Hollywood and Wall Street wonder how the show will go on at CBS without Leslie Moonves

Sept. 10, 2018 8:30 PM PT

The big personality of former CBS Corp. Chief Executive Leslie Moonves made him a throwback to show business impresarios of the past.

His bravado, outsize personality and longevity tied his name to the storied media company as closely as its founder William Paley. When in New York, Moonves even worked in Paley’s old office.

Now, CBS has to figure out how to face the complicated media landscape of the future without him.

After being in talks for weeks about an exit agreement, Moonves, 68, was ousted Sunday, the same day the New Yorker published a second series of allegations of sexual misconduct and assault against him.

The magazine detailed six women’s allegations involving him in the 1980s and 1990s, including reports that Moonves demanded massages from women or forcibly kissed them. In all, at least a dozen women have said Moonves made inappropriate advances toward them.

Though Moonves has expressed regret for some of his behavior, he called the latest allegations “untrue” and said his relationships were consensual.

Moonves leaves the company under a cloud of scandal that could escalate as two outside law firms investigate the claims. His exit creates a power vacuum atop CBS at a time when the challenges facing the traditional media business have never been greater.

Consumers have been fleeing traditional TV and spending more time watching video on digital devices and streaming services. Under Moonves, CBS has maintained the biggest TV audiences, but the technology-driven shift has eroded its viewing levels as well. The network’s prime-time audience declined 7% in the 2017-18 TV season and was down even more among the younger viewers that advertisers covet.

His longtime chief operating officer Joe Ianniello, named interim CEO as the CBS board searches for a permanent replacement, is well-regarded in financial circles but is not known for having the showmanship of his former boss.

“Les, to his credit, has made CBS feel bigger than life,” said one producer and former studio executive who did not want to speak publicly because he does business with the network. “Running CBS was not the biggest job in the world, but Les made it feel like it was. He was able to take a broadcast network and make it relevant to advertisers and Wall Street. ”

Moonves, who was given the top job at CBS in 2006 when the company was separated from media conglomerate Viacom, is departing at a crucial time for the New York-based media company. CBS owns the most-watched broadcast network, 27 TV stations, premium cable network Showtime and publishing house Simon & Schuster.

CBS has only one more season of its biggest comedy hit, “The Big Bang Theory.” Its long-running mass appeal dramas such as “NCIS” and “Blue Bloods” are still strong attractions. But launching new shows that approach their popularity has only become more difficult in the crowded TV marketplace.

Down the road, CBS will have to negotiate a new broadcast rights contract with the National Football League and is likely to find itself competing with deep-pocketed tech giants such as Google, Amazon and Apple.

Moonves diversified CBS’ revenue sources by getting satellite and cable companies to pay fees to carry its TV channels. He developed programs with an eye on international distribution, which has grown over the years and boosted profits. And he stepped up efforts to get the company into the over-the-top TV subscription services favored by younger viewers. (CBS’ profit grew to $400 million, or $1.05 a share, in the second quarter, from $58 million, or 14 cents a share, a year earlier.)

But some Wall Street analysts who follow the company said those moves are not enough for CBS to withstand larger competitors and the technology companies that have invaded the TV business. The direct-to-consumer services CBS All Access and Showtime have about 4.5 million subscribers compared with 130 million for Netflix.

“CBS All Access is a pimple that needs far greater investment to expand and diversify content,” Richard Greenfield, a BTIG analyst, wrote in a research note.

Moonves was said to be open to making CBS bigger by combining with another media company. But he was opposed to doing so with Viacom, whose parent company, National Amusements Inc., controls 80% of both companies. He believed Viacom’s cable TV channels, which include MTV, VH-1 and Comedy Central, were laggards that would erode CBS profits.

NAI has agreed to not merge the companies for two years, but independent members of the two company boards can propose it sooner. Some analysts favor the idea.

“It’s just bonkers to not just do it,” said Brian Wieser, a senior analyst for Pivotal Research Group. “If you believe scale matters then you end up with your primary option being Viacom. You’re working for Shari Redstone one way or the other.”

Greenfield believes the CBS and Viacom boards will not wait two years to combine. “As CBS searches for a new CEO, we expect the newly composed board of directors to focus on long-term strategic planning and set up a clear plan for succession,” Greenfield said in his note.

The other question being asked in Hollywood is how the CBS brand will change without Moonves at the helm. While he was the head of an increasingly diversified media operation, his passion was program development and casting, areas in which he continued to be involved.

One longtime friend and former rival of Moonves who did not want to be named said many of the executives he’s known over the years who worked at CBS felt they had limited power under such a hands-on boss.

But members of Moonves’ team, some of whom have been there since he arrived at CBS as entertainment president in 1995, probably will continue the network’s template for broad-appeal programming. That includes procedural crime dramas and multi-camera sitcoms taped in front of live audiences.

If the company hires a chief executive with a different programming philosophy, it will take a couple of years for viewers to notice it.

The choice to replace Moonves will also have to help repair the damage the harassment scandal has done to the corporate image of CBS. A number of executives predict the board will try to find a woman to replace Moonves to eradicate the notion that the company is a boys’ club.

“The brand has been hurt, but not irreparably,” said Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management. “All of media has been haunted by the imagery of the casting couch for a century almost. They can certainly clean up their act going forward, especially with the new people they have on the board and with the right CEO. It’s not rotten to the core.”

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Twitter: @SteveBattaglio