Stock Analyst Update

CBS Withholds Moonves Severance, Shares Attractive

Neil Macker, CFA

The  CBS (CBS) board announced on Dec. 17, 2018 that former Chairman and CEO Les Moonves was fired for cause based on the findings from the investigation into his actions. The investigation found that Moonves was guilty of “willful and material misfeasance,” violating company policies, breaching his employment contract, and failing to co-operate with the investigation. Due to being fired for cause, Moonves is not eligible to receive his $120 million severance package. We believe that Moonves is likely to sue the board over the investigation as the findings not only stop him from collecting his severance but make him almost unhirable if Moonves would like to make a comeback. We are maintaining our narrow moat rating and fair value estimate of $71. With the stock trading in 4-star range, we believe current prices offer an attractive entry point for investors.

The report found that “harassment and retaliation are not pervasive at CBS” but that the firm’s policies and practices did not reflect “a high institutional priority on preventing harassment and retaliation.” While we agree with the second part of that statement, we find the first part hard to reconcile with the large number of credible accusations against CBS executives, producers, and stars beyond Moonves. According to The New York Times, the firm is still paying a woman for her silence about sexual harassment by 60 Minutes founder, Don Hewitt, who passed away in 2009. Jeff Farber, Hewitt’s successor at 60 Minutes, was fired in September for threatening a reporter looking into sexual harassment allegations against him. Charlie Rose, a correspondent on 60 Minutes and co-host of CBS This Morning, was fired in November 2017 after reports about a number of women accusing him of sexual harassment and assault. The investigation revealed that CBS paid actress Eliza Dushku $9.5 million to settle her claims about retaliation after she accused “Bull” star, Michael Weatherly, of sexual harassment on the set of the show.

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Neil Macker, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.