Philippe Dauman: The king in waiting

Philippe Dauman: The king in waiting

Philippe Dauman
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Raymond Snoddy takes the measure of Philippe Dauman, the man poised to inherit the Viacom crown

Philippe Dauman, Chief Executive of Viacom, the media empire created by nonagenarian Sumner Redstone, has been called many things in his long Viacom career.

One is "dauphin", marking both his succession potential and the fact that he is French-born. Although he has lived almost all of his life in the US, Dauman is a fluent French speaker.

He is "an iron fist in a velvet glove" according to Sir Martin Sorrell, Chief Executive of WPP. The New York Times summed him up as "The man who would be Redstone".

Bruce Tuchman, President of AMC Global, the company behind Mad Men, has an unambiguous view: "Philippe is a true visionary in this industry. It has been a real inspiration to watch him lead his company with extraordinary intelligence and grace through so many incredible opportunities and challenges over the years."

There is no doubt that the relationship between the elegant Dauman, aged 61, and Redstone, 92, has been the key professional partnership of their careers.

Both are very smart. Redstone topped his class at Boston Latin School and romped through Harvard Law School. At the age of 13, Dauman scored what was then the highest possible score of 1,600 in his SAT test for college admission and went to Yale when he was 16.

Both men are poker players, but the biggest thing they have done together has been to pull off three contested multi-billion takeovers – Viacom, Paramount Pictures and then CBS – that turned Redstone into a major player in the US media industry.

Dauman was a corporate lawyer when he met Redstone in 1986 to deliver a routine legal filing – and the two recognised kindred spirits.

Thereafter, Redstone would deal only with Dauman, who then took on an advisory role in the hostile takeover of Viacom, owner of MTV Networks, and became a director. He later moved to the company as General Counsel.

"We do not put bounds on our ambitions… We are here to compete"

In 1993 the pair beat off the likes of Barry Diller and John Malone to acquire Paramount Studios in a $9.75bn deal.

At a party to celebrate Paramount’s 100th anniversary in 2012, Dauman, son of Life magazine photographer Henri Dauman, explained that Redstone had transformed his life.

"We shed a lot of blood, sweat and tears in a very long process," Dauman told the audience.

Redstone also transformed Dauman’s fortunes. In 2010 he was paid $84.5m in cash and stock, making him one of the highest-paid executives in the US. Last year, his total compensation fell to a more "normal" $44.3m.

Claire Enders, Chief Executive of Enders Analysis, sees parallels between Dauman’s role in Viacom and that of Chase Carey, the top non-Murdoch executive in the Murdoch media business, who is staying on for a year to support James and Lachlan Murdoch in their new roles.

Both, she believes, are thoughtful men who work for powerful owners and only speak when they have something interesting to say. They have offered safe hands over many years.

"He [Dauman] has proved to be an incredibly able and very intelligent survivor, who has sustained his impact through the application of intelligence, rather than creative acumen," Enders argues.

Dauman usually only hears about a show when it has been green-lit. He has remained and flourished while well-known executives such as Mel Karmazin and Frank Biondi at Viacom, Tom Freston and Judy McGrath at MTV and Brown Johnson at Nickelodeon’s animation studio have departed or been pushed.

Like Carey, Dauman also had time away – only to return. Dauman left Viacom to make room for Karmazin after the company’s merger with CBS in 2000. CBS is now a separately quoted company, run by Les Moonves.

When he quit Viacom, Dauman took with him $150m in severance pay and set up a private equity firm specialising in the media with long-term Viacom associate Tom Dooley.

They made it clear they would come back if needed. In 2006, both were recalled to try to rebuild well-­established, but increasingly challenged, brands such as MTV and Nickelodeon – Dauman as CEO and Dooley as Chief Administrative Officer.

The Viacom share price was close to $40 in 2006 and doubled to more than $80 by 2014.

The turnaround in value under Dauman was achieved by the buying back of Viacom stock, combined with a push into digital syndication deals with the likes of Netflix, and by expanding international activities.

The highlights of the period included a long-running battle with YouTube over copyright – a battle fought, in effect, for the entire audio-visual industry.

Dauman launched a $1bn lawsuit against Google, YouTube’s owner, for alleged copyright violations – using Viacom material without permission.

In 2010, a US court ruled largely in Google’s favour. Viacom appealed, but suffered a similar outcome in 2013.

Then, last year, just before the latest appeal was due to be heard, Viacom and Google settled. Now, media owners can ask for material to be taken down from YouTube or decide to run ads against such items so that they are properly compensated.

According to one analyst, the entire industry could have been seriously damaged if Dauman had not persisted in court. Ironically, one of his two sons, also called Philippe Dauman, is a Google executive.

Dauman’s belief in international expansion is exemplified by Viacom’s successful bid for the UK’s Channel 5 – the first time a UK terrestrial broadcaster has been bought by an American group.

Characteristically, Dauman has high ambitions for his £463.5m purchase from Richard Desmond. Last autumn, he told journalists in London that he saw beating Channel 4 in the ratings as only a first step in growing his new asset.

"We do not put bounds on our ambitions. We are not arrogant about our ambitions. It’s a very competitive business. We are here to compete," insisted Dauman.

"We will bring UK and global know-how and relentlessly pursue our objectives," added the Viacom CEO .

Already there have been joint Channel 5 and MTV commissions, such as 10,000 BC, and big-ticket acquisitions that include the crime series Gotham.

Now Dauman has had to enter a second rebuilding phase as the Viacom share price has been heading southwards of $65.

Ratings have fallen at MTV Networks and Paramount has seen its revenues decline. A restructuring of the group is estimated to have saved around $250m a year. Overall, the company is cutting about 10% of its workforce.

There will be more emphasis on data and mobile to reflect the realities of how younger viewers of Nickelodeon and MTV watch streaming videos. Acquired shows that no longer deliver will be dropped.

Despite the clear challenges, Dauman is upbeat about what lies ahead. "I have a great deal of confidence in the future of Viacom. We can look forward to renewed growth in the years ahead," he told investors in April.

And then there is the succession.

Rupert Murdoch has recently moved to reduce uncertainty by elevating his sons within his organisation, but at Viacom things are less certain. Dauman is the executor of Redstone’s will and it has been claimed, though never confirmed, that Dauman is named in the will as successor.

Redstone controls both Viacom and CBS through his 80% stake in a private holding company, National Amusements. He insists he will never retire.

The official view is that a trust and the boards of CBS and Viacom will decide who becomes chairman after Sumner Redstone.

However, one unnamed Viacom executive has been quoted as saying: "There will be an epic battle and Philippe will win." But when it comes to the succession in family-owned businesses, you never can tell.

 

Philippe Dauman is a keynote speaker at the RTS Cambridge Convention 2015, 16-18 September.