Coverage: The saga for control of Viacom continues
The biggest corporate soap opera just gets better with the daughter of media mogul Sumner Redstone saying Tuesday that investors want new management of Viacom Inc., and a Viacom board member saying she’s contradicting her father.
Joe Flint of The Wall Street Journal has the day’s news:
A spokeswoman for Shari Redstone said shareholders of Viacom Inc.“have already spoken” and “want new management at the top” as she responded to criticism by board members of her role in her father Sumner Redstone’s media empire.
In a letter Monday to Viacom constituencies, lead independent director Frederic Salerno said he and other board members believe Ms. Redstone, who is vice chair of the media company, was behind Mr. Redstone’s recent decision to remove Viacom CEO Philippe Dauman and board member George Abrams as stewards of his holdings.
The changes, which could leave Ms. Redstone in a better position to influence events at Viacom, were inconsistent with Mr. Redstone’s “stated judgment for many years that his daughter, Shari, should not control Viacom or his other companies,” the letter said.
The letter said also signaled the board members’ intent to fight for their jobs in court if they are removed, on the grounds that Mr. Redstone, who is 93 years old and in poor health, isn’t acting of his own free will.
Salerno added that when Redstone was in good health, he told others that he did not want his daughter, Shari Redstone, to control Viacom or CBS Corp. and, thus, set up a seven-member trust that would make decisions about his shares in the two companies.
A representative of Shari Redstone on Monday shot back:
“Shari has made it abundantly clear that she has no desire to manage Viacom nor chair its board, and [she] is fully engaged in running and growing her firm, Advancit Capital,” said Nancy Sterling, a spokesperson for Shari Redstone.
“What she has also made clear is that what she wants for Viacom is the best management in place, and strong, independent directors who will properly oversee that management,” Sterling said.
Viacom shares have fallen more than 45% over the last two years amid ratings struggles and a paucity of hits from the company’s Melrose Avenue movie studio, Paramount Pictures.
But unlike some companies, Viacom’s corporate charter gave Redstone’s National Amusements Inc (NAI) the ability to immediately remove Viacom’s board at any time under Delaware law, said Lawrence Hamermesh, a corporate law professor at Widener University Delaware Law School.
NAI holds 80 percent of the voting shares in Viacom and CBS Corp.
The ousted directors could petition a Delaware judge to issue a “status quo” order that keeps them on the board while the case is being litigated. Such orders are somewhat easier to obtain than a formal injunction in other kinds of civil cases, Hamermesh said.
However, status quo orders are meant to last only a few weeks. A Delaware judge would likely be reluctant to delve into questions about Redstone’s mental competency when that issue is already being litigated in other courts, said Minor Myers, a corporate law professor at Brooklyn Law School.