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Viacom prez sells shares
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August 7, 2001: 12:39 p.m. ET
Sale of $35M of shares by Karmazin said to upset Viacom chief Redstone
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NEW YORK (CNNfn) - Mel Karmazin, the president and chief operating officer of Viacom Inc., has raised eyebrows by selling $35 million of the company's stock, according to published reports Tuesday.
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Mel Karmazin
President of Viacom sells $35 million worth of the company's class B stock. | |
Articles in the entertainment daily Variety and the New York Times said Karmazin's sale of about 15 percent of his current holdings displeased Sumner Redstone, the CEO and majority shareholder of Viacom, who reportedly has never sold a share of the company's stock.
Karmazin sold 700,000 shares of Viacom's (VIA.B: up $0.34 to $50.54, Research, Estimates) non-voting class B stock, its most widely traded security. According to the company's most recent filing he owned 4.5 million class B shares and had options for another 5 million shares, which is less than 1 percent of those shares outstanding. Redstone owns 68 percent of Viacom's (VIA: up $0.36 to $50.60, Research, Estimates) class A voting stock, and 104.3 million shares, or 6.3 percent, of its class B shares.
The Times reported that several people close to the company, whom it did not identify, said Redstone was not happy about the signal the sale seemed to send to the investment community. The paper said others noted that Redstone and Karmazin did not consult about the sale.
The paper also said there have been rumors that Redstone, who is 78 years old, and Karmazin, who is 57, have an increasingly tense relationship.
Variety quotes unnamed analysts who said Karmazin was telling investors when the shares were at 52-week high of $75.88 last August that they were worth at least $100 and that any advertising revenue slump would be short-lived. Shares of Viacom have tumbled since to about a two-thirds of that high-water mark. Variety said Karmazin's sale suggests that a recovery in advertising won't take place in the near term.
Karmazin joined Viacom when it purchased CBS, of which he was CEO. He joined CBS when it purchased a controlling stake in his radio broadcasting company, Infinity Broadcasting Corp.
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The Times story said Karmazin had sold some of his holdings in those companies while he was running them, although he had been blocked from selling any of his Viacom shares for one year after completion of Viacom's purchase of CBS in May 2000. He also was limited from selling more than 800,000 shares in a year.
Karmazin has a strong reputation with Wall Street and a three-year contract with Viacom that can not be terminated without the support of Viacom's board of directors, the Times reported. 
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