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CBS stock drops following ouster of chief executive Leslie Moonves

CBS stock drops following ouster of chief executive Leslie Moonves
Leslie Moonves, shown in 2017, was removed as CBS chief executive late Sunday amid a sexual harassment scandal. (Chris Pizzello / Invision)

Shares of CBS Corp. were down about 3% in early trading Monday as Wall Street absorbed the news of the ouster of the media company’s high-profile chief executive amid a sexual harassment scandal.

The stock had climbed late last week as Wall Street was relieved over reports that the boards of CBS and National Amusements were negotiating the exit of Leslie Moonves, who was removed from his job late Sunday.

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Shares were down $1.71, or a little over 3%, to $54.34 as of 7:28 Pacific time.

Moonves’ future has been in doubt since the New Yorker magazine first reported July 30 on allegations of sexual misconduct over the course of his career. A second New Yorker story published Sunday had six additional women accusing Moonves of inappropriate sexual behavior or assault and pressed the company board to act.

Moonves maintains some of the incidents described in the story were consensual and others were false.

CBS has named the company’s chief operating officer, Joseph Ianniello, as interim chief executive. The move is expected to keep the company on track for the short term. But there are still questions about whether there will be more fallout from the sexual harassment scandal.

Doug Cruetz, a media analyst for Cowen, said there will be continued concern from investors as to whether the allegations that took down Moonves “extended to the overall culture of the company” and more executives are forced out.

Two outside law firms are continuing to investigate harassment allegations in the company. Jeff Fager, the long-time executive producer of the CBS newsmagazine “60 Minutes” has been accused by female employees of unwanted touching and tolerating a work environment that was hostile to women. One allegation from a former CBS News intern was included in the latest New Yorker story.

Fager has denied the allegations, but people inside CBS News who were not authorized to discuss the matter publicly believe he will exit the company.

Barring more revelations regarding harassment, Cruetz believes Ianniello will be a steady hand at CBS in the short term.

“Ianniello has worked for the company since 1997 and thus is very familiar with the assets,” Cruetz said in a note issued Monday. “We believe he is generally well respected on the Street as an operator and negotiator, including retaining talent.”

But Rich Greenfield, media analyst for BTIG, said he expects Ianniello to be a short-timer because of his close association with Moonves.

“Ianniello protected Moonves for years, had a similar focus on short-term cheerleading actions versus real long-term strategy, and was overpaid for years for his support of Moonves,” Greenfield said. “Timed to Ianniello’s exit, we would expect a new permanent CBS CEO to be appointed; feels likely it will come from outside CBS’ current executive ranks. “

Cruetz has a target price of $59 on the stock. The stock closed Friday at $56.06.

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