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TURMOIL AT VIACOM

Grey's Job Picture Appears Murky

The Paramount chief receives another jolt when he loses his most powerful supporter.

September 06, 2006|Claudia Eller | Times Staff Writer

For Paramount Pictures Chairman Brad Grey, the firing of his boss, Tom Freston, is the most unsettling development in his already turbulent 18-month run at the studio.

Although Grey, 48, has received a vote of confidence from his new boss, Viacom Chief Executive Philippe P. Dauman, as well as from Chairman Sumner M. Redstone, he has nonetheless lost his strongest advocate at the company.

And, as anyone in Hollywood knows, assurances from the corporate brass don't guarantee job security. Indeed, Redstone declared to the Wall Street Journal in July that he could envision "no circumstance" under which he would oust Freston.

"Brad Grey looks more vulnerable and more exposed today than he did yesterday," said media analyst Harold Vogel. "He was Tom Freston's pick."

At the very least, the move is destabilizing for the movie studio and its top executive team.

Freston, who built Viacom's MTV into a worldwide cultural icon, is popular among Hollywood's creative community. A savvy dealmaker, Dauman is more of a button-down corporate executive who is expected to be much more focused on the bottom line.

Pali Research analyst Richard Greenfield predicted changes in the entire Viacom family.

"You're going to see more changes at MTV and at Paramount Pictures," he said. "They've got to streamline the company and make sure they've got the right executives in their seats."

Merrill Lynch analyst Jessica Reif Cohen said in a report that "all changes in senior leadership have the potential to disrupt operations as they ripple through an organization."

"However, the impact is likely to be greater than usual at Viacom given the length of Freston's tenure and his unconventional choices for his management team."

That includes Grey, a former top talent manager who had never run a movie company before Paramount.

The Freston firing comes as Paramount is already reeling from Redstone's surprise public dismissal last month of megastar Tom Cruise, who had based his production company at the studio for 14 years.

Freston and Grey were blindsided by Redstone's blunt criticisms of the movie star and his off-screen antics, and were both said to be furious at being undermined, say sources close to the matter.

Those sources said that Freston was particularly harsh in expressing his anger to Redstone over the matter, which may have hastened his departure.

"It's safe to say that the Cruise incident could have been the straw that broke the camel's back," said Anthony Valencia, media analyst with TCW Group. "It undercut him [Freston] in an industry in which relationships are key and in an area of the company that they are frantically trying to rebuild."

Redstone, in an interview Tuesday, disputed any suggestion that the Cruise incident had anything to do with Freston's undoing. "That had nothing to do with this," he said.

Redstone also said he had spoken with Grey, as well as MTV Networks chief Judith McGrath, and did not anticipate any change in their status at Viacom.

"I don't see any chance of any of these people leaving," Redstone said. "Paramount is in the early stages of a turnaround and Brad said he would continue the turnaround he had in progress."

A Viacom spokesperson confirmed that Dauman was the first to call Grey at home Monday night to deliver the news that Freston had been fired.

On Tuesday, Dauman reiterated his strong support of Grey, singling out his aggressiveness in luring DreamWorks SKG to the studio after NBC Universal balked at buying the company.

"Brad is doing terrific things at Paramount," he said, "from the DreamWorks acquisition, which I think was brilliantly executed, to the talented team he has assembled. He's made great strides at Paramount. I like his strategy and I look forward to working with him."

Dauman, Redstone and Vice Chairman Shari Redstone, the influential daughter of the chairman, all personally told Grey they were pleased with his performance and urged him to stay.

Grey, who has no "key man" clause in his contract triggered by Freston's departure, is not considering leaving at this time, according to a source familiar with his thinking.

However, he was clearly shaken by Freston's firing, discussing the surprise development with former Warner Bros. Chairman Robert Daly, a close advisor and friend, at a long-planned lunch Tuesday at Morton's. Daly is a consultant to Viacom who speaks frequently with Grey and Freston. Should Grey leave, one potential scenario would be for former Universal Studios chief Stacey Snider, now running Paramount's DreamWorks unit, to take over.

Before meeting Daly for lunch, Grey had a pep talk Tuesday morning with five of his top executives--marketing, distribution and home entertainment chief Rob Moore, President Gail Berman, Chief Financial Officer Frederick Huntsberry, Snider and John Lesher, head of specialty label Paramount Vantage.

A source close to Grey said the studio chief expressed his sadness about Freston's firing and also talked about his confidence in Paramount's future.

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