CEO Leslie Moonves resigns from CBSBy Meg James
Los Angeles Times
September 09. 2018 8:44PM
LOS ANGELES — Bowing to pressure brought on by a sexual harassment scandal, CBS Corp. Chairman and Chief Executive Leslie Moonves resigned late Sunday, marking a stunning fall from grace for one of Hollywood’s most respected entertainment executives.
CBS said that it and Moonves will donate $20 million to organizations that support the #MeToo movement and equality for women in the workplace. The donation, which will be made this week, has been deducted from any severance benefits that might have been due to Moonves.
Moonves’ most recent contract, which was due to expire in 2021, made him eligible to receive an exit deal valued at around $180 million — but that is now in doubt. The CBS board plans to wait to negotiate a financial settlement until the conclusion of an investigation by two prominent law firms into allegations of misconduct.
“Leslie Moonves will depart as Chairman, President and Chief Executive Officer effective immediately. Chief Operating Officer Joseph Ianniello will serve as President and Acting CEO while the Board conducts a search for a permanent successor,” CBS said in a statement Sunday afternoon.
Negotiations over the terms of Moonves’ departure accelerated following a new report Sunday in the New Yorker magazine, which detailed six women’s allegations of sexual misconduct involving him in the 1980s and 1990s. Now at least 12 women have alleged that Moonves made inappropriate advances toward them.
In addition, CBS’ board will get a makeover. Independent board members struck a separate settlement with the company’s controlling shareholder family — the Redstones. That deal will dramatically overhaul CBS’ board by installing six new members, including several who are not aligned with the Redstone family.
The Redstone family, through its investment firm, National Amusements Inc., controls nearly 80 percent of the voting stock of both CBS and a second media company, Viacom Inc. As part of the truce, National Amusements will agree not to pursue a merger between CBS and Viacom for at least two years. CBS’ board also will be allowed to entertain offers from other prospective buyers — a condition that should immediately hang a for-sale sign on CBS.
Moonves’ departure was not unexpected. The 68-year-old executive has been negotiating a settlement with independent CBS board members in recent weeks. But talks heated up in the wake of the latest allegations contained in the New Yorker article, which included the account of a former Lorimar television executive, Phyllis Golden-Gottlieb. She described being attacked by Moonves in the mid-1980s when the two were colleagues at the prolific TV studio.
Golden-Gottlieb filed a report with the Los Angeles Police Department last year, and police found her allegations to be credible, according to law enforcement sources. She described two incidents, including one in which she said Moonves demanded that she perform oral sex on him. In the second incident, Moonves was angry over a work matter and allegedly slammed her against a wall. But prosecutors declined to bring charges because the incidents were more than 30 years old, and the statute of limitations had expired.
“CBS takes these allegations very seriously,” the network said Sunday in a statement. “Our board of directors is conducting a thorough investigation of these matters, which is ongoing.”
CBS board member Bruce Gordon has been leading the efforts to hammer out a settlement with Moonves as well as to end a bitter lawsuit with National Amusements.
Joseph Ianniello, CBS’ chief operating officer, is expected to be elevated to acting CEO. Ianniello has been with CBS, and its corporate predecessor Viacom, for 18 years. He is deeply familiar with the company’s finances — and has helped to plot the company’s business strategy — but he lacks relationships in Hollywood, where Moonves had a strong reputation for being one of the industry’s best programmers.
CBS has been considering bringing in a high-level entertainment executive from outside CBS to oversee programming executives in Los Angeles, according to two other people familiar with the matter.
Moonves becomes the highest-profile media executive to see his career collapse from the weight of sexual harassment allegations that surfaced in the #MeToo era. Articles in the New Yorker, authored by investigative reporter Ronan Farrow, in the last six weeks contained devastating accusations. Farrow’s first report detailed claims of an actress, Illeana Douglas, who said Moonves tackled her at the end of a business meeting in his CBS office in 1997. Sunday’s article in the New Yorker detailed allegations that Moonves demanded massages from women or forcibly kissed them.
Moonves told the New Yorker that some of the encounters described in the Sunday article were consensual. A spokesperson for Moonves was not immediately available for comment Sunday.
“CBS has a lot of work to do,” said Diane Doolittle, a trial lawyer with the Los Angeles law firm Quinn Emanuel. “Like everyone, I am shocked, saddened and disgusted by the nature of the allegations, the number of women and the force of the violence that is being alleged.”
The allegations against Moonves came to light as CBS was struggling to mop up a separate scandal at its vaunted CBS News division. Longtime PBS personality and CBS morning news host Charlie Rose was ousted late last year following allegations by women that he acted inappropriately. In addition, “60 Minutes” executive producer Jeff Fager also has been accused of boorish behavior and tolerating inappropriate conduct at the storied newsmagazine. An outside law firm has been investigating the CBS News culture since March.
“These allegations speak to a culture of toxic complicity at CBS, where the safety of women was continuously ignored to protect the careers of powerful men and the corporation,” a representative of the Times Up movement said in an email Sunday. “The CBS Board of Directors has an obligation to move swiftly and decisively to create a safe work environment for all and rid the company of this toxic culture.”
The allegations came at an inopportune time for Moonves by diminishing his clout as well as the leverage of CBS’ independent board members who had taken the extraordinary step of suing the company’s controlling shareholder, Shari Redstone. Redstone, the daughter of patriarch Sumner Redstone, has been agitating for changes atop CBS for much of this year.
But the agreement structured between CBS and National Amusements is intended to protect the CBS board from meddling by the Redstones.
Moonves and other independent board members were attempting to strip the Redstone family of its voting control, but now the independent board members are poised to settle that case, too.
That lawsuit was headed for an October trial, which gave urgency for the settlement talks.
Moonves has been the face of CBS since 1995. He took over a floundering television network and steadily built it into a juggernaut that attracts more viewers than any other U.S. TV network. Since 2006, Moonves has served as chief executive of CBS Corp., which, in addition to the broadcast network, owns a string of television stations, a growing television production studio, the Showtime premium channel, the Simon & Schuster publishing house and a 50 percent stake in the CW network.
When Moonves took over CBS, the network was on the ropes in the ratings. He steadily rebuilt the network with a string of hits, including “Everybody Loves Raymond,” “Survivor,” “CSI: Crime Scene Investigation,” “NCIS,” “Two and a Half Men,” “The Amazing Race” and “The Big Bang Theory.”
He was elevated to CBS Corp. chief executive in 2006 when then-controlling shareholder Sumner Redstone divided his empire into two publicly traded companies, CBS and Viacom. Moonves, in the last decade, reshaped the company by launching streaming services, building a CBS digital product, and shedding mature businesses such as the billboard division and radio stations.
Moonves also maintained the distinction of being one of America’s highest-paid CEOs. Last year, he received a compensation package worth $69.3 million.
He acknowledged mistakes following the first New Yorker article, saying he recognized “there were times decades ago when I may have made some women uncomfortable by making advances.” But he denied harassing anyone and also pointed to his record of promoting women to high-profile roles.
Several prominent female executives — film executive Terry Press, advertising sales chief Jo Ann Ross along with Moonves’ wife and CBS talk show host, Julie Chen — rallied around Moonves in a show of support following the initial article. Some of his supporters called for a more tempered response, noting the incidents that allegedly occurred were several decades ago when cultural mores tolerated boorish behavior.
But the damage was done. Three days after the article was published, one of the network’s biggest stars — Stephen Colbert — told his “The Late Show” audience that “accountability is meaningless unless it’s for everybody, whether it’s the leader of a network or the leader of the free world.”
CBS’ board of directors last month hired two high-profile female attorneys from powerhouse New York law firms to investigate the allegations of sexual harassment and examine the company’s workplace culture, including within the CBS News division. Former Securities and Exchange Commission Chair Mary Jo White from the Debevoise & Plimpton law firm was brought in, along with Nancy Kestenbaum of Covington & Burling.
The lawyers have interviewed dozens of people who work at CBS and former executives and assistants who left long ago, according to several knowledgeable people.
Hollywood, and other industries, have been forced to account for years of turning a blind eye to sexual harassment and discrimination following allegations that movie producer Harvey Weinstein had sexually abused dozens of women. In the case of Moonves, there were fewer allegations of misconduct, but the stakes were higher because he managed a publicly traded company, which must protect the interests of shareholders.
CBS’ stock is down 10 percent this year and board members had important business interests to consider, such as maintaining its relationships with the advertisers that provide a huge chunk of CBS’ annual revenue.
The quick turn of events has been a gut-punch for Moonves and his tight-knit team. “This has been a tough week at CBS,” CBS Entertainment President Kelly Kahl acknowledged to writers in early August at the Television Critics Association gathering in Beverly Hills. “Leslie has been an excellent boss and a mentor for a long time. ... At the same time, we must respect the voices that come forward. All allegations need to be — and are — being taken seriously. ... If you look up and down the halls at CBS, you’ll find a very safe environment.”
Moonves’ departure will give a boost to Shari Redstone, who now oversees the family’s voting stake in CBS and serves as vice chair of the company. She has clashed with Moonves over her desire to reunite CBS and Viacom, which Moonves and a majority of the CBS board were fighting to block.
The dispute flared in mid-May when the CBS board sued the Redstone family and National Amusements in an attempt to dilute their interest in the venerable broadcasting company. Redstone and National Amusements filed a countersuit. But the tensions can be traced to Redstone’s attempt to reunite CBS and Viacom.
CBS independent board members balked at the move, fearing that Viacom’s struggling cable television channels, such as MTV and Comedy Central, would weigh down CBS’ business prospects. Then media reports began circulating that Redstone was looking to replace several board members. In legal papers, the family has said it would advocate a merger only if it made sense for both companies.