Sumner Redstone’s attorneys say he removed key lieutenants from trust over Paramount sale
The high-profile dispute between Sumner Redstone and his lieutenants took center stage in a Massachusetts courtroom Tuesday, with lawyers haggling over what motivated the media mogul’s decision to oust two loyal advisors.
Attorneys for Redstone argued that plans to sell a stake in movie studio Paramount Pictures against his wishes -- and not mental incompetency -- contributed to his unexpected decision to remove Viacom Chief Executive Philippe Dauman and George Abrams from the board of his family’s investment vehicle. The men were also removed from a trust that will eventually oversee his controlling shares in Viacom Inc. and CBS Corp.
That prompted Dauman and Abrams to sue Redstone and his family members to reverse the decision, charging that the mogul is being manipulated by his daughter, Shari Redstone, in an effort to take control of the trust’s assets.
The arguments, presented before a Norfolk County Probate Court judge on Tuesday, came a day after Redstone’s family firm, National Amusements Inc. -- which controls nearly 80% of voting stock in Viacom and CBS -- announced that it had amended Viacom’s bylaws to require a unanimous vote to approve any Paramount sale.
Dauman supports selling a piece of the legendary studio as a means to reduce the company’s debt. Redstone, however, has been vehemently opposed to the plan.
The hearing Tuesday was to consider a request by Dauman and Abrams to speed preparations for a trial. They are seeking access to Redstone’s medical records and an order for an examination of the mogul by an independent physician, rather than his own doctors.
Another issue to be decided is a venue for the case. Redstone’s attorneys want further legal proceedings to occur in his current home state of California, while Dauman’s team have pressed to keep the case in Massachusetts, where National Amusements and Redstone’s trust are incorporated.
Probate Judge George Phelan said he would rule on the matters later this month after listening to attorneys from both sides -- 22 were in the courtroom located in this small town outside of Boston -- debate the mental state of the 93-year-old Redstone, at times depicting scenes worthy of a Gothic horror novel.
Redstone attorney Robert Klieger described a visit to his client’s home in March for a meeting of the family’s legal team. Klieger said he had never met Redstone before, but one of Redstone’s nurses -- among a dozen to care for him around the clock --– brought Klieger in to see the mogul for a few personal words.
“He asked me to communicate that he was not interested in selling any portion of Paramount,” Klieger said.
The attorney said he believed that “it was likely something that Redstone got worked up about early that day” as reports had surfaced that the studio that Redstone acquired for $10 billion in 1994 was being shopped.
Klieger said that when he was back at the residence the next day, Redstone followed up with him about whether his wishes were passed along. After telling Redstone that he had informed Viacom counsel, Redstone replied, “You need to send the message to the board.”
Les Fagen, an attorney for Dauman and Abrams, countered that Redstone’s decision to randomly discuss Paramount with “a stranger” would be uncharacteristic of a powerful business leader in control of his personal situation.
“Does this sound like the act of a competent man?” Fagen asked. “Or does it sound like a man in prison trying to get a message out.”
Klieger later noted that he had worked for firms that had done business with various Viacom-owned properties over the years, and that though they were not personally acquainted, Redstone was familiar with him.
As for their encounter, he added, “It surprised me not because ‘why would he trust me?’ What was surprising was that the message not being listened to.”
Attorneys for Dauman and Abrams presented a dire picture of Redstone’s condition, in which he requires a feeding tube and suffers cognitive impairment, at one point suggesting that he was “hanging on to life by a thread.” They said Shari Redstone has isolated the mogul from longtime friends and colleagues.
“Mr. Redstone does not have the capacity to deal with the issues we’re talking about,” Fagen told the court.
Though Redstone family attorneys acknowledged that he requires a speech therapist or one of his nurses to communicate, they said he leaves his home for visits with his grandson and friends and that his physical condition has stabilized.
“There has been significant improvement in Mr. Redstone’s capacity in recent weeks,” Redstone physician Richard Gold said in a declaration presented to the court. “Far from being a ‘prisoner’ in his house, the frequency with which he leaves the house has been steadily increasing over the past several months. I have also not observed any recent decline in Mr. Redstone’s mental condition.”
Gold, who said he has treated Redstone since March 2013, added that the mogul continues to have the ability to make his own medical decisions.
Attorneys for the Redstone family also contend that he is still engaged when it comes to discussing his business, which includes Paramount, the movie studio he acquired after a bidding war with Barry Diller. Redstone has described the studio as his “baby,” and his lawyers said their client has been clear in his opposition to any deal that gives up all or part of Viacom’s ownership.
“Sumner Redstone may have a tube in his throat but there has never been any equivocations in his voice,” Redstone attorney Peter Biagetti told the court.
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