Mel Karmazin, one of the most highly regarded executives in the media industry, resigned suddenly as the No. 2 executive at Viacom Inc, the media conglomerate that owns CBS and MTV.
He was replaced by two senior Viacom executives, CBS head Leslie Moonves and MTV chief Tom Freston, the company announced Tuesday. The moves clear the way for either Freston or Moonves to succeed Sumner Redstone, who is 81 years old, as CEO.
Redstone agreed to step down as CEO within three years and to designate a successor sometime before then, the company said. Given years of rumored friction between Redstone and Karmazin, it was not clear that Karmazin, 60, would have eventually succeeded Redstone.
Redstone, speaking in a conference call with Wall Street analysts, said it was "extremely likely" that he would be succeeded by either Freston or Moonves. While Viacom will suffer a loss of talent with Karmazin's departure, the moves help clarify the company's succession strategy -- a topic investors have been pressing the company about.
Karmazin said in an interview that the persistent concerns among investors about his relationship with Redstone were not serving his interests or those of the company.
"I was naive enough to think that if I signed a new contract a year ago that all of this Mel-Sumner stuff would disappear," Karmazin said. "I thought it was time to leave."
Karmazin declined to comment about his relationship with Redstone.
Redstone has dismissed persistent concerns that he had a rocky relationship with Karmazin. However, he also acknowledged on the call that Karmazin did not discuss his decision to resign with Redstone directly. Instead, Redstone said he learned of Karmazin's decision through another executive, whom he did not name.
Speaking with analysts, Redstone said Karmazin left because of "frustration" with the company's sagging stock price and issues related to the radio division, which has been struggling.
In a separate conference call with reporters, Redstone parried several other questions about the reasons for Karmazin's departure.
"He just decided he was better off going in another way," Redstone said. "Mel was frustrated about something -- I hope it wasn't about me."
Investors have been pressing Viacom to clarify its plans for succession, especially given Redstone's age.
Karmazin, who became the head of CBS Corp before it merged with Viacom in 2000, was highly regarded in the industry and on Wall Street.
He worked his way up through the ranks in the radio business, and is known to be close to several of Viacom's leading radio personalities including Howard Stern and Don Imus. Imus broke the news of Karmazin's departure Tuesday morning on a show broadcast by MSNBC.
Redstone suggested that Viacom's new management team would consider getting rid of the radio business, saying the company would have a "hard look" at that operation as well as other assets.
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