At the end of January, Dan Loeb and I had a “drink” together—sparkling water for both of us and some crudités—at the recently opened Aman New York, at the corner of 57th and Fifth. There is some sort of private Aman Club in there for members, as well as an ultra ultra-luxe hotel. Since Dan is a member, we agreed to meet there.
We spoke about a bunch of things, including about his friend Marc Benioff and Salesforce. He made no mention of buying a stake in Salesforce and becoming the fifth activist to buy into the stock—nor should he have mentioned it—but it was clear to me he knows and likes Marc and has been serving as some sort of informal adviser to the embattled C.E.O.
So what is a founder/C.E.O. to do when there are five activist investors—Starboard Value, Elliot Management, Value Act, Inclusive Capital and now Loeb’s Third Point—hanging out in your capital structure? Benioff is uber successful, of course, with a net worth of around $7 billion these days. So, on the one hand, dealing with five activist investors isn’t going to change his lifestyle one iota. But, on the other hand, he’s got to care since Salesforce is his baby. Should he take a page from the Disney playbook, where now two C.E.O.s in less than a year have seen off threats from two serious activist investors, including both Nelson Peltz and the ubiquitous Loeb?
In Disney’s case, the company was able to ward off the threats without giving up a board seat—although it gave Loeb a board choice, Carolyn Everson—but did agree to cut $5 billion in costs, 7,000 employees and to reinstate the dividend by year end. So, not quite ignoring. In fact, I’m told that as Bob Iger was going through his restructuring proposal on Wednesday, Peltz and Trian were happily noting that he was giving them pretty much everything they asked for and checking off boxes along the way—enough anyway to get the hedge fund to fold its tent.
Benioff, who has had his own succession headaches, has already announced layoffs—in fact 10 percent of the Salesforce workforce—so that move is out. He’s already put one of the activist investors—Mason Morfit from ValueAct—on his board, so that move is out too, unless, say, his friend Dan Loeb goes on the board, which is a possibility. (I have no idea, and Dan did not bring this up during our visit.) I suppose Marc could consider divesting some of the 72 acquisitions that Salesforce has made since 2006, but presumably some of them have been accretive to Salesforce’s various SaaS offerings.
Maybe the wolves would like Marc to spin off Slack, which Salesforce acquired for $28 billion in 2021. I love Slack; Puck is big into Slack and it’s a great way to share ideas and communicate quickly to a like-minded group, such as colleagues in an office who may not be together in the same place, but does it really need to be part of Salesforce? I’m not convinced. But, on the other hand, is now the optimal time for a tech spinoff to stand on its own? It wouldn’t do much for Benioff to spin off Slack only to have it trade for, say, $10 billion. That would be an embarrassment.
So what’s Benioff to do? Obviously, he can save himself a lot of heartache if the Salesforce stock keeps heading back up. The company, which is still worth around $165 billion, has seen its stock oscillate, just like so many others: Salesfoce stock is down 19 percent in the last 12 months but up 24 percent so far this year. If that’s Salesforce’s trajectory for the rest of 2023, Marc might be able to keep the wolves at bay. In the meantime, I’d offer one simple suggestion. Maybe he should have a drink with Dan Loeb and take his wise counsel, find out what this group of investors wants and think about ways to give it to them.
Endless Sumner
I have read and reviewed (in yesterday’s Air Mail) Unscripted, the new book by New York Times reporters James Stewart and Rachel Abrams about the battle royale that raged for years in the C-suites of what is now known as Paramount Global, the company that emerged from the 2019 combination of CBS and Viacom. (My Puck partner, Matt Belloni, also reviewed the book for the Washington Post.) As I wrote in the review, I loved the book, especially for its gossip and revelations. And I like to think I am a good judge of the substance of the Shari Redstone–Les Moonves-ViacomCBS saga since I have written about it extensively, starting in June 2015, with my pieces about Sumner Redstone and his two live-in girlfriends, Manuela Herzer and Sydney Holland.
