Burn, baby, burn.
CFRA Research downgraded 'B' shares of CBS Corp. (CBS) on Monday, July 30, after The New Yorker published an article detailing accounts of sexual assault and misconduct against long-time CEO Leslie Moonves.
According to the article by Ronan Farrow, published in the online edition on Friday after the market closed, six women have accused Moonves of harassment and intimidation, and dozens more describe abuse at his company. The story quotes actress and writer Illeana Douglas as saying to Farrow, "What happened to me was a sexual assault, and then I was fired for not participating."
"CBS is very mindful of all workplace issues and takes each report of misconduct very seriously. We do not believe, however, that the picture of our company created in The New Yorker represents a larger organization that does its best to treat its tens of thousands of employees with dignity and respect. We are seeing vigorous discourse in our country about equality, inclusion, and safety in the workplace, and CBS is committed to being part of the solution to those important issues," CBS said in a statement to The New Yorker.
"While Mr. Moonves has mostly denied the allegations, we see a range of potential outcomes that could make his tenure become increasingly tenuous, amid heightened sensitivity to the #MeToo movement," CFRA analyst Tuna Amobi said in a note.
"We see a particularly inauspicious timing for CBS, currently embroiled in a high-stakes litigation against National Amusements Inc. (NAI), its controlling shareholder under the direction of Shari Redstone, who might seek to exert further leverage under the current circumstance," the note continued. "With Ms. Redstone already calling for a "thorough, open and transparent" investigation, we see potential far-reaching implications for CBS's corporate governance and possible questions related to management succession. Q2 earnings report is expected this week after the market's closing on August 2nd."
Shares of CBS were down more than 4% to $51 a share on Monday.