Viacom Directors Call Dauman Removal Invalid
Related: Redstone Ousts Viacom Directors Including Dauman
The Viacom directors removed from the board say controlling shareholder Sumner Redstone's actions to oust Philippe Dauman and other board members are invalid and have filed suit challenging the change.
"This is a brazen and demonstrably invalid attempt by [Redstone's daughter Shari] 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, " said lead independent director Fred Salerno.
Related: Viacom Director Sends Redstone Open Letter
The board plans to stay in place until a decision is rendered by Chancery Court in Delaware, where Viacom is incorporated.
On Thursday, Sumner Redstone's holding company National Amusements announced that it was replacing five Viacom directors including CEO Dauman, who was elected chairman, replacing Redstone, earlier this year. Shari Redstone cast the lone dissenting vote to making Dauman chairman.
Related: Analyst Eagan ‘Cautiously Optimistic' About Media
The directors’ suit seeks to have Shari Redstone’s attempt to remove members of the Viacom board through the purported authority of Sumner Redstone declared invalid and confirm the board as currently composed.
It also seeks to enjoin the Redstones from taking further wrongful actions under Sumner Redstone’s authority and order the Redstone’s not to disrupt Viacom’s business.
The suit repeat claims that recent actions taken in Sumner Redstone’s name are inconsistent