Redstones win battle at Viacom
Months of feuding ends with resignation of CEO Philippe Dauman. Board elects his replacement.
Media mogul Sumner Redstone’s boardroom war for control of Viacom Inc. has ended in victory with the resignation of Chief Executive Philippe Dauman and the installation of new members to the company’s board.
Viacom’s board Thursday elected Thomas Dooley as CEO. Dooley, 59, is expected to serve at least through the end of September and could stay on longer.
Dooley has long been a popular figure among the rank and file of Viacom. He has worked 36 years for the New York media company that owns television channels MTV, VH1, Comedy Central, Nickelodeon and the Hollywood movie studio Paramount Pictures.
Thursday night’s meeting culminated with board members approving a settlement designed to end the rancor that pitted Sumner Redstone and his daughter, Shari Redstone, against Dauman and other members of the board.
During the meeting, Dauman and Shari Redstone praised each other for their dedication to Viacom, a person with knowledge of the meeting said. That was in sharp contrast to the public feuding that has engulfed the media company for the last three months.
Dauman thanked Sumner Redstone for his career opportunities, including serving as chief executive for nearly 10 years. Redstone hired Dauman, then a young corporate lawyer, in 1986 as the mogul was preparing his hostile takeover of Viacom.
Dauman will receive a generous payout of $72 million. The golden parachute was outlined in Dauman’s most recent employment agreement, negotiated in in early 2015.
The proposed settlement, confirmed by three people close to the company, marks a significant victory for the ailing 93-year-old billionaire, who lives near Beverly Hills, and his daughter, who serves as vice chair of the board.
The Redstone family demanded new leadership at the beleaguered company that has seen its stock slide 45% in two years.
Next month, Viacom’s board is expected to consider a succession plan and weigh whether to keep Dooley in the top job. Dooley is expected to begin meeting with the five new board members, who were identified by Shari Redstone in June.
Five veteran board members will step down this year or at the company’s annual meeting early next year. For the next few months, Viacom’s board will have at least 15 members, an overlap designed to ensure a smooth transition.
The proposed settlement, which must receive court approval, is expected to end the legal wrangling in Massachusetts and Delaware. The skirmish centered on questions as to whether the ailing mogul orchestrated a series of complex moves to shake up the company — or if he was acting under pressure from Shari Redstone, who was estranged from her father until late last year. She has been a fierce critic of Dauman.
In the end, Dauman and other Viacom board members recognized that they did not have the staying power to battle Sumner Redstone and his determined daughter. The Redstone family holds the controlling voting shares of the Viacom and CBS Corp. — a $40-billion media empire that was built over three decades.
Dauman is expected to serve as nonexecutive chairman of Viacom until Sept. 13.
Dauman won a small concession: He will have an opportunity to present his plan to sell as much as 49% of Paramount Pictures to an outside investor. However, the Paramount proposal must win the unanimous approval of Viacom’s enlarged board, which won’t be an easy task. Sumner Redstone doesn’t want Viacom to unload such a significant stake of Paramount, which he won in a contentious bidding war in 1994. The studio once churned out culture-defining hits such as “The Godfather” and “Forrest Gump.”
The tycoon got his start in the entertainment business managing his family’s chain of movie theaters. The family believes that Paramount is core to the company’s operations, and they didn’t want a new investor to complicate the picture.
Both sides were motivated to find a compromise to end the squabble before a trial that was set to begin next month in Massachusetts.
The trial was expected to delve into whether Sumner Redstone was mentally competent or under undue influence of his daughter when he abruptly dismissed Dauman and another longtime associate, George Abrams, from a trust that will someday control his shares in Viacom and CBS. Dauman and Abrams filed a suit in Massachusetts to try to reverse their dismissals.
Viacom’s proposed new board members are Nicole Seligman, who previously served as the president of Sony Entertainment Inc.; Thomas May, chairman of Eversource Energy; Ken Lerer, a managing partner of a New York investment firm whose portfolio includes BuzzFeed and Warby Parker; Ronald Nelson, executive chairman of Avis Budget Group; and Judith McHale, a former president of Discovery Communications.