Pressure on CBS Chairman and Chief Executive Leslie Moonves intensified Tuesday with news the Los Angeles Police Department had investigated sexual assault claims against the executive from the 1980s.
Wall Street analysts and others have offered dire assessments of Moonves’ chances to remain in the job. But perhaps the most stinging rebuke came from inside CBS, when “The Late Show” host Stephen Colbert offered a pointed critique during his show on Monday night.
“Les Moonves is my guy … I like working for him,” a serious Colbert told his audience. “He stood behind this show while we were struggling to find our voice … [but] accountability is meaningless unless it’s for everybody — whether it’s the leader of a network or the leader of the free world.”
CBS’ board on Monday voted to hire an outside law firm to investigate allegations of sexual harassment raised by six women in an article on Friday in the New Yorker magazine. The board action appeared to help stabilize CBS shares, which climbed 2.7%, or $1.39, to $52.67 on Tuesday.
A day earlier, the stock had plummeted amid speculation that Moonves might be suspended. But board members stopped well short of that, announcing that they would hire an outside counsel to launch an independent investigation into the claims of multiple women cited in the New Yorker article. In the meantime, Moonves remains CEO and chairman.
CBS’ executives hunkered down as they prepared to deliver an earnings report Thursday.
But some investors were rattled by the developments. On Tuesday, investment firm Cowen & Co. downgraded CBS’ stock.
“The allegations go beyond CEO Les Moonves and extend to the overall culture of the company, this is a serious matter for the board,” Cowen media analyst Doug Creutz wrote in a report.
“Our downgrade is not based on any evaluation of the claims in the [New Yorker] article,” Creutz wrote. Instead, he cited, “the added overhang of an investigation of uncertain length with an uncertain outcome.”
Pivotal Research senior analyst Brian Wieser faulted CBS’ board for not investigating sexual allegations earlier, saying management was aware of earlier media inquiries into Moonves’ behavior.
“The company will not be viewed by many key industry participants as taking workplace safety seriously without significant action,” Wieser wrote. “Consequently, it seems likely to us that CEO Les Moonves will be eventually removed from his role.”
Additional serious questions about Moonves’ alleged past behavior surfaced Tuesday when Los Angeles County prosecutors disclosed that an unidentified woman last year accused the network chief of assault and battery and exposing himself. Prosecutors declined to file charges because the alleged incidents dated back to 1986 and 1988, which exceeds the statute of limitations.
Moonves did not respond to a request for comment. CBS declined to comment.
The turmoil comes at a time when CBS’ leadership already was embroiled in a high-stakes legal battle for control of the company. CBS board members in May sued controlling shareholder Shari Redstone, who now oversees her family’s nearly 80% voting stake in CBS. The Redstone family also controls Viacom Inc., which owns MTV, Nickelodeon, BET, Comedy Central and Paramount Pictures in Los Angeles.
Redstone has been pressing to recombine CBS and Viacom, which were part of the same company until 2006. However, Moonves and a majority of the CBS board have opposed a merger.
Analysts said Moonves’ tenuous grip increases the odds that Redstone, through her family’s investment vehicle National Amusements Inc., could shake up CBS management and reunite CBS and Viacom.
“If the appearance (true or not) is that the board hasn’t acted in the interest of shareholders by allowing a culture of sexual harassment to persist for decades through inadequate oversight, it undermines their case and strengthens NAI’s position,” Creutz said.
Court documents filed in Delaware late Monday by National Amusements accused Moonves and Chief Operating Officer Joseph Ianniello of erasing text messages that might have been used as evidence in the trial.
National Amusements asked the judge to grant a motion to prevent CBS from destroying documents and also to turn over the cellphones of high-level CBS executives. In a heavily redacted version of the filing, National Amusements alleged that Moonves and Ianniello used a popular phone app, called TigerText, which automatically erases text messages after a certain period of time. Bloomberg News first reported on the filing.
CBS said that it, like many other companies, used the app as protection from a cybersecurity threat.
“TigerText was implemented by CBS’s Information Security Group for cyber-security reasons following the Sony hack,” CBS said in a statement, adding that the app “was not developed or used for any nefarious or sinister communications as some have alleged.”
Current and former employees have been reeling with each new allegation. Soon after the news of the TigerText dispute broke, one former executive said: “Given the battle with Shari Redstone, all of this feels like a coordinated attack.” The former executive did not want to be identified discussing the delicate situation.
Should Moonves eventually depart, his absence would create a void at the top of the media company, which owns America’s most-watched broadcast network, a string of television stations, the Showtime premium channel, Simon & Schuster book publishing house and a 50% stake in the CW network.
For his part, CBS late night host Colbert told viewers he had no idea what might happen to his boss. Moonves hired the former Comedy Central personality to replace David Letterman on “The Late Show” in 2015.
“In a situation like this, I would normally call Les,” Colbert said.
Staff writer Stephen Battaglio contributed to this report.
6:05 p.m.: This article was updated throughout with analyst commentary and details about a Los Angeles Police Department investigation.
This post was originally published at 6:45 a.m.