Les Moonves Said to Be Negotiating Possible Exit From CBS

Leslie Moonves, faced with an investigation into allegations of sexual harassment against him as well as a bitter boardroom battle over the control of CBS, has for the last few weeks been negotiating his potential exit from the network he has run for two decades.

Moonves has been talking to the board about his possible departure as chief executive, including terms of a payout that would be far less than $180 million, the amount specified in his employment agreement should he leave the CBS Corp., according to three people familiar with the discussions who spoke on condition of anonymity to discuss a private bargaining agreement.

The multiple allegations of sexual harassment against Moonves have partly motivated the talks, which could still break down. Should Moonves depart, his chief lieutenant, Joseph Ianniello, is likely to be named interim chief executive, two of the people said.

During his tenure, Moonves, 68, has helped transform CBS from a last-place network into the most watched channel for the last decade, with hits like “The Big Bang Theory” and “Survivor.” That success has made Moonves one of the most powerful figures in Hollywood and his possible departure has put the future fortunes of the company into doubt.

For over a month, Moonves has been grappling with the two separate but equally fateful issues. In addition to the harassment allegations against him, Moonves is involved in a legal dispute with Shari Redstone, the controlling shareholder of CBS. An exit with a significant cash payout for Moonves before a trial that may decide control of the company could be seen as a beneficial outcome for all parties, according to the people.

The talks also include delaying for two years a possible merger between CBS and Viacom, both of which are controlled by Redstone’s family company, National Amusements, two of the people said. CNBC first reported details of the possible settlement involving Moonves, who is also the CBS chairman. Redstone had said she would only pursue a merger if both companies supported a transaction.

Earlier this year, Moonves and the network’s independent directors mounted a legal challenge to Redstone, 64, in an attempt to stop her from merging the network with Viacom. The trial is set to begin Oct. 3 in Delaware Chancery Court. At the same time, the board is investigating claims of sexual harassment against Moonves and allegations of a broader culture of harassment at CBS, most notably in its news division.

Both issues complicated the interplay among directors, and exposed its factions, with one group apparently loyal to Redstone, another to Moonves and others debating which direction the company should take.

In July, The New Yorker published an article, written by investigative journalist Ronan Farrow, in which six women made allegations of harassment against Moonves. The earliest allegations in the article date to the mid-1980s, and the most recent to 2006.

In a statement at the time, Moonves said: “I recognize that there were times decades ago when I may have made some women uncomfortable by making advances. Those were mistakes, and I regret them immensely. But I always understood and respected — and abided by the principle — that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone’s career.”

Shortly after the article was published, the CBS board enlisted two law firms to lead an inquiry into the claims against Moonves and the wider workplace culture at the network. The board soon after folded a separate examination of CBS News — underway since March — into the larger investigation.

The board hired Nancy Kestenbaum of Covington & Burling and Mary Jo White of Debevoise & Plimpton to conduct the inquiry. White led the Securities and Exchange Commission during the Obama administration and was previously the U.S. attorney for the Southern District of New York. Kestenbaum was also a federal prosecutor with the same district. The investigation into CBS News is being led by the law firm of Proskauer Rose. Moonves had recused himself from any matters related to the investigation, and a three-member committee — Bruce S. Gordon, Linda Griego and Robert N. Klieger — has been appointed to oversee the inquiry. The makeup of that panel reflects the fractious board itself.

Klieger, a lawyer based in Los Angeles, occupies one of three CBS board seats appointed by Redstone’s family company. (In addition to Klieger, Redstone and David R. Andelman, a Boston-based lawyer who has represented the Redstone family in the past, make up the Redstone family’s board seats.)

On the other side is Gordon, a former Verizon executive and once head of the NAACP, who is the lead independent director and has spearheaded settlement talks between the parties on behalf of CBS. Meetings between Redstone and Moonves had become so contentious that each had taken to bringing along witnesses. At a May meeting, Gordon acted in that role for Moonves. Griego, a former Los Angeles deputy mayor, is not seen as affiliated with either side.

Redstone commands both CBS and Viacom by owning 80 percent of voting rights, and the legal battle is being waged to water down that stake in CBS.

Redstone had asked the boards of CBS and Viacom to explore the possibility of a merger to protect themselves from the onslaught of technology giants like Netflix, Amazon and Facebook, which have taken ad dollars and eyeballs away from the traditional players.

Moonves and the majority of the CBS board, however, concluded a combination would not benefit CBS’ shareholders. The company has a far more robust business, while revenue at Viacom, which includes the cable networks Nickelodeon, MTV and Comedy Central, have been shrinking over the last few years.

Redstone has countersued, claiming Moonves had effectively forced the CBS board to take legal action against her lest he leave the company.

Moonves draws an annual pay package worth $69.3 million. His employment agreement included a provision that would give him more than $184 million in pay and benefits as part of his exit if the board fires him without fault, or if he leaves because of the legal dispute. Last month, the CBS directors who are unaffiliated with Redstone filed requests to seek more information about how her family company, National Amusements, handles the voting shares of its own company and that of CBS.

Lawyers for the network suggested in court proceedings that Redstone’s control of the shares could be in doubt because she’s acting at the behest of her father, Sumner Redstone, 95, who has been in ill health for several years. He owns the controlling shares, and he does not speak and is being fed through a tube.