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Viacom still working on sale of a stake in Paramount Pictures

Viacom still working on sale of a stake in Paramount Pictures
Viacom had narrowed the field of potential Paramount bidders to two companies. (Anne Cusack / Los Angeles Times)

Viacom Inc. is urging a judge to expedite legal proceedings in Delaware because of the fragile health of media mogul Sumner Redstone and because any delay could hamper the company's efforts to raise money by selling a stake in Paramount Pictures.

The controversial sale of a 49% stake in the Melrose Avenue movie studio has become a flashpoint in the fierce battle for control of Redstone's $40-billion media empire.

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Redstone's lawyers have pointed to Viacom Chief Executive Philippe Dauman's plan to unload a big chunk of Paramount as a catalyst for sweeping leadership changes that have thrown the media company, which also owns MTV, VH1, Nickelodeon, Comedy Central and BET, into turmoil.

On Thursday, Viacom attorneys renewed their efforts to get a judge in Delaware to speed up legal proceedings, including ordering a competency examine for the ailing 93-year-old mogul.

Both sides are hoping that a judge will determine whether a move last month to dump five Viacom board members, including Dauman, and replace them with new directors was valid.

Viacom said there were several reasons to warrant an expedited timetable for the legal proceedings.

"One is the possible loss of potentially critical evidence as Mr. Redstone's physical and/or mental health changes from the relevant dates at issue, and, given his age and health,the possibility of his death," Viacom attorney Edward B. Micheletti wrote in the nine-page letter to the Delaware chancery judge, Andre G. Bouchard,

Another reason for an expedited timetable is the proposed Paramount sale.  Dauman's plans to sell a piece of the studio angered the ailing media tycoon because Paramount has long been his prized entertainment property.

Dauman announced the Paramount sale in February, shortly after he became chairman of Viacom when Redstone relinquished the title because of his poor health.

Dauman had wanted to identify a buyer, either a foreign investor or technology firm, by the end of June but the bitter legal dispute with the Redstone family got in the way.

Viacom on Thursday indicated that it was pushing ahead with its plans for Paramount. A delay in the proceedings could have an "adverse impact on potentially valuable Paramount transaction," Micheletti said, which Viacom executives hope will boost the company's stock price.

"Viacom continues to pursue a publicly disclosed potential transaction involving, in part, a minority investment in its subsidiary, Paramount Pictures," Micheletti wrote.  "A cloud over any such transaction has been placed in the name of Sumner Redstone by attempting to amend Viacom's bylaws."

The filing noted that both Sumner Redstone and his daughter, Shari Redstone, are members of Viacom's board, and by virtue of bylaw changes, they could veto any Paramount transaction.

Changes to the bylaws require the Viacom board to vote unanimously for any Paramount transaction.

A spokesman for Sumner Redstone declined to comment on Viacom's filing.

Redstone in May abruptly ousted two of his longtime associates -- Dauman and Viacom director George Abrams – from their influential roles at the Redstone family investment vehicle, National Amusements. The two men also were removed from the trust that will eventually oversee Redstone's controlling interest in Viacom and CBS Corp.

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In June, National Amusements named five new board members to oversee Viacom. National Amusements asked a Delaware judge to ratify the board shuffle, and Viacom's lead independent director quickly sued to block the moves.

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