FRESTON OUT AT VIACOM

In a move that caught many insiders by surprise, Tom Freston resigned today as President and Chief Executive of Viacom and was replaced by Philippe Dauman. Additionally, Thomas Dooley was named to the newly created post of Senior Executive VP and Chief Administrative Officer. Dooley will report to Dauman, who will in turn report to company founder and executive chairman Sumner Redstone, who still controls both Viacom and CBS.

The Wall Street Journal blamed the company's stock price, which had dropped 10% since the first of the year, Freston's questionable online strategy and inability to bring in acquisitions, including MySpace, as the reasons for the move.

The shake-up comes just a week after Viacom’s highly publicized split with Tom Cruise to end their 14-year movie-making relationship, citing his distracting behavior, a reason Sumner denied having anything to do with Freston's exit at a press conference. Freston leaves just as Wall Street investors had been increasingly calling for change at Viacom, whose share price has languished since the company split from CBS early this year. The separation was supposed to lift the stocks of both companies, but so far, CBS’s stock has performed far better than Viacom’s. In a sign that Viacom may be priming itself for more dealmaking, one analyst told Bloomberg News on Tuesday that Dauman’s background was in mergers and acquisitions, not in media programming.

Both Dauman, 52, and Dooley, 49, have previously held a number of executive positions at Viacom, and both currently serve on the company's board. Since 2000, they have run DND Capital Partners, LLC, a private equity firm specializing in media and telecommunication investments. The two executives have worked with Redstone for more than 20 years. Dauman has been a director of Viacom since 1987, overseeing strategic transactions, legal and government affairs, human resources and administration in the 1990s; he was general counsel of Viacom from 1993 to 1998. Dooley held various corporate positions at the company from 1980 to 2000, was a board member from 1996 to 2000 and rejoined the board in 2006. The two ran the company between the exit of then CEO-Frank Biondi in 1996 to the merger with CBS, which had Mel Karmazin leading the combined company.

“I’ve spent over 26 years at Viacom, 18 of them with Sumner,” said Freston in a statement. “With my exceptional colleagues, we built a worldwide powerhouse of brands and businesses, literally from scratch. I leave many good friends knowing that they have an unmatched track record, a great plan going forward and incredible abilities to execute on it in this digital age. I have worked closely with Philippe Dauman and Tom Dooley over the years and have the highest respect for their abilities. I have every confidence that Viacom is well positioned to prosper under Philippe’s leadership. I will do all I can to insure a smooth transition. I particularly want to thank my colleagues from all over the company who have been inspiring to work with and have been so instrumental in the great success we’ve had.”