Age has not withered this media baron
Sumner Redstone is winning most of the legal battles even as Viacom bleeds
The fight over Sumner M. Redstone’s $40 billion (Dh146.8 billion) media empire is over, and the 93-year-old mogul has won.
A truce has been reached in the vicious corporate battle that pitted Redstone, who controls Viacom and CBS, and his daughter, Shari Redstone, against his longtime confidants and directors at Viacom.
The two sides have completed a settlement agreement that puts an end to messy legal battles in Massachusetts, Delaware and California over whether Sumner Redstone had the mental capacity to make decisions about his businesses and whether he was being manipulated by Shari Redstone, who was long estranged from her father before they recently reconciled.
Terms of the settlement — which firmly put the future of the corporate empire under the control of Redstone and his daughter — include the dismissal of Philippe P. Dauman as chief executive of Viacom, the beleaguered media company that owns the MTV, Comedy Central and Nickelodeon cable television networks and the Paramount Pictures film and television studio.
Dauman will depart with a total severance package valued at about $72 million. Viacom’s board has approved the settlement, said the people briefed on the agreement.
Redstone, who is in poor health, controls about 80 per cent of the voting shares in Viacom and CBS through National Amusements, the private theatre chain company started by his father. The fight over Redstone’s empire erupted in May, when he unexpectedly ousted Dauman and another longtime confidant, George S. Abrams, from the trust that will gain control of his companies after he dies or is declared incompetent.
He also removed them from the board of National Amusements. The action set off a fight for money, power and control that included all the twists and turns of a Shakespearean drama, sullying the reputations of both sides and leaving a troubled company even more battered and bruised.
Dauman and Abrams filed suit in Massachusetts, challenging Sumner Redstone’s mental competency and depicting Shari Redstone as a villain who unduly influenced her father as part of an “unlawful corporate takeover”. Dauman, in turn, was depicted as a failing, egoistic executive who oversaw the loss of $7 billion in market capitalisation at Viacom in the previous year.
That suit was scheduled to go to trial in September. Another legal battle emerged in June, when National Amusements moved to replace Dauman and four other directors on the Viacom board.
Viacom’s lead independent director immediately filed suit in Delaware, seeking to block the changes. That case was scheduled to go to trial in October. Over the past three months, the two sides made a series of attempts to resolve the dispute out of court.
Settlement talks picked up in the past two weeks, after Viacom’s latest earnings report, in which the company said its profits plunged 29 per cent during the latest fiscal quarter. The company reported weakness across both its television and film groups, with soft TV ratings at some networks, declines in domestic advertising sales and the dismal box office performance of its film Teenage Mutant Ninja Turtles: Out of the Shadows.
Speech impediment
Reaching a settlement helps to preserve the privacy and the dignity of Sumner Redstone, who has suffered a series of strokes and has a severe speech impediment. And it prevents the public airing of the relationship between Redstone and his daughter, which was strained in the past.
The resolution also provides a path for Dauman to leave the company less contentiously and while still being well compensated. And, most importantly, Sumner and Shari Redstone now are decidedly in charge of the company’s future.
As part of the agreement, Thomas E. Dooley, Viacom’s chief operating officer, will become the interim chief executive through September 30, the end of the company’s fiscal year. Dooley is expected to work closely with the Viacom board during the next month and a half to develop a new strategic and financial plan for the company, the people said, and could potentially become the permanent chief executive, pending board approval.
Dooley, a longtime Viacom executive, has been a member of Viacom’s board since 2006. He started at Viacom in 1980 and has been part of Sumner Redstone’s inner circle since the mogul wrested control of the company in 1987.
While the fight for control over Redstone’s business empire has reached a resolution, Viacom’s business is in dire straits. The company has reported persistent declines in profit and revenue, and its share price has plunged about 47 per cent in the last two years.
As part of the agreement, Dauman will continue as nonexecutive chairman of Viacom until September 13, the people said. During that period, Dauman will have the opportunity to present Viacom’s board with his proposal to sell a 49 per cent stake in Paramount.
The deal would require the unanimous approval of the Viacom board. While Dauman has pushed for the deal, Redstone’s National Amusements holding company has opposed the transaction and the board is unlikely to approve it.
Reserved and calculating
Dauman, who formed a close bond with Redstone in the late 1980s when he was a young corporate lawyer, was named chief executive of Viacom in 2006. Described as reserved and calculating, Dauman didn’t let his guard down publicly amid the dispute in recent months as Redstone turned against him and opponents attacked his character, motives and performance as chief executive.
“I’m steady in all things,” Dauman, 62, said in June, just before stepping onto an elevator after making a business presentation at an investor conference. The quip was in response to a question from a reporter about whether he had lost weight in the midst of the drama.
During his tenure, a number of longtime executives and creative talent left the company. Comedy Central, for instance, said goodbye to three of its biggest stars: Jon Stewart, Stephen Colbert and John Oliver.
Critics, meanwhile, attacked the company for failing to transform the business from its traditional roots into a media company for the digital age. Dauman long maintained that he was positioning Viacom for growth through new initiatives, including the Paramount deal, TV ratings improvements, a new data unit and its international business.
As part of the agreement, Thomas E. Dooley, Viacom’s chief operating officer, will become the interim chief executive through September 30.