USA TODAY International Edition
Viacom CEO is suing to reclaim Redstone role
Viacom Chairman and CEO Philippe Dauman and board member George Abrams filed a lawsuit Monday after a lawyer claiming to represent former Viacom Chairman Sumner Redstone removed them as trustees of Redstone’s trust, igniting more questions about the future of the media company’s management.
The complaint, filed in the Commonwealth of Massachusetts Probate and Family Court, claims Redstone’s daughter, Shari Redstone, illegally removed their names from the trust to regain control of her father’s business affairs. Sumner Redstone is in need of 24- hour care and has difficulty communicating. Dauman and Abrams say he’s not mentally capable of making the decision to remove them, which was revealed last Friday. The suit seeks to block their removal as trustees.
Redstone, who stepped down as chairman of Viacom and CBS Corporation in February, is still chairman and CEO of National Amusements, a theater company that owns controlling stakes in the two media giants. Shari Redstone is president of National Amusements and is one of seven trustees of her father’s trust. Dauman and Abrams were also removed as board members of National Amusements, and the suit asks that they be reinstated.
Viacom owns Paramount Pictures, Comedy Central, BET, MTV, Nickelodeon and other cable networks.
Meanwhile, Sumner Redstone has appointed his oldest granddaughter- in- law, Kim Ostheimer, and a family friend, Jill Krutick, to replace Dauman and Abrams in his trust. Krutick and Tad Jankowski, general counsel of National Amusements, have been named new members of National Amusements’ board of directors.
The lawsuit “only appears to amplify a toxic situation, where investors have little sense of who will control the company in the months ( if not years) ahead,” wrote Brian Wieser, an analyst at Pivotal Research Group, in a note to investors Monday. If Shari Redstone were to gain control of Viacom, she could move to replace Dauman and the management team.
“If the current management team is replaced, Viacom’s stock will undoubtedly rise on a shortterm basis given investor frustration ( over) the company’s operating performance,” Wieser wrote.
Dauman said Redstone is being “manipulated” by his daughter.
In a statement, Shari Redstone said it was “absurd” to suggest that she is controlling her father.
The drama could have longterm implications for Viacom, which wants to sell a stake in its film business to pay off some debt as its cable networks continue to suffer from low ratings and sluggish ad sales. The plan has been opposed by Sumner Redstone, and the battle could affect the sale of Paramount.