Crisis Lessons from Black Rock (Part 2)

CBS is Getting Back in Control

9/15/18 – – On Sunday, September 9, 2018, CBS Corporation released a media statement announcing several major developments. This communication, an excellent example of effective crisis response, is worth examining.

Leading the news was the departure of embattled Chairman and CEO Leslie Moonves, who had been heading the company under a cloud of multiple allegations of sexual misconduct and professional retribution. But the company announced a lot more than its settlement with Moonves. CBS also named an acting CEO, patched up its ugly legal differences with National Amusements Inc. and Shari Redstone, ruled out any merger with Viacom for at least two years, named six new independent directors to the CBS board, and pledged $20 million to “one or more organizations that support the #MeToo movement and equality for women in the workforce.”.

Why do I think this was “an excellent example of crisis response?”

It’s all about control.

Companies experiencing a crisis are perceived to be out of control. In fact, loss of control is probably the situation that most separates a run-of-the-mill problem from a full-blown crisis. Regaining control is, therefore, a critical objective of crisis response.

While saying goodbye to Mr. Moonves sends a very positive message to those who believe the culture at CBS is in need of serious reform, it also leaves employees, investors, producers and advertisers wondering who is in charge. Les Moonves, for all his apparent faults, was a giant in the entertainment industry. For two decades, he had been in control of a very successful enterprise.

CBS directly addressed the issue of control by immediately naming the company’s well-respected COO Joseph Ianniello president and acting CEO and announcing the start of a search for a permanent successor to Moonves. In addition, they settled the nasty internecine turf war with National Amusements, named six new independent directors to the board — four are women. To clean up any lingering doubts about stability, talk of any merger between CBS and Viacom was tabled for at least two years. And 10 days after the release, Richard Parsons, former chairman of Time Warner and Citigroup, was installed as interim chairman of the board of directors. (Parsons stepped down in October 2018 because of health issues and was replaced by Strauss Zelnick, CEO and chairman of Take-Two Interactive Software, Inc., who is also serving in an interim role.)

In the release, CBS Vice Chair Shari Redstone offered this assurance: “Today’s resolution will benefit all shareholders, allowing us to focus on the business of running CBS — and transforming it for the future.” In other words, “we’re not fighting anymore and we’re back in control.”

Consistent with guidance provided in Chapter 18 of The Crisis Preparedness Quotient – Measuring Your Readiness to Weather a Reputational Storm (“Dealing with Leadership Transitions”), the majority of content in the release is forward-looking. Far more space is dedicated to the incoming Mr. Ianniello and the future than to the outgoing Mr. Moonves and the past.  Remember this preferred balance when you have to write your next leadership transition announcement.

One issue left hanging, unfortunately, is the outcome of the investigation into Mr. Moonves’ behavior, which will impact his separation package. (UPDATE: in December, the board denied Moonves any of his $120 million payout.) This leaves the controversy in play. As a preemptive offer of restitution, CBS announced a significant contribution to groups supporting women’s equality.

So I give CBS high marks for making every effort to “tell it all and tell it once.” There certainly will be more reputational challenges ahead, but it’s clear CBS has made great strides to get back in control.

https://www.cbscorporation.com/cbs-corporation-and-national-amusements-announce-resolution-of-governance-disputes-and-transition-to-new-leadership/

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