept at navigating two vastly different worlds: the insular and ego-driven environment of Hollywood and the bottom-line-obsessed culture of Wall Street.

"How they resolve the succession issue is going to shape the strategic direction of the industry," longtime entertainment industry analyst Harold Vogel said. "Do we move toward more acquisitions? Do we do more international business? ... That will depend on whoever is selected to run these companies."

To be sure, not every media giant is being roiled by questions of succession. Bob Wright, chairman and chief executive of General Electric Co.'s newly formed NBC Universal unit, is 61 and says he's not going anywhere anytime soon. At Time Warner Inc., veteran media executive Jeffrey Bewkes, 54, is considered by many to be the eventual heir apparent to CEO Richard D. Parsons, 56.

As for Viacom, the race is on there between two men: CBS Chairman Leslie Moonves, 53, and MTV Networks Chairman Tom Freston, 58. Both were named co-chief operating officer of the parent company Tuesday, setting the stage for a competition to eventually replace Redstone, who pledged to step down in three years.

Also poised to play a prominent part at Viacom is Redstone's 50-year-old daughter, Shari. On Tuesday, Redstone said his daughter would not assume an operational role at the company.

But many, noting that Redstone and his family control about 70% of Viacom's voting shares, believe that she could wind up as chairwoman of the board.

It's a far different scenario at News Corp., where Murdoch has been grooming his sons to ultimately run the company.

Lachlan Murdoch, 32, is now the third-ranking executive of News Corp. -- deputy chief operating officer.

James Murdoch, 31, was last year named chief executive of News Corp.'s BSkyB satellite television operation in Britain despite grumblings of nepotism from influential investors.

This suggests that News Corp. President and Chief Operating Officer Peter Chernin, 53, will ultimately be left out in the cold. Sources say he's been negotiating a new contract for months -- but hasn't yet signed anything because he wants an escape clause that would let him leave News Corp. to run a rival company, should the opportunity arise.

For his part, Rupert Murdoch downplayed the idea that there was any friction with Chernin. The contract talks, he told reporters last month, were "very far advanced, and it's now in the hands of the lawyers."

Besides, Murdoch is quick to point out that he's not about to head for the exits. He has survived prostate cancer, eats healthfully and regularly works out, a regimen that includes boxing.

He has two children under the age of 3.

"I intend to be around as long as my brain holds out, and my mother is doing very well at 95," Murdoch told BusinessWeek this year.

Meanwhile, succession continues to be a particularly hot-button issue at Disney.

The board has been under pressure to name a successor to Eisner since shareholders, unhappy with his leadership and the company's long-term financial results, withheld 45% of the votes cast during his reelection to the board this year.

Eisner was stripped of his chairman's title after that backlash.

On Tuesday, former Disney board members Roy Disney and Stanley Gold, who have spearheaded a campaign to oust Eisner, embraced the notion of Karmazin becoming the company's next CEO. They called the 60-year-old Karmazin "a world-class executive who has both the right credentials and experience" and said "he should definitely be on the Disney board's short list."

But Disney quickly slammed the door on the notion that Karmazin would replace Eisner -- at least right now. In a statement, Disney Chairman George J. Mitchell asserted that the board "has complete confidence in the current management."

That said, Disney's board has begun compiling a list of internal and external candidates to succeed Eisner one day. A source close to the situation said that Karmazin was on the list, along with Chernin.

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