In a dramatic move that suggests a major shake-up at media company Viacom Inc. may be imminent, Sumner Redstone said Wednesday that he has lost confidence in his hand-picked board members who oversee the media company.
Redstone's comments came in response to an open letter sent this week by Viacom's lead independent director, Frederic Salerno, who pleaded for the opportunity to meet with the ailing 93-year-old mogul. Viacom board members say their attempts to get access to Redstone have been thwarted.
Redstone is angry with Viacom Chief Executive Philippe Dauman over his plan to sell a sizeable stake in his treasured movie studio. Redstone also is unhappy that Viacom stock has lost more than 40% of its value in the last two years as its TV channels have struggled to remain relevant.
"I no longer trust Philippe or those who support him," Redstone said in Wednesday's statement, which was addressed to Salerno and distributed by Redstone's recently hired spokesperson.
The statement represents the sharpest criticisms to date that Redstone has leveled against Dauman and the board.
As the controlling shareholder of Viacom, Redstone can replace Viacom board members without having to wait for the annual shareholders meeting next spring – or even calling for a special election.
Some observers expect the Redstone family – through its investment vehicle National Amusements -- will take action to shake up Viacom's board by installing new directors, who then would oust Dauman as chief executive. Dauman, who once was Redstone's most trusted lieutenant, has held the job since September 2006.
Late last month, Viacom independent board members said they would resist any attempts to overhaul the board. Some Viacom board members believe that Redstone's daughter, Shari Redstone, not Sumner Redstone, is behind the moves. However, in Wednesday's missive, Redstone – who has a severe speech impediment – said he was the one directing the legal team.
The ailing mogul and his daughter visited Paramount Pictures in Los Angeles on Friday. On Tuesday, he stopped by CBS' West Coast offices in Studio City and met briefly with CBS Chief Executive Leslie Moonves.
Dauman and Salerno said they have been exploring the Paramount stake sale in an effort to boost Viacom's share price and provide other strategic advantages for Viacom, which also owns Comedy Central, BET, MTV, VH1 and Nickelodeon cable channels.
Dauman has said he and the board are acting in the interests of all shareholders.
"We could clear a lot of this up if Sumner would share his thoughts with me face-to-face," Salerno said late Wednesday in a statement.
A Viacom representative declined to comment further.
Although the Redstone family holds nearly 80% of the voting shares, through National Amusements, their economic interest in the company is about 10%.
"I am determined to act in the best interests of the company and all of its shareholders," Redstone said in his statement to Salerno. "I do not trust you or the current board to do the same."
In late May, Dauman and another Viacom board member, George Abrams, sued Redstone and his family after the two men were removed from their influential positions as board members of National Amusements. They were also stripped of their roles as members of the Sumner Murray Redstone trust, which will oversee Redstone's controlling shares after he dies.
"I am being sued by my fellow board members and my wishes are being ignored," Redstone said in the one-paragraph note.
National Amusements holds the controlling stake in CBS as well as Viacom. The Redstone family has signaled they are happy with Moonves at CBS.
"The simple truth here is that Sumner Redstone is the controlling shareholder of Viacom," activist shareholder Eric Jackson wrote in a report earlier Wednesday. "And Delaware law is clear: the controlling shareholder can make changes to management and the board of directors as he or she sees fit."
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