CBS Scandal Is Neatly Timed - WSJ

When he was trying to sell the CBS fall lineup to advertisers back in 2005, boss Leslie Moonves starred in a promotional video based on the boxing movie “Million Dollar Baby.” He was seen punching out NBC’s then-leading draw, a certain Donald Trump, star of “The Apprentice.”

No hard feelings. Ten years later Mr. Moonves couldn’t say whether he liked Mr. Trump for president, but he certainly liked what his campaign was doing for ad sales and viewership. “The money’s rolling in and this is fun,” he said.

An axiom applies as much to business as to politics: Personnel is policy. Unfortunately, a corollary also applies: There can be no policy until personnel disputes are settled. The sexual misconduct allegations that threaten pre-emptively to take the otherwise excellent Mr. Moonves out of the picture arrive at a convenient moment for CBS shareholders.

Mr. Moonves has been a great executive, but then Kevin Spacey was a great actor, Charlie Rose was a great interviewer, Matt Lauer was a great morning-show host. The world has hardly stopped turning because of their absence.

We’ve seen it enough times: In companies, things happen that wouldn’t happen under any likely alternative CEO. Mr. Moonves might be a tad more indispensable now, however, if the sexual allegations against him had not landed in the New Yorker magazine last week just as he was engaged in a power struggle with his controlling shareholder, Shari Redstone.

This apparently culminating showdown began after Ms. Redstone urged a merger between CBS and its former partner, Viacom , of which Ms. Redstone is also the controlling shareholder. The idea is not a terrible one for two companies otherwise left out of the panicked reshuffling of TV assets as the industry adapts to streaming. But in the nature of things, and unrelated to any rumors about Mr. Moonves’s alleged misdeeds that were then already circulating, such a deal could not be suggested without triggering the neuralgic issue of Ms. Redstone’s voting control, inherited from her incapacitated mogul father, Sumner Redstone.

Whatever you think of voting-rights lockups, Ms. Redstone’s is written into both companies’ bylaws, and Mr. Moonves took the job knowing the lay of the land. A court seems likely to find improper his attempt to use Ms. Redstone’s supposedly conflicted backing of a Viacom merger, plus his own threat to quit as CEO, to pressure his board into a maneuver to strip Ms. Redstone of her special rights. That effort has been blocked, pending further litigation, and probably will not end well for Mr. Moonves, in which case it would likely have required a heroic effort to patch things up and preserve him in his job anyway.

All this comes amid great uncertainty about how fast the traditional ad- and cable-supported model of linear TV will fade, and how quickly the streaming alternative will develop. How many subscription streaming services will consumers be willing to sustain? Will ad-supported be a model that consumers prefer for some kinds of fare? Will stand-alone streaming (i.e., Netflix ) remain predominant given the apparent appetite in the marketplace to use video as a sweetener to support other businesses, such as Amazon’s retail empire, or AT&T ’s wireless empire, or Google’s ad business, or Apple ’s device business?

CBS probably is not sellable to Comcast or Disney , both of which already own broadcast networks, with their lingering, antediluvian significance in the minds of politicians and regulators. Though Facebook could use some non-Facebook content properties on which to serve ads to Facebook users, Mark Zuckerberg is in the doghouse with investors right now. He probably would find it an inopportune moment to give the impression that he’s extending his hand into a new industry.

None of these objections apply to Amazon’s Jeff Bezos, and we can think of reasons CBS-Viacom might be useful to Amazon. Viacom owns the original “Star Trek” episodes. Analysts also speculate that Amazon wants marquee sports rights for its Prime streaming business. If so, it would still need help from a conventional distributor to deliver big-time, live sports events to a much larger natural audiences than streaming can satisfy at this stage.

Mr. Bezos is running not only Amazon, but Whole Foods, the Washington Post and his space company, Blue Origin. Plus it’s unclear just how deep Amazon wants to get into video production, or what it intends for its nascent advertising business, which CBS and Viacom could potentially be useful for. We wouldn’t bet on him being a buyer. Of course, there are telecom carriers like Charter and Verizon that might eye CBS in a belated, me-too attempt at a content strategy. Yet all these deals would be more likely to happen once a CBS-Viacom reunion is sorted out.

Which is all the more reason for Mr. Moonves to get out of the picture quickly if that’s the best way for the companies to make sure their assets live long and prosper in the digital age.