Political Affiliations of Viacom Board Could Impact CBS Case

[LRB]

Political Affiliations of Viacom Board Could Impact CBS Case

BY JOSH GERSTEIN - Staff Reporter of the Sun
September 21, 2004

Experts in corporate governance say the directors of CBS's parent company, Viacom, are obliged to assume some role in resolving the fiasco over CBS News's use of what appear to be fake documents about President Bush's military record.

The political affiliations of Viacom's board and senior management, however, could undercut the credibility of any action the board may take.

Viacom's chairman and chief executive, Sumner Redstone, is a self-described "liberal Democrat" and a prolific donor to Democratic campaigns. Of the company's 13 board members, eight contribute primarily to Democratic candidates and party committees. Two other members of the board, Joseph Califano and William Cohen, held cabinet posts under Democratic presidents.

"The board needs to be involved, so to speak, prophylactically," a business ethics specialist at the Conference Board, Ronald Berenbeim, said.

"The exposure to risk for Viacom, even though CBS News is just one of many things that it owns, is very substantial," he said. "There's substantial risk to a major business operation for which they have ultimate oversight and responsibility."

An attorney who conducts independent investigations like the one CBS ordered up yesterday said the board members have a duty to make sure the CBS brand is not tarnished, or not tarnished further.

"Dan Rather is obviously an important person. He's part of the brand," said the lawyer, Jeffrey Kaplan of Skillman, N.J. "A board's duty in this situation is somewhat uncertain because the facts are so unique. But at a minimum, given what's at stake for CBS, the board would want to be involved in this to ensure the independence and the professionalism of the investigation to be conducted, because if that doesn't happen then this asset of great value to the Viacom shareholder, meaning CBS, could be imperiled."

None of the members of Viacom's board consented to be interviewed for this story. Most referred questions to a Viacom spokesman, Carl Folta.

Mr. Folta said the board has not discussed the forged-documents flap and is unlikely to do so.

"They have not had any deliberations on this, board deliberations, and as a board are not handling the situation, which is being handled totally at the news level by CBS," he said. "At Viacom, we just don't get involved in the news division."

Mr. Folta said the political contributions of board members were not unusual. "As private citizens, board members at Viacom and others make donations to political parties and candidates all the time," he said.

Viacom's critics say Mr. Redstone, 80, who has been at the helm of Viacom for nearly two decades, set a liberal course that led to the document debacle.

"Why did Dan Rather think he could get away with this or stonewall it? You look at Sumner Redstone's political contributions," said Cliff Kincaid of the conservative press watchdog group Accuracy in Media. "It's clear he's a major donor to the Democratic Party."

In the past six years, Mr. Redstone has given $50,000 to Democratic campaigns and party committees, according to filings with the Federal Election Commission. He gave the maximum $2,000 to Mr. Kerry's presidential campaign and supported Vice President Gore's 2000 presidential bid as well.

The only Republican candidates the Viacom chief has supported directly are Senator Hatch of Utah, whom he gave $2,000, and Senator McCain of Arizona, who got $1,000 from him. Mr. Redstone also made donations to a Viacom political action committee that splits its donations fairly evenly between the parties.

"Rather must have felt comfortable, not only because this is his bias but because he knew the parent company was comfortable with this kind of frontal attack on Bush," said Mr. Kincaid, whose group has tangled with CBS for years about its news and entertainment programming.

One member of the Viacom board who has attracted considerable attention in recent months is Mr. Redstone's daughter and possible successor, Shari. According to federal records, she has given exclusively to Democrats in recent years, though not as prolifically as her father. Ms. Redstone has contributed to Senator Clinton and Mr. Kerry as well as the Democratic National Committee.

Other Democratic-leaning donors on the Viacom board include: two Boston attorneys, George Abrams and David Andelman; a Manhattan investor, Philippe Dauman; the chairman of Bear Stearns, Alan Greenberg; a law professor at Yeshiva University, William Schwartz, and the president of the Bill & Melinda Gates Foundation, Patricia Stonesifer.

Mr. Cohen, the former Republican senator from Maine and secretary of defense under President Clinton, has made modest donations to a few GOP candidates.

An Ohio health care executive who sits on the Viacom board, Robert Walter, has supported Republicans from his home state. In 1999, another board member, investor Jan Leschly, gave $350 to a former New Jersey governor, Christine Todd Whitman, for a Senate bid.

A former Verizon executive who is on Viacom's board, Frederic Salerno of Rye, could offer some solace to supporters of President Bush looking for a friendly face at Viacom. Mr. Salerno, who split his giving relatively evenly between the parties, donated to Mr. Gore in 1999 and contributed the maximum $2,000 to Mr. Bush's campaign this time.

The two men who act as co-chief operating officers of Viacom, Leslie Moonves and Thomas Freston, also favor Democrats. In the 2000 presidential campaign, Mr. Moonves, who oversees CBS, gave $1,000 each to Mr. Gore and Senator Lieberman of Connecticut.

Mr. Freston is a regular presence at Democratic fund-raising events in New York. He contributed $2,000 to Mr. Kerry and has given nearly $30,000 to Democratic groups and candidates in the past six years. In July, Mr. Freston and Mr. Moonves replaced Mel Karmazin, another prolific Democratic donor, who left the company after reportedly clashing with Mr. Redstone.

A business professor at Columbia, Meyer Feldberg, said he doubted the Viacom board members would jeopardize the company to advance their own political views.

"Redstone runs an incredibly outstanding organization," Mr. Feldberg said. "I'm very sure that the chairman and CEO would not allow the board of the company to be compromised by individual political agendas."

The professor said he doesn't expect the directors to take formal action in connection with the flap, but he said he could not imagine they would ignore it.

"In this particular case, because of the personalities involved and the issue, it's like the elephant in the tent," he said.