Viacom chief executive Philippe Dauman filed a complaint today, disputing his removal by company czar Sumner Redstone from a family trust that holds the keys to long-term control of the media empire.
The suit, filed in Commonwealth of Massachusetts Probate and Family Court, alleges that the 92-year-old Redstone is incapacitated and being controlled by his long-estranged daughter.
"Shari Redstone is attempting to illegally hijack her father's well-established estate plan," Dauman said in a statement. "We will continue to have great respect and affection for Mr. Redstone, but he is clearly being manipulated by his daughter, Shari."
The tabloid-driven dispute has major implications for pay-TV as it involves one the biggest programming conglomerates.
"After years of estrangement, she has inserted herself into his home, taken over his life, and isolated him from anyone not under her control, including longtime business colleagues," Dauman added. "Shari's actions amount to an unlawful corporate takeover, and if effectuated, could have far-reaching consequences for thousands of shareholders and employees of Viacom."
On Friday, Redstone removed both Dauman and Viacom director George Abbrams from the trust and board of directors of National Amusements, through which Viacom is controlled. Redstone said he made this decision based on performance of the company. Certainly, he's not without support in this assertion — Viacom stock has dropped precipitously over the last four years as ratings and ad sales have declined for its linear channels.
Redstone won a judgment last month, declaring he had the mental capacity to change his healthcare agent and setting in motion the return of Shari Redstone to a controlling capacity.
If Dauman is unable to get a ruling declaring the Sumner Redstone unable to make decisions, major changes could extend to CBS Corp., BTIG Research analyst Richard Greenfield said.
"If Sumner Redstone is unhappy and has capacity, it is hard to see how Philippe Dauman and his management teams survive the wrath of Redstone," Greenfield said. "If Dauman is removed, the question becomes will Viacom and CBS be recombined (safest move for Viacom, but not what CBS shareholders want). When Viacom was split, there was no minority shareholder vote and it is unclear if a majority of the minority of shareholders would be needed to recombine (nothing in the bylaws speaks to this issue. If not recombined, Viacom could be put up for sale, but that appears unlikely if Sumner does not even want a portion of Paramount sold today."
Sumner Redstone turns 93 on Friday.
For more:
- read this New York Times story
- read this Reuters story
- read this BTIG Research story
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