Originally created 06/02/04

Karmazin out as president of Viacom, replaced by Freston, Moonves

NEW YORK -- Mel Karmazin has resigned as president and chief operating officer of the media giant Viacom Inc. as the company seeks to find a successor for its 81-year-old chairman and CEO, Sumner Redstone.

Two senior executives were named to replace Karmazin, MTV boss Tom Freston and CBS leader Leslie Moonves. They will run the company on a day-to-day basis and report to Redstone.

The company described the moves as part of a corporate succession plan. As part of that plan, Redstone agreed to relinquish his role as CEO within three years and identify his successor before then.

Karmazin and Redstone have reportedly clashed at various times, but that tension had appeared to have been soothed when Viacom signed Karmazin to a new three-year contract last year.

At Viacom's annual meeting two weeks ago, Redstone said he and Karmazin had never had a major disagreement. He also said the company would be making an announcement soon about its succession plans.

"We very much regret Mel's decision to resign and we wish him well," Redstone said in a statement. He said Karmazin would stay on as a consultant for two months to help with the transition.

Redstone will work with the company's board to identify a successor for him as CEO as well as other senior management posts in the company. Redstone said in a statement that Freston and Moonves are "the two leading candidates" to be the next CEO.

Investors have been pressing Viacom to clarify its plans for succession, especially given Redstone's age. Even though Redstone has voting control of Viacom through a special supervoting class of stock, he made clear in his announcement that he was working with the company's board on the succession issue.

Karmazin was highly regarded in the industry and on Wall Street for his leadership of Viacom. Karmazin worked his way up through the ranks in the radio business, and became the head of CBS Corp. before it merged with Viacom in 2000.

Karmazin did not elaborate on his reasons for leaving. In a statement, he said that "After more than 20 years with the company, for personal and professional reasons, I have decided to leave Viacom and pursue other challenges."

Freston has been chairman and CEO of the MTV Networks unit since 1987. Moonves has been chairman and chief executive of CBS since 2003 and joined CBS in 1995 as president of its entertainment operation.

In their new roles, Freston and Moonves will jointly oversee all of the operations of Viacom.


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