In a letter to Viacom’s board, Sumner Redstone and a majority of the directors of National Amusements, the Redstone holding company that controls 80% of Viacom’s voting shares, say resistance to being removed is futile.
In the battle over control of the media company, the 93-year-old Redstone moved to replace five Viacom directors including CEO Philippe Dauman earlier this month.
Dauman and other directors filed a suit in Delaware looking to have their removals declared improper because they claim Redstone is incompetent to make business decisions and is under “undue influence” of his daughter Shari Redstone.
“As one of Viacom’s largest shareholders, National is deeply concerned with the time and resources being devoted to malicious and ultimately pointless attacks on Sumner and his family, rather than to business and management decision that will redound to the benefit of all shareholders,” the letter signed by Redstone and five other National Amusement directors says. “Viacom’s management and board serve at the will of the voting shareholders. The voting shareholders have spoken and the reaction of the market strongly suggests that the other shareholders agree. We urge you to listen.”
Redstone has also moved to eject Dauman and another National Amusement director from the National Amusement boards. Dauman has contested that move in court in Massachusetts.
The Viacom board voted to pay for legal and public relations efforts to resist removal by Redstone, a decision to which Redstone objected.
In the letter, Redstone and the other directors say that Redstone’s voting rights allow him to replace Viacom directors at will.
It also says that if he’s judged to be incompetent, the other directors would vote and they agree that the five Viacom directors should be replaced, making the battle pointless.
“A majority of the National board as it existed before Mr. Dauman and [George Abrams, the other Viacom director Redstone wants to eject from the National Amusements board] were removed voted to reconstitute the Viacom Board There is no world in which Mr. Dauman and Mr. Abrams could have vetoed that decision,” the letter says.
“In short, however the attacks on Sumner’s capacity or alleged undue influence might be resolved, National’s removal and replacement of five of Viacom’s eleven directors will not be disturbed.”
A Viacom spokesman responded to the the letter saying that Redstone's state of mind makes a difference.
“In today’s letter, the supposed directors of National Amusements have claimed that Sumner Redstone’s incapacity or undue influence does not matter. It matters a great deal to Viacom’s shareholders and Viacom’s board if Sumner Redstone lacked capacity or was unduly influenced in the making of recent and dramatic governance changes. Under the law, the implications would be grave if a Court were to rule that recent changes were infected by Shari Redstone’s undue influence and any improper acts allegedly in Sumner Redstone’s name. Any ‘vote’ made under these circumstances would be meaningless. Individuals who have taken part in such a scheme could and should be ruled unfit to serve as trustees or board members," the statement said.
A court in Massachusetts has a hearing on Dauman’s suit scheduled for Thursday.
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