CBS stock falls on report of New Yorker article alleging misconduct by Les Moonves

The New Yorker is about to publish an investigation of CBS Corporation and its CEO Leslie Moonves. News of the impend...

Posted: Jul 28, 2018 9:36 AM
Updated: Jul 28, 2018 9:36 AM

The New Yorker is about to publish an investigation of CBS Corporation and its CEO Leslie Moonves. News of the impending investigation sent the company's stock down more than 6%.

Members of the CBS board of directors say they will take the allegations seriously.

But the magazine story hasn't actually come out yet.

Ronan Farrow, who has investigated President Trump, Harvey Weinstein, and other powerful men in the past year, has been pursuing a story about Moonves and CBS, according to people with knowledge of his work.

In TV circles, there have been rumors of an impending Farrow story about Moonves for the past six months.

Some people began to turn skeptical about the potential story because it had not materialized yet.

But the story is, in fact, set to be published on the web sometime Friday.

The New Yorker declined to comment, citing its policy of not commenting on reporting efforts before publication.

But The Hollywood Reporter foreshadowed the Farrow report in an item of its own Friday morning. According to The Hollywood Reporter, Farrow's piece is about CBS as a whole, including Moonves, who is said to be accused of sexual misconduct in the past.

CBS stock fell 4% as soon as the THR item came out. It closed down 6.1%, at $54.01 a share.

Moonves has been one of the most celebrated and well-respected executives in the television industry. A titan of broadcasting, he has guided CBS for the better part of twenty years.

Moonves is embroiled in a bruising legal battle with CBS vice chair Shari Redstone, whose holding company effectively controls CBS and its sister media company Viacom.

Related: CBS crisis comes to a head as Moonves and Redstone fight for network's future

The CBS board is split, with the independent members of the board backing Moonves in his quest for more autonomy from Redstone.

On Friday, in response to the expected Farrow report, the independent directors of the board said they would look into the charges made in the forthcoming article.

"All allegations of personal misconduct are to be taken seriously," the board members said in a statement. "The Independent Directors of CBS have committed to investigating claims that violate the Company's clear policies in that regard. Upon the conclusion of that investigation, which involves recently reported allegations that go back several decades, the Board will promptly review the findings and take appropriate action.

"The timing of this report comes in the midst of the Company's very public legal dispute. While that litigation process continues, the CBS management team has the full support of the independent board members. Along with that team, we will continue to focus on creating value for our shareowners."

Moonves did not immediately respond to a request for comment.

In a statement issued Friday afternoon, a representative for Shari Redstone said, "The malicious insinuation that Ms. Redstone is somehow behind the allegations of inappropriate personal behavior by Mr. Moonves or today's reports is false and self-serving. Ms. Redstone hopes that the investigation of these allegations is thorough, open and transparent."

-- CNN's Dylan Byers and Jill Disis contributed reporting

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