Battle for Viacom: Sumner Redstone, 92, moves to oust men he picked as trustees
The struggle for control of Sumner Redstone’s media empire — Viacom Inc. and CBS Corp. — culminated in a dramatic showdown Friday night.
The 92-year-old mogul moved to oust Viacom Chief Executive Philippe Dauman and longtime ally George Abrams as trustees of the entity set to control the two companies when Redstone dies or is incapacitated, according to a person familiar with the matter who was not authorized to speak publicly.
Redstone sent a faxed notification to Dauman and Abrams saying they would be replaced as directors of National Amusements and the trust that will supervise the mogul’s 80% controlling stake once he dies or is found incompetent.
The move, first reported by Fortune, would appear to be a victory for Redstone’s daughter Shari Redstone in the latest flare-up over the media properties valued at about $40 billion.
But it also could set the stage for a protracted legal battle. A representative for Dauman blasted the effort as “invalid and illegal” and suggested that Shari Redstone was behind the attempt to oust him from the trust.
“They are a shameful effort by Shari Redstone to seize control by unlawfully using her ailing father Sumner Redstone’s name and signature,” the spokesman said in a statement. “As she knows and as court proceedings and other facts have demonstrated, Sumner Redstone now lacks the capacity to have taken these steps. Sumner Redstone would never have summarily dismissed Philippe Dauman and George Abrams, his trusted friends and advisors for decades.”
A Viacom spokesman also questioned the validity of Friday’s actions, saying that the notification to Dauman and Abrams was sent by Michael C. Tu, a Los Angeles lawyer “previously unknown until this week to anyone associated with Sumner other than Shari Redstone.”
“The actions taken yesterday in Sumner Redstone’s name are completely inconsistent with his long expressed wishes and intent and extremely disruptive and damaging to Viacom and all its shareholders,” the spokesman said.
In a statement Saturday morning, Tu, a partner at Orrick, Herrington & Sutcliffe, said Redstone’s actions were “decisive and lawful,” and questioned Dauman’s leadership of Viacom.
“Mr. Redstone acted after he expressed his concerns regarding Viacom’s performance to Messrs. Abrams and Dauman, and received no response from them,” Tu said in the statement on behalf of Sumner Redstone. “The public statement made on Mr. Dauman’s behalf attacking Mr. Redstone’s capacity is disappointing and incorrect.”
Shari Redstone said in statement Saturday: “l fully support my father’s decisions and respect his authority to make them.”
The fight for control of Viacom casts another cloud of uncertainty over a company that has seen its stock value plummet more than 40% in the past two years.
The move also highlights deep divisions inside Viacom’s boardroom. Shari Redstone has long been at odds with Dauman and has been intent on remaining a key player in determining the future of CBS and Viacom, which boasts such culture-defining assets as Nickelodeon, MTV, Comedy Central and the Hollywood movie studio Paramount Pictures.
Earlier this year, she opposed naming Dauman as chairman of Viacom to replace her ailing father. She owns 20% of National Amusements Inc., the family’s investment vehicle that holds the controlling shares of Viacom and CBS.
Sumner Redstone’s competence was at the center of a recent bitter court battle, in which former companion Manuela Herzer argued that he was not able to make his own decisions when he removed her as the agent in charge of his advance healthcare directive should he become incapacitated..
L.A. County Superior Court Judge David J. Cowan found that Redstone was in command of his faculties enough to know whom he wanted in charge of his healthcare — his daughter Shari.
Nonetheless, during an 18-minute deposition played for the judge at the trial Sumner Redstone appeared to have trouble answering basic questions, such as his given name, according to a transcript of the session.
Earlier this week, Viacom’s board decided Redstone will not be paid an annual salary.
In a statement provided by Viacom, the company’s lead independent director Frederic Salerno expressed support for the current management team and their strategy for the media giant’s future.
Abrams, who has known Sumner Redstone for more than 50 years, called the mogul a friend who would never have ousted him from the trust.
“What is going on now is unsettling and sad,” Abrams said.
Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder
1:30 p.m.: This article was updated with comments from George Abrams and Viacom’s lead independent director.
12:25 p.m.: This article was updated to include a comment from Shari Redstone.
May 21, 10:06 a.m.: This article has been updated with additional comments from an attorney.
This article was originally published at 8:49 p.m., May 20.
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