Attention Wall Street: Forget Mel. Forget Sumner. Follow the Abruzzese.
Mel Karmazin, the Teflon-coated Wall Street darling, mouths the platitudes that are supposed to build Viacom’s stock price. Sumner Redstone-he of hanging-on-a-ledge-during-a-fire fame-is the tough old coot who refuses to share the power. And Abruzzese? That’s Mr. Abruzzese to you. Joe Abruzzese, president of ad sales for CBS. As such, he’s the real money man-and, as they say, follow the money.
Not only is Mr. Abruzzese in charge of ad revenues at CBS, the ad sales department at UPN also now reports to him, according to a Jan. 25 CBS memo to UPN employees. Soon, ad sales for King World Productions are likely to report to Mr. Abruzzese as well, according to executives with knowledge of the situation. King World is Viacom’s powerhouse syndication division that distributes “The Oprah Winfrey Show,” Wheel of Fortune,” “Jeopardy!” and the new “Dr. Phil.”
“In a year don’t be surprised if ad sales for the MTV Networks reports to Joey,” said one of the executives.
With about half of Viacom’s revenues coming from advertising sales, all of this makes Mr. Abruzzese, in a real sense, a major power behind the throne.
As Mr. Karmazin and Mr. Redstone trade blows in the Viacom boardroom and in the pages of the nation’s financial press, it is two top CBS veterans, Mr. Abruzzese and Leslie Moonves, president and CEO of CBS, who are quietly consolidating power over Viacom’s TV properties.
“Both Joey and Les predate Mel at CBS. And when push comes to shove, they’re betting on Sumner,” said the executive. “At the same time, they’ve managed to keep a good relationship with Mel.” While the fact that Mr. Redstone has considered Mr. Moonves as part of ruling triumvirate if Mr. Karmazin leaves the company has been written about, less public is Mr. Abruzzese’s likely ascent.
Mr. Abruzzese was out of town and not reachable last week. A King World spokesman said it is company policy not to comment on rumor and speculation.
Mr. Abruzzese, the veteran among the top network sales chiefs, is by far the most respected and best-liked of the broadcast network sales presidents.
“Joey is fair to a fault.” said the top network buyer of a major New York media agency. “He’s one of the good guys. His word is his bond, no questions asked. In my world, that counts for everything.”
During last year’s upfront marketplace, Mr. Karmazin put Mr. Abruzzese and his sales team in a very tough spot that tested the strength of Mr. Abruzzese’s good will among agencies.
“When NBC and ABC caved [on cost-per-points], Joey wanted to deal,” said another buying executive. “He had the strongest CBS schedule in a long time. The marketplace was dictating that CBS should lower its prices somewhat, and they could write share. But for a long time Mel dictated otherwise. But these days, one network really can’t dictate the marketplace. At least not CBS last year. It wasn’t fair to Joey.”
“What happened fundamentally when Mel did that was he was saying he didn’t have faith in his sales guys to be smart enough to negotiate deals that would ultimately benefit CBS,” said another executive familiar with what happened. “In other words, you let them do their job, where they might negotiate a lower CPM with one client but a different, higher CPM with another. You have to let them be flexible. He frustrated both Joey and his staff.”
CBS ended up selling a limited amount of inventory upfront, counting on a rebound in the scatter marketplace.
In the fourth quarter, the economy didn’t recover, but “Mel got lucky,” said one of the buying executives. “He’s no genius. He just got lucky. ABC’s programming went in the dumper, and Fox had ratings problems as well, the Emmys were moved to the fourth quarter, and so on, so CBS was able to write scatter with some decent prices.”
“Sumner realizes how smart and important Joey is,” said another executive with close ties to CBS. “Mel knows it, but he hasn’t given Joey the respect he deserves. But that’s Mel. He’s very cavalier.”
Mr. Karmazin was also said to have alienated many at CBS when he made changes to the network’s pension plan. “Basically, none of Joey’s guys get raises anymore,” this executive said. “Mel gives them short-term incentives tied to stock options, and the stock’s not been doing well. So, long-term, unless the stock rebounds significantly, a lot of these folks have taken a serious financial hit.”
A Viacom spokesman said neither Mr. Redstone nor Mr. Karmazin would discuss the recent reports of dissension at the top of the company.