Earlier this year, we reported that Sumner Redstone had stepped down as head of Viacom, putting President Philippe Dauman in his place. Now the former CEO is shaking up the board again, and it’s likely his heir apparent is completely out. But Dauman’s not the only one out of a job, as many on the board have been handed their hats as well.
“Sumner Redstone has made no secret of his lack of confidence in the existing Viacom board of directors, He fully supports the steps taken today by National Amusements.” – Redstone lawyers Michael Tu and Rob Klieger in a statement.
Redstone owns the majority of Viacom/Paramount/CBS through his company National Amusements, and although he’s now enjoying emeritus status, he has used his considerable financial clout to shake up the board of Viacom, removing five of the eleven members including Dauman. Also out are George S. Abrams, Blythe J. McGarvie, Frederic V. Salerno and William Schwartz.
Replacing them will be Kenneth Lerer, co-founder of the Huffington Post and chairman of Buzzfeed; Nicole Seligman, former Sony executive; Judith McHale, former Discovery Communications chief executive; Thomas J. May, the chairman of the Eversource Energy utility and director at Bank of America; and Ronald Nelson, chairman of Avis Budget Group and former co-chief operating officer of DreamWorks SKG.
So what you’re seeing here is an effort to bring in some new energy with web 2.0 and cable executives, plus some interesting wild cards. Bringing in in Ronald Nelson, former COO of DreamWorks, for instance, kinda makes me wonder if Redstone was angry at losing Steven Spielberg to Universal, when the director signed a deal to come back to the studio he calls home. Add to that the embarrassment of JJ Abrams promising that CBS was allegedly backing out of their legal challenge against Axanar Productions, and to date, they haven’t. So it may be that Redstone has had enough.
“(This move is) a brazen and demonstrably invalid attempt by Ms. Redstone to gain control of Viacom and its management in disregard of Sumner Redstone’s wishes and to undermine the current Board’s ability to represent the best interests of all of the stockholders of Viacom.” – Outgoing board member Frederic Salerno
Redstone has also made the break with Dauman extremely public, shortly after Dauman was named to replace him after his retirement. Dauman was the inside man in Redstone’s organization, and a trusted confidant and advisor for decades. But now, according to aides, Sumner Redstone no longer trusts the man he called his “son in business.”
“(This move is) is invalid and illegal, a shameful effort by Shari Redstone to seize control by unlawfully using her ailing father Sumner Redstone’s name and signature.” – Philippe Dauman
The move also solidifies Redstone’s daughter Sheri Redstone, as a notable voice on the Viacom Board, which is leading many, including Dauman, to suggest that it isn’t really Redstone who’s making the moves, but his daughter. Salerno and others argue that the daughter of the ailing mogul is making a move to solidify her claim to the company once Redstone passes.
The outgoing members have vowed to mount a legal challenge to the move, prompting Redstone and National Amusements to file a preemptive strike, and ask a Delaware Court to affirm their right to remove the directors as per their company charter. In addition, they are seeking temporary injunctive relief to prevent the board from taking any action that goes beyond the “ordinary course of business.”
Meanwhile, responding in kind, the outgoing group is filing a lawsuit in the same court seeking a ruling that the board firings are invalid, and that the board remained unchanged until the legal battle is resolved. Salerno, as the group’s voice, is making the case that that Redstone, who is 95, wished the trust to run the organization, and not members of his family. Salerno says that Redstone has long stated his wish is for his family benefit from owning a majority share the media empire while competent professionals steered it.
“Mr. Redstone established and maintained for decades a clear estate plan for the governance of Viacom upon his death or incapacity – based on independent control and professional management of Viacom going forward,” Salerno said. “Sadly, it is now clear that Mr. Redstone is being manipulated and used by his daughter in an attempt to accomplish her long-held goal of gaining complete control of Viacom.”
The only real question here, though, is who will replace Dauman? Could this be the next move for Les Moonves? Maybe not. According to insiders, Viacom Chief Operating Officer Thomas Dooley has the inside track, at least in the interim. However the change may not occur until after the issue of the board ousters is settled, if Salerno gets his legal way. That’s likely going to be after a prolonged legal challenge, so you can bet that this won’t likely be resolved until after Redstone is long gone.
Hat Tip – Variety