What Summer Redstone learned from Mel Karmazin
Viacom will be splitting into 2 units by Q1 2006. I bet you didn't know that Viacom's Infinity division was bought and spun out several over its life, making Mel Karmazin, founder and recently left Viacom's CEO, very rich indeed. Should we enrich another CEO that instead of focussing on running its companies (in a rather difficult environment I might add), remain obsessed with driving the stock price up? Summer Redstone is a CEO that would not be shy about touting its company stock when its share price is under pressure (I personally can attest to this as he would repeatedly leave voice messages on my phone reassuring the positive case of its stock whenever there is a negative story that knock down the stock). Financial engineering may be a solution but it is only a solution to short term profiteers such as the investment bankers etc. The stock price would respond if VIA is trading at cheap valuation and/or the environment is getting better, neither of which has happened. Imagine my surprise when I heard Dick Parson of Time Warner chided on CNBC that not all stocks need financial engineering to boost the stock price up, referring to the oft debated case that they should spin off AOL.COM. Kudos to him, we should have more CEOs like and he just elevated his position among my most respected CEOs altar. No wonder Karl Icahn is buying a chunk of TWX, hmm, makes you wonder.