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Viacom Triumvirate Is Restored

In a bid to reinvigorate the media giant, Redstone enlists deal makers Dauman and Dooley, veterans from the company's heyday.

September 06, 2006|Charles Duhigg | Times Staff Writer

After Viacom Inc. Chairman Sumner Redstone orchestrated the acquisition of CBS Corp. in 1999, his most trusted lieutenants, Philippe Dauman and Tom Dooley, told him they were leaving.

But, Dauman said reassuringly, "We'll both be around anytime you want us," Redstone recalled in his autobiography.

On Tuesday, Dauman and Dooley stayed true to their word. The veteran deal makers answered Redstone's call to help him revive the sagging fortunes of the Viacom media conglomerate he controls, with Dauman assuming the chief executive role from the ousted Tom Freston and Dooley named chief administrative officer, a new post.

For Redstone, enlisting Dauman, 52, and Dooley, 49, restores the triumvirate that led Viacom during its heyday in the 1990s, when the company put together a string of multibillion-dollar acquisitions that included movie maker Paramount Pictures Corp., video chain Blockbuster Inc. and CBS.

"We saw the best days of Viacom," Redstone said in a conference call with analysts. "Not many people tripled their stock price in those years."

Viacom today owns such assets as MTV Networks Co., Comedy Central and Nickelodeon Networks, after spinning off Blockbuster and being severed from CBS at the start of the year.

In naming Dauman and Dooley, Redstone is seeking to address what he felt was a lack of aggressiveness by Freston in pursuing acquisitions such as MySpace.com, which was scooped up by Rupert Murdoch's News Corp.

Redstone, who built his empire deal by deal, hopes his moves will get Viacom back in the game.

"These guys conjure up some nostalgia for Viacom's glory days," said Aryeh Bourkoff, a media analyst at financial services firm UBS. "But they also bring needed skills. Dauman knows how to get deals done. Redstone wants Viacom to be more opportunistic, more nimble about acquiring assets. And he wants people there he knows well."

Dauman and Dooley lately have operated a media-focused private equity firm, DND Capital Partners, which holds investments in the Tennis Channel and Si TV, an English-language, Latino-oriented cable network. They rejoined Viacom's board this year.

Dauman, a lawyer, met Redstone when the mogul needed legal advice in his 1987 acquisition of Viacom, which then owned cable channels and systems. Dauman later held several posts with the company, including general counsel, head of strategic transactions and, from 1987 through 2000, director.

"I have a long history at Viacom and I love the company," Dauman said in an interview Tuesday, adding that he hoped to instill "a very entrepreneurial culture."

Dooley represented Viacom to Wall Street as an executive vice president, and later served as a board member from 1996 to 2000. He is expected to try to improve communication with investors -- another area in which Redstone found fault with Freston's performance.

Tuesday's action was reminiscent of Redstone's abrupt 1996 firing of CEO Frank Biondi. Redstone had criticized Biondi for failing to expand fast enough internationally. He named himself as Biondi's replacement, moving Dauman and Dooley into key posts under him.

What is unclear is how Dauman and Dooley will fare as managers. Although both have strong reputations for making deals, neither has significant experience running a company.

"Philippe is a brilliant lawyer, but he's not an operator," said a former Viacom executive who requested anonymity because of the situation's delicate nature. "But Sumner has never been interested in how the company works day to day. He likes deals and Wall Street."

Others said the two's lack of operational experience may not be significant, given the team that Freston left behind.

"On the MTV Networks side, there's a deep bench of quality people," another former Viacom executive said. "MTV is being run by creative people who have been there for years. They don't need a lot of management right now. Paramount is in trouble, but Sumner feels like he knows who to ask if he wants to hire new people. So having a manager at the top isn't as important right now as having someone who is doing aggressive deals."

The biggest thing Dauman and Dooley have going for them may be their close relationship with Redstone, as well as their willingness to let the 83-year-old mogul take the spotlight. At one point in the 1990s, Dauman was designated to be interim Viacom chairman in the event of Redstone's death and also would have been executor of his estate.

"Philippe is brilliant, but he is also very much the guy who makes it clear he won't outshine Sumner," said a former Viacom executive. "These guys aren't the kind to toot their own horns. There's no anecdotes about them. They are Sumner's guys, and everyone knows that. Most importantly, Sumner knows it."

In his memoir, "A Passion to Win," Redstone made it clear that he longed for the days when the two men worked at his side.

"I enjoyed the freedom [Dauman and Dooley] took in popping into my office and I enjoyed walking down the hall into theirs," he wrote.

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charles.duhigg@latimes.com

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