NEW YORK - Mel Karmazin resigned suddenly as president and chief operating officer of Viacom Inc., owner of CBS, MTV and Nickelodeon, as the media giant seeks to find a successor for its 81-year-old chairman and CEO, Sumner Redstone.
Two senior executives were named to replace Karmazin, MTV boss Tom Freston and CBS leader Leslie Moonves, the company announced Tuesday. They will run the company on a day-to-day basis and report to Redstone.
The company described the moves as part of a corporate succession plan under which Redstone will relinquish his role as CEO within three years. He will work with the company's board to identify a new CEO and other senior executives before then.
In a conference call with Wall Street analysts, Redstone said Karmazin left because of "frustration" with the company's sagging stock price and issues related to the company's radio division, which has been struggling.
Redstone suggested that Viacom's new management team would consider getting rid of the radio business, saying the company would have a "hard look" at the radio operation as well as other assets. "There is no sacred cow," Redstone said. "But for the time being we're committed to radio."
Karmazin worked in radio for much of his career, and is known to be close to several of Viacom's leading radio personalities including Howard Stern and Don Imus. Imus broke the news of Karmazin's departure early Tuesday morning on a show broadcast by MSNBC.
On the call, Redstone dimissed peristent concerns that he had a rocky relationship with Karmazin. However, he also acknowledged that Karmazin did not discuss his decision to resign with Redstone directly. Instead, Redstone said he learned of Karmazin's decision to resign through another executive, whom he did not name.
Redstone stressed that no one at Viacom had asked Karmazin to resign. He also said Karmazin had been in the running as a candidate to succeed him as CEO.
In a separate conference call with reporters, Redstone parried several other questions about the reasons for Karmazin's departure. "He just decided he was better off going in another way ..." Redstone said. "Mel was frustrated about something - I hope it wasn't about me."
At Viacom's annual meeting two weeks ago, Redstone said he and Karmazin had never had a major disagreement. He also said the company would be making an announcement soon about its succession plans.
Redstone said he regretted Karmazin's departure and wished him well. He also said Karmazin would stay on as a consultant for two months to help with the transition.
Investors have been pressing Viacom to clarify its plans for succession, especially given Redstone's age. Even though Redstone has voting control of Viacom through a special supervoting class of stock, he made clear in his announcement that he was working with the company's board on the succession issue.
Redstone said on the conference call that it was "extremely likely" that he would be succeeded by either Freston or Moonves as CEO.
Karmazin was highly regarded in the industry and on Wall Street for his leadership of Viacom. Karmazin worked his way up through the ranks in the radio business, and became the head of CBS Corp. before it merged with Viacom in 2000.
Karmazin did not elaborate on his reasons for leaving. In a statement, he said that "After more than 20 years with the company, for personal and professional reasons, I have decided to leave Viacom and pursue other challenges."
Freston has been chairman and CEO of the MTV Networks unit since 1987. Moonves has been chairman and chief executive of CBS since 2003 and joined CBS in 1995 as president of its entertainment operation.
In their new roles, Freston and Moonves will jointly oversee all of the operations of Viacom.
Investors took the news of the management shakeup in stride. In late morning trading, Viacom's widely held "B" class shares were up 8 cents at $36.97 in heavy trading on the New York Stock Exchange.
However, the sudden loss of Karmazin is likely to disappoint many on Wall Street. In a note to investors, Merrill Lynch analyst Jessica Reif Cohen called Karmazin's departure "a very significant negative" factor for the company since Karmazin was "an extremely talented operating executive."