Leslie "Les" Moonves, president and chief executive officer of CBS Corp., speaks at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 3, 2017. The conference is a unique setting that convenes individuals with the capital, power and influence to move the world forward meet face-to-face with those whose expertise and creativity are reinventing industry, philanthropy and media. Photographer: David Paul Morris/Bloomberg
CBS chief Les Moonves © Bloomberg

CBS’s board said it was hiring outside counsel to investigate allegations of sexual misconduct against chief executive Les Moonves, but did not take immediate action to suspend him.

The board had spent much of the weekend discussing how to proceed after the New Yorker magazine on Friday published an article in which six women accused Mr Moonves of sexual harassment, and interviews with dozens of employees depicted a toxic culture at the company. 

Some board members questioned whether Mr Moonves should step aside while the claims were being investigated, according to people familiar with the discussions. However, after Monday’s board meeting in Los Angeles concluded, the board simply said it was “in the process of selecting outside counsel” for the investigation. “No other action was taken on this matter at today’s board meeting,” they said. 

Shares in CBS fell 5.1 per cent to $51.28 on Monday, and have dropped 10 per cent since rumours about the article surfaced on Friday. In the report, four women told reporter Ronan Farrow that Mr Moonves had forcibly touched or kissed them during business meetings, with incidents spanning from the 1980s to early 2000s. Two women said he had physically intimidated them and alleged that he had threatened to damage their careers after they resisted his advances.

The board on Monday also said it would postpone an annual shareholder meeting that had been set for August 10. 

Leslie Moonves, president and chief executive officer of CBS Corp., and Julie Chen arrive for a morning session of the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, U.S., on Wednesday, July 11, 2018. The 35th annual Allen & Co. conference gathers many of America's wealthiest and most powerful people in media, technology, and sports. Photographer: David Paul Morris/Bloomberg
Leslie Moonves with his wife Julie Chen at the Sun Valley media conference in Idaho earlier this month © Bloomberg

The independent members of CBS’s board pledged on Friday to investigate the claims and “take appropriate action, while also giving their “full support” to CBS management during the litigation process. 

However, this statement was issued before the board members had seen the article, and some members questioned over the weekend whether Mr Moonves should be suspended while the investigation is ongoing, according to people familiar with the matter.

Mr Farrow won a Pulitzer Prize for his reporting on sexual harassment by once-powerful Hollywood producer Harvey Weinstein, helping to ignite the #metoo movement.

The CBS board investigation into Mr Moonves’s behaviour comes at the same time as it is working with him over a battle with National Amusements, CBS’s controlling shareholder, over whether the company will remain independent.

Shari Redstone, the daughter of media magnate Sumner Redstone, runs the family company National Amusements, which controls CBS and Viacom. She wants to merge CBS and Viacom but Mr Moonves has been against a tie-up. CBS’s board attempted to dilute National Amusements’ 80 per cent voting stake in the company but a judge blocked the move in May.

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Several members of the CBS board have been directors for years, and 11 of the 14 members had supported the move to try to strip the Redstone’s voting rights. Ms Redstone said on Friday that she hoped the investigation would be “thorough, open and transparent”. 

Mr Moonves, in a statement to the New Yorker admitted that “there were times decades ago when I may have made some women uncomfortable” but denied claims that he had used his power to damage women’s careers.

The 68-year-old began working at CBS in 1995 and has been credited with building the network into a broadcasting powerhouse during his two decades as chief executive. CBS has been the most-watched US television channel for the past decade, thanks to hit shows such as The Big Bang Theory.

Investors and analysts contemplated the prospect of a future for CBS without Mr Moonves. Analysts at Bernstein kept their stock rating and price target for the company intact but warned “there is obviously a new, material risk to CBS shareholders that didn’t exist before. And the market value of CBS is tied closely to its management”.

The company will report its second-quarter financial results on Thursday.

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