My only beef with Unscripted is that this is Shari Redstone’s version of events and it’s clear in the reporting and writing that she was a major source. (The authors have only said that Shari “responded to questions either directly or through a spokesperson, and participated in fact-checking”; in other words, a wide-open highway of participation.) How else, for instance, can one gather Shari’s fragile and wounded state of mind from her Fifth Avenue pied-à-terre on the morning that Moonves decided to hit the mattresses—suing the Redstones in Delaware Chancery Court? “She wandered through her apartment in a daze,” Abrams and Stewart report, without citing how they knew that.
To which I say, good for them for getting Shari to participate in the reporting of their book. In my many years of reporting and writing on this topic, she only agreed to meet with me once, in an off-the-record conversation in the breakfast room at the Pierre Hotel, where Shari has an apartment. I think she just wanted to size me up, since I was the one chiefly responsible for her being able to get rid of Herzer and Holland and to try to supposedly get back in the good graces of her father.
Unscripted is not quite Shari Redstone hagiography, but it’s close. “Today Shari Redstone ranks among the most powerful executives in Hollywood,” Stewart and Abrams write in their Times adaptation from the book. “As nonexecutive chair she oversees Paramount Global, the company that emerged from the combination of CBS and Viacom, home to such hits as last summer’s ‘Top Gun: Maverick’ and the current streaming series ‘Yellowstone.’” And that, to me, is where the problem lies in this extraordinary corporate saga.
In my reporting, Shari was not the hero of the story that Stewart and Abrams make her out to be. She was rather a very clever and opportunistic antagonist, who saw her openings and seized them, knowing that her increasingly comatose father and a mortally wounded Les Moonves would not be able to do anything to stop her. First of all, Sumner made no secret of the fact that he didn’t want Shari to succeed him. No matter, she did it anyway. He also made very clear that he didn’t want Viacom and CBS recombined. Heck, he was the one who separated them. No matter, Shari decided she wanted them recombined, and she did it, even though Moonves, the CBS C.E.O., was dead set against the recombination. When he made himself vulnerable because of his atrocious #MeToo behavior, she pounced and got her hand-picked boards at both CBS and Viacom to go along and force the merger. And she made it all legal and nice, too. Sumner, gravely reduced in his later years to immobility, signed off on bequeathing her control of the family’s nearly 80 percent voting control of Viacom and CBS (and 10 percent economic ownership). If you look at the signed papers, as I have, you will see something quite extraordinary: a Sumner Redstone “signature” that is nothing more than a veritable line of ink that falls off the page in a grandiose sweeping arc downward. It’s an extraordinary metaphor.
None of this, by the way, is included in Unscripted. Also excluded, perhaps because it calls into question the Stewart-Abrams thesis, is the fact that the formerly $10 billion Redstone family fortune is now a much-diminished fortune of around $1.4 billion, although I’ve seen estimates that put Shari’s net worth closer to $500 million. Nor is there mention in the book of what has become of Paramount Global. It’s now a bit player on the media scene—despite owning CBS and Paramount—with a market value these days of around $14 billion, a mere fraction of its major competitors, Disney, Comcast and Warner Bros. Discovery. The Paramount stock price is down 40 percent in the last year and down nearly 50 percent from when the merger closed in December 2019. I’m sure that part of the reason Shari wanted to re-combine CBS and Viacom was to make it easier to sell Paramount Global in one fell swoop to one buyer. But nowadays that looks increasingly unlikely to happen. It’s unclear who would want a declining CBS linear broadcast network as well as its cable and digital channels.
The ultimate irony of the Redstone saga is that for Shari to get her money out of the company now, after all this trouble, she may have to break it up again or to sell it off in pieces. Don’t get me wrong, I have great admiration for Stewart and Abrams, with whom I’m friendly, but I feel like the price they paid for bountiful access to Shari in the writing of their excellent book was to fail to come to grips with just how much havoc Shari wrought in getting her way. That’s just something we’ll have to agree to disagree about without being disagreeable.
