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Tom Freston, who built MTV into a global entertainment powerhouse, was removed on Tuesday as chief executive of its parent company, Viacom, amid shareholder frustration with the cable television group’s awkward transition to the digital age.
Sumner Redstone, chairman of Viacom and its largest shareholder, said the board had begun to mull over a management change about two months ago, citing the weak performance of its shares, its relationship with Wall Street analysts and a belief it had lost ground to other competitors in digital media.
One of the sorest points was Viacom’s failure last year to acquire MySpace, the social networking site that was snapped up by Rupert Murdoch’s News Corporation for $580m, and has since become the spearhead of its internet strategy.
“We bought a lot of little things and you can add it all up, but it’s not MySpace,” Mr Redstone said, noting that the start-up company had been “sitting out there for a long time” before News Corp came calling.
The decision, he added, was not related to any internal dissension over his public dumping two weeks ago of actor Tom Cruise, who had a long-time production deal at Viacom’s Paramount film studio.
Mr Freston is to be replaced by Philippe Dauman, who was Viacom’s deputy chairman from 1996 to 2000, and has since run a private equity firm, DND Capital. Thomas Dooley, who was also a deputy chairman at Viacom before co-founding DND, will assume the newly created position of chief administrative officer.
In an interview on Tuesday, Mr Dauman said he did not plan a major shift at Viacom, but would push the company to become more entrepreneurial.
“We have the right overall strategy. What I want to do is accelerate it,” he said.
Mr Freston’s firing comes eight months after Mr Redstone split Viacom from CBS in a high-profile bid to boost the shares at both companies.
“Viacom was supposed to be the growth company and CBS was supposed to be the slow-growth company. So something was astray,” Mr Redstone said.
Media stocks, in general, have been lacklustre in recent years as investors fret over an uncertain transition to a new era of digital distribution.
While Viacom has struggled, other media companies, such as News Corp and Walt Disney, have begun to gain favour on Wall Street because their digital strategies are perceived to be more coherent.
Mr Freston, a former advertising executive and entrepreneur, was one of the original founders of MTV 25 years ago, and oversaw the “I want my MTV” marketing campaign.
In a statement yesterday, Mr Freston said he had “every confidence” that Viacom would prosper under Mr Dauman, and thanked his colleagues.