CBS executives and employees remain on edge as their CEO, Les Moonves, prepares for one of the most important days during his long, and mostly illustrious career: Thursday’s earnings conference call with Wall Street analysts following allegations of sexual misconduct which have jeopardized his future at the network, FOX Business has learned.
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Shares of CBS have been pounded since The New Yorker on Friday published an expose in which six women accused Moonves of sexual misconduct, the latest alleged incident occurring around 2006. One brief bright spot occurred Tuesday, when the stock reversed some earlier losses after FOX Business first reported that amid the turmoil, Moonves -- barring some last-minute change -- is still planning to speak during the company’s conference call with analysts Thursday after CBS releases second-quarter 2018 earnings.
CBS closed at $52.55 Wednesday in New York Stock Exchange Composite trading, down for the third consecutive session.
If Moonves addresses the allegations, this would mark his first public comments on the scandal after The New Yorker article. Meanwhile, people inside the management suites of CBS describe the mood at the Tiffany Network as both tense and uncertain: Moonves has been the CEO for 12 years, where he oversaw strong profits, and what has become the most-watched network for 15 of the last 16 years, according to the company.
But now following an internal investigation, Moonves could be removed from his job -- thrusting the once stable network into the type of management turmoil it hasn’t seen in years.
A CBS spokesman had no comment.
Even before The New Yorker article and its allegations were published, Moonves was testing the limits of his power. His latest initiative is wresting the company away from its controlling shareholder, National Amusements’ president Shari Redstone, who wants to merge CBS with the other media company she controls, Viacom.
Moonves believes the move would be bad for CBS shareholders and is pushing to remain independent and sell to another outfit -- and most shareholders agree. Investors believe a weakened Moonves will likely lead to Redstone winning her battle with the CBS chief, allowing for the merger of her two media properties, and they are wary about combining CBS’s premium sports, entertainment and news content with Viacom, which controls fading franchises like MTV and Nickelodeon.
“The board is in a tough spot,” said one former CBS executive who knows Moonves well. “They can get rid of him, but they might have to pay him out big time depending on what his contract says, which will make them look bad. They can keep him, which investors might like, but the pressure from outside groups will only grow to throw him out, particularly if they find more stuff during the investigation.”
Moonves’ contract is said to award him possibly hundreds of millions of dollars if he leaves the company, including significant perks, such as being able to produce programming. It’s unclear what legal remedies the company might have to preclude some or all of those payments if Moonves was dismissed for cause.
One other problem faced by the company and its board in deciding Moonves’ future is his stature on Wall Street. Investors believe there is no executive in-house with the business chops and broadcasting acumen to fill Moonves’ shoes, further clouding the stock performance.
People close to CBS say the reason to put Moonves on the call is to calm investors’ anxiety about the company’s future. Still, they also tell FOX Business that Moonves or the board might make a last-minute change, and pull him from the earnings call line-up that usually includes chief operating officer Joe Ianniello and Adam Townsend, the investor relations chief, particularly if more allegations emerge.
But barring such a change, Moonves has been actively preparing to appear on the call and answer questions. It’s unclear how the company or Moonves will respond to questions involving The New Yorker article or whether he will even address the matter, these people add.
Moonves has issued a single statement since the controversy first broke, saying that he recognizes “there were times decades ago when I may have made some women uncomfortable by making advances. Those were mistakes, and I regret them immensely. But I always understood and respected -- and abided by the principle -- that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone's career.”
With calls for his dismissal growing, the Thursday analyst call will take on additional urgency with Wall Street and media watchers, particularly if Moonves answers questions. As is customary, CBS management will select the analysts asking the questions, and management tends to shy away from those who are at odds with the company’s direction.
One such analyst is Rich Greenfield of the brokerage firm BTIG, who has publicly called for Moonves’ resignation and supported Redstone’s efforts to combine CBS with Viacom.
On Wednesday, Greenfield published a research note titled, “12 Questions for Les Moonves,” with question No. 6 being: “When did you first become aware of The New Yorker story...And when you became aware of the in-process story, did you inform the full CBS Board?”
The earnings call will take place at 4:30 p.m. ET on Thursday.
Late on Wednesday, CBS said it retained two law firms for a full investigation into the allegations about Moonves, CBS News and cultural issues in the company.
The investigation by the law firm Debevoise & Plimpton will be led by Mary Jo White, a former chair of the U.S. Securities and Exchange Commission.
Covington & Burling will also probe the matter.