NEW YORK (TheStreet) --Late last week reports surfaced that a settlement agreement between Viacom (VIAB) - Get Reportand CEO of National Amusements (Viacom's parent company) Sumner Redstone had been approved by Viacom's board to effectively oust CEO Philippe Dauman from his position at Viacom.
New York Times columnist Jim Stewart, who penned an article detailing the specifics of Dauman's exit, joined Friday morning's "Squawk on the Street" on CNBC to explain how the decision was made.
"Utterly mystified" by the settlement agreement, Stewart says Dauman was gaining momentum in several lawsuit cases that aimed to preserve his position at the company, by claiming Sumner Redstone had been mentally incompetent to make decisions that would impact the company.
"All of a sudden there's a settlement. I was wondering what Dauman got out of this and the answer seems to be nothing. It turns out when I delved in and talked to almost everyone involved, that the board said we've had enough of this," Stewart explained.
The tipping point, Stewart noted, came about when board members had become aware of Dauman engaging in settlement talks with the Redstone's without telling the lead independent director or the board members he was doing so.
"They were furious when they found that out," Stewart said.
The secret settlement talks, coupled with Viacom's disastrous performance under Dauman, talent threatening to leave, the unwillingness for other companies to want to engage in deals, and the amount of money at stake, caused the board to put an end to the tumultuous relationship, Stewart noted.
Stewart concluded by commenting on the current situation at Viacom, and potential action it can employ to help off-set these major setbacks.
Describing the current atmosphere surrounding the company as a "mess," Stewart believes Viacom is in need of "long overdue change."
Some have pointed to CBS (CBS) as a potential remedy as National Amusement is the parent company of CBS. However, Stewart noted CBS CEO Leslie Moonves is uninterested in a merger.
Shares of Viacom were higher during mid-morning trading on Friday.
Separately, TheStreet Ratings rates Viacom as a "Hold" with a ratings score of a "C+." The primary factors that have impacted TheStreet Ratings are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and notable return on equity. However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You canview the full analysis from the report here: VIAB