Settlement talks between Sumner Redstone and ex-girlfriend Manuela Herzer have hit a roadblock, and attorneys now are busy gearing up for what could be a contentious trial.
Attorneys representing the 92-year-old mogul and his former companion late last week were close to an agreement on the framework for a settlement that would have ended the lawsuit that challenged Redstone’s mental competency.
But after details of the settlement leaked, negotiations fell apart.
“We have hit a snag,” Pierce O’Donnell, Herzer’s attorney, said Monday. “We will see what happens.”
He declined to provide details of what caused the talks to stall. On Tuesday, O’Donnell released a statement saying the issue was “not over monetary issues.”
“We remain hopeful that we can resolve our differences,” O’Donnell said on Tuesday. “A settlement is in everyone’s best interests. But if we have to go trial, we look forward to it.”
If the two sides fail to reach an agreement, the case could go to trial early next month before Los Angeles County Superior Court Judge David J. Cowan.
The two sides were hoping for a settlement that would close the chapter on a tawdry lawsuit that has been a distraction for media company Viacom Inc. and an embarrassment for the Redstone family.
Herzer met Redstone in 1999, and they had a romantic affair, later becoming friends. As his health deteriorated, she helped care for him until Redstone ordered her out of his home and life in mid-October.
Herzer would have received $25 million to $30 million to end her claim that she should be returned to a position of power in Redstone’s life. Until October, Herzer was designated as the person who would make healthcare decisions should Redstone become incapacitated.
A deposition of Shari Redstone, Sumner Redstone’s daughter and the vice chair of Viacom Inc., has been scheduled for next week, O’Donnell said. A representative for Shari Redstone declined to comment.
Viacom Chief Executive Philippe Dauman is expected to also give a deposition.
Sumner Redstone controls media companies CBS Corp. and Viacom Inc., which owns Paramount Pictures and the MTV, Comedy Central and Nickelodeon cable channels.
Meanwhile, more uncertainty swirled around the planned sale of a stake in the historic movie studio.
Dauman devised a plan to sell a big chunk of Paramount in February, hoping to fetch a high price that would boost the overall value of the media company.
However, less than a week later, Redstone told Paramount Pictures Chairman Brad Grey that he did not want to sell Paramount, according to a person familiar with Grey’s visit who declined to be identified discussing sensitive conversations.
Some prominent investors didn’t put much stock in the latest twist.
“I can’t believe that Sumner would say ‘yes’ to selling Paramount, but stories get garbled,” said Mario Gabelli, whose investment funds are the second-largest voting shareholder of Viacom Inc. “But why would Sumner become upset about selling a portion of it? Why would the board be upset? I am a shareholder and I’m not upset.”
Paramount has long been one of Redstone’s favorite assets, but Viacom has been struggling to lift its sagging stock price, and investors have been demanding dramatic action.
Viacom has said that more than three dozen parties have expressed interest in the Melrose Avenue studio. Dauman has said he wants to find an investor by the end of June, though dissension on Viacom’s board could complicate that process.
The Wall Street Journal reported late Monday that Dauman may have misunderstood whether Redstone, the controlling shareholder of the company, gave his approval to sell a piece of the movie studio. The Journal reported that Dauman told the Viacom board that Redstone’s nurse supported Dauman’s view that Redstone initially appeared to agree to the plan to look at strategic options.
“This definitely muddies things up,” said Eric Jackson, managing director of SpringOwl Asset Management, which has been lobbying for big changes at Viacom, including management changes.
Whether Redstone supports the proposed sale might not matter. Redstone resigned as Viacom’s executive chairman in early February, and Dauman stepped into the chairman’s seat.
Redstone controls 80% of the voting stock of Viacom but has one vote on the board. His daughter, who also serves on the board, could side with her father and oppose Dauman in a sale of Paramount.
The board has not taken a vote on the matter, but a majority would ultimately be asked to approve such a sale if an acceptable buyer is found.
Paramount is worth an estimated $5 billion, according to analysts, which is roughly twice the value of the company implied by Viacom’s sagging stock price. Paramount has struggled in recent years, suffering from a thin film slate.
Los Angeles Times staff writer Ryan Faughnder contributed to this report.