The Lion In Sumner

• Share

Executives at the MTV networks stood and roared their approval at a budget meeting last November when Sumner Redstone, chairman and CEO of parent company Viacom, pledged $30 million of corporate cash to launch Logo, a gay channel that the MTV brass had regarded as a top priority. Under Viacom president and heir apparent Mel Karmazin, the channel had been delayed. But at this meeting, attended by Karmazin, Redstone openly said to MTV chief Tom Freston, "You want to do it? You have the money." Karmazin was silent. "It was a dramatic moment," Freston recalls. "All of a sudden, we got something we hadn't expected." The new channel is set to debut early next year.

This wasn't the only time Redstone took the lead in orchestrating a shift toward bigger risks on the content side of Viacom's media empire. At a meeting this year with executives at Viacom's Paramount Pictures, with Karmazin present, Redstone stunned his team with a commitment to bankroll more of the big-budget films that studio heads love but that Karmazin loved to avoid. The divide over how far to wade into expensive movies and risky programming was not gaping. Karmazin says he was eager, for example, to launch the gay network. But things weren't moving fast enough for Redstone. Ultimately, Karmazin realized he would never really run the company, and he last week announced his resignation.

Redstone, 81, was quick to promote to co-president both Freston, 58, and Leslie Moonves, 54, who ran CBS, filling the vacancy left by Karmazin, 60. Redstone said he would finally call it quits within three years, setting up a horse race for the top job at Viacom, a la GE after Jack Welch retired in 2001. Critical to Redstone, Freston and Moonves are dyed-in-the-wool content guys. Freston, a free-spirited music lover who has served on the board of the Rock and Roll Hall of Fame, engineered the phenomenal success of MTV. Moonves, a hard-charging executive, has turned CBS Television into the top-rated network. Left out was Jonathan Dolgen, 59, chairman of Viacom Entertainment Group, who resigned a day after Karmazin. "My emphasis is on creativity," Redstone tells TIME. "You have to invest and not just be concerned with the next quarter."

Reports of sniping between Karmazin and Redstone began surfacing almost immediately after the media titans joined forces with the merger of CBS and Viacom in 2000. Even Karmazin's new contract, signed just last year, didn't put an end to constant rumors of feuding. But in contrast to Redstone's creative leanings, Karmazin's focus was on running a lean operation, and by last month Karmazin had evidently tired of Redstone's upstaging him. Karmazin denies any material conflicts and says he resigned because "there was too much about Mel and Sumner, and I didn't think it would go away." He says he was concerned that press scrutiny of their relationship was hurting the company's stock price.

Karmazin's departure wasn't the blow it once would have been. One analyst rushed out a report titled "Mel Who?", and the stock barely budged. Just a few years ago, Karmazin was a Wall Street darling, highly prized as a tough, budget-minded operator who could make the free-spending creative forces at Viacom toe the line. But his star faded as Viacom consistently fell short of financial targets.