Special Report

Viacom’s Parental Duty

It’s time for the Viacom board to deal with the CBS crisis.

By 9.16.04

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How should a business owner respond to a highly compensated employee in a position of great responsibility engaging in seemingly irrational behavior that is causing great harm to the firm and its brand names? And what if the company is in a business like news reporting where reputation is everything?

Of course, it depends on the circumstances, but one thing is for certain. Doing nothing is not an option. Viacom, the parent of CBS Television, cannot now do nothing about the deepening controversy over the use by CBS of apparent forged documents on 60 Minutes and its evening news anchored by Dan Rather.

If Rather and CBS News President Andrew Heyward had simply acknowledged a possible problem and announced they would look into it, the Viacom board would be off the hook. It would be an embarrassing episode for CBS, but it would have been a 3-4 day story.

Instead, Rather and company have dug in, moving from one implausibility to another, each day facing intensified hoots of derision, playing what is most certainly a losing hand. As Mark Twain once said, "Against the assault of laughter nothing can stand."

Over the years, Rather accrued power at CBS. He is not only anchor of the evening news, but also its managing editor. He doesn't just read the news on-camera. He also decides what is news. And now instead of reporting the news, he has become the news, and it looks like he is in way too deep.

Marian Carr Knox of Houston, an 86 -year-old former typist for Lt. Col. Jerry Killian, Bush's now-deceased squadron commander, became the latest bit player in this drama to declare the memos fake. According to the Los Angeles Times, "Even as other reporters lined up for interviews with Knox Tuesday, CBS anchor Dan Rather was calling into the elderly woman's home." Rather may have a confident demeanor on camera, but one can only imagine his frantic efforts behind the scenes.

CBS's management has allowed Rather great influence in formulating the news, but with such power comes responsibility. When that responsibility is abused in such a dramatic fashion, the responsibility of accountability flows ultimately to the board.

Viacom is chaired by movie-theater magnate Sumner Redstone. The board includes not only his daughter and moneyed cronies of varying degree, but also "independent" directors like Bill Cohen, the former Senator and defense Secretary, and Patty Stonesifer, president of the Bill and Melinda Gates Foundation.

Serving on a board like Viacom is no doubt a cushy deal and a positively thrilling opportunity. But every so often publicly held companies get in big trouble and directors have to function like directors. This is one of those times.

Dan Rather joined CBS News in 1962. He is a bit of an institution. The prominence of CBS News preceded by decades Viacom's acquisition of CBS in 1999. Under normal circumstances, reluctance by Viacom to tamper with CBS News would be understandable. Add to that the fear that it would be accused of breaching the news division's "independence" if it exercised more oversight.

But it may be that very independence that the Viacom board must now rescue. Rather and Heyward appear to be acting irrationally, but they are not stupid men. It is rational to exercise the better of two bad options. Perhaps having their credibility pummeled is preferable to disclosing where the documents came from. If CBS knowingly received them from the Kerry campaign or the Democratic National Committee, it would be a huge journalistic scandal, not to mention a serious blow to John Kerry's candidacy.

The corporate scandals of recent years have created an expectation of financial accountability and transparency. Viacom faces this expectation, but also another one just as powerful. With or without the memo controversy, there is an increased expectation in the news business of editorial accountability and transparency. The Internet has democratized information. Pajama-clad bloggers can check facts as easily as Dan Rather's staff.

CBS News and 60 Minutes are valuable brands. Over the years, 60 Minutes in particular has been a cash cow for the network. Those brands now face irreparable harm. The Viacom board has a fiduciary duty to protect the interests of shareholders by getting to the bottom of how CBS came to use the fakes, and where they came from.

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About the Author

Peter Flaherty is president of the National Legal and Policy Center, a foundation promoting ethics in public life. The group sponsors the Government Integrity Project.