Battle for Viacom control flares up; Paramount sale could falter
Battle for control of Viacom flared up with the Sumner Redstone family working to line up prospective new board members, and Viacom executives countering that the clan’s recent actions – including efforts to scuttle a sale of nearly half of Paramount Pictures – could harm other investors.
The Redstone family investment vehicle, National Amusements, holds nearly 80% of the voting stock in Viacom and CBS Corp., giving the Redstone family extraordinary sway over the affairs of the two companies.
Sumner Redstone’s daughter, Shari Redstone, is not a fan of Viacom’s management, particularly Viacom Chief Executive Philippe Dauman, and she has been taking steps to shake up the company that has seen its share price fall more than 40% in the last two years.
Shari Redstone ultimately would like to recombine CBS and Viacom into one media company – should CBS Chief Executive Leslie Moonves agree to the plan, according to a person familiar with the situation who asked not to be identified discussing the internal conversations.
A spokesperson for Shari Redstone could not be immediately reached Friday morning.
Earlier this week, the Redstones’ Massachusetts-based National Amusements voted to change Viacom’s bylaws to require a majority vote for any sale of a stake in Paramount Pictures, the beleaguered Melrose Avenue movie studio.
Viacom, in a regulatory filing on Friday, said those changes – which the company contends are illegitimate – threaten to hobble the company’s efforts to do business and serve shareholders other than the Redstone family.
The company had hoped to sell as much as 49% of Paramount Pictures to a Chinese company or a large technology firm. The Paramount sale was Dauman’s first major initiative after becoming Viacom’s chairman in February after the mogul stepped down due to his deteriorating health.
Viacom executives had been hoping that such a sale would bring in billions of dollars – and serve to boost the company’s stock price.
But the Viacom bylaw alterations, announced Monday, appear to scuttle that effort – at least for now – because the changes mandate a unanimous vote of Viacom board members for any Paramount transaction. Sumner Redstone is adamantly opposed to any such deal.
The 93-year-old bought Paramount in a hard-fought battle in 1994 and has long considered the Hollywood studio his “baby,” according to court documents. He becomes tearful when the issue of a Paramount sale comes up, according to a geriatric psychiatrist who examined Redstone twice last month.
The boardroom battle is becoming increasingly untenable for Viacom’s management.
“The constraint imposed by the purported bylaw amendments could … have a significant adverse effect on the Company’s share price,” Viacom said Friday morning in a regulatory filing to document the bylaw change – and its opposition.
Meanwhile, the New York Times reported that National Amusements has been putting together a list of potential new Viacom board members that would change the balance of power on the board and serve as a prelude to an ouster of the embattled Dauman.
New board members would be independent and not have an allegiance to Redstone – or Dauman. Corporate governance experts in the past have criticized Viacom’s board for not being accountable to other shareholders. Viacom shares declined 2% to around $43.50 in early Friday trading.
Among the list of potential new board members are venture capitalist Kenneth Lerer, co-founder of the Huffington Post and chairman of the popular news site Buzzfeed; former top Sony Corp. executive Nicole Seligman; Judith McHale, a former Discovery Communications executive; and Thomas J. May, the chairman of Eversource Energy.
Representatives of National Amusements, Sumner Redstone and Shari Redstone declined to comment on that effort.
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