Why the Public, Bitter Battle Over Viacom’s Future Shouldn’t Affect Its Upfront Negotiations

Ad sales chief Jeff Lucas provides stability

As Hollywood-related civil wars go this summer, Captain America and Iron Man have got nothing on Sumner Redstone and Philippe Dauman, who are engaged in a public, bitter battle over the future of Viacom.

With Team Redstone (the company's founder, who stepped down as executive chairman in February) and Team Dauman (Viacom's CEO, who replaced Redstone as chairman) trading public statements and lawsuits, ad buyers who are preparing for upfront negotiations with the company are surveying the chaos from afar and choosing to side with a third camp: Team Lucas.    

That's Jeff Lucas, head of marketing and partner solutions for Viacom, and the person who will be overseeing the upfront business across Viacom's portfolio. And as long as he is still the point person for upfront talks, buyers say they don't anticipate Redstone and Dauman's war affecting their upfront negotiations.

Redstone made the first move last Friday, when the 92-year-old mogul removed Dauman and George Abrams from the seven-person trust that will control Viacom (and CBS Corp.) after his death.

Dauman responded on Monday by filing suit in Massachusetts to block Redstone's move, noting that Redstone's daughter, Shari, "has manipulated her father to achieve her goals." Shari, who has supported her father's actions in the last few days, called that "absurd."

In this morning's latest twist, Redstone announced two new appointees to his trust—former media executive Jill Krutick and Tad Jankowski, who serves as general counsel to Redstone's holding company, National Amusements Inc.—to replace Dauman and Abrams. Redstone also named Krutick and Kimberlee Ostheimer, his oldest granddaughter, to the National Amusements board. "This is my trust and my decision. I have picked those who are loyal to me and removed those who are not," said Redstone in a statement. 

In February, Redstone stepped down as executive chairman of both CBS Corp., where Leslie Moonves replaced him as chairman, and Viacom, where Dauman was elevated to executive chairman.

This bitter battle is unfolding as Viacom's ad sales team is preparing to start upfront negotiations with buyers, who are determining their strategy for Viacom's TV properties, including MTV, Nickelodeon, Comedy Central and TV Land.

But buyers, who spoke anonymously as they prepared to do business with Viacom, don't see the power struggle affecting their upcoming upfront deals. "At this point, Jeff Lucas is a proven commodity and they trust he will do the right thing," said one.

And no matter which exec emerges on top, the fallout shouldn't affect the ad sales team. "At a Viacom level, the most important thing that anyone looking to work with them, whether it's an advertiser or content producer, is: Are the people who make sure their problems are taken care of still going to be there? We're at least a few steps removed from hitting the practitioners at that level in any way," said Brian Wieser, senior research analyst at Pivotal Research. "When you look at ad sales in particular, the main thing is, is Jeff Lucas still there? As long as there's confidence on the part of buyers that he's not going anywhere, then there's confidence that the rest of the team doesn't go anywhere, and it cascades from there."

Other potential fallout, including an eventual sale of Viacom and its properties, is too far away and will take too long to play out to have any bearing on upfront sales, Wieser added.

Viacom reiterated it will be business as usual for Lucas and his team going into upfronts, with Lucas still as involved as ever. "The upfronts are looking strong and there is heavy demand for Viacom's offerings," said Lucas in a statement. Though he declined to address this week's events, he touted Viacom's data platforms and Viacom Velocity, its branded content and integrated marketing division, as key assets for the company heading into the upfront.

Even before the events of the past week unfolded, Viacom had a lot at stake going into upfront talks. The company has seen declining ratings at several of its networks (and on May 9, Comedy Central president Michele Ganeless became the latest Viacom network head to step down; she'll be replaced by president of original programming Kent Alterman), but is still hoping to take advantage of what network chiefs believe will be the strongest upfront market in years. While several companies scaled back or eliminated their upfront events this year, the company threw multiple elaborate presentations for Nickelodeon, TV Land/CMT, Comedy Central, BET and MTV.

But while all parties expect a smooth sailing during Viacom's upfront talks, all bets are off if Lucas is either pushed out or chooses to leave as a result of the upheaval. "Then, it's time to worry," said Wieser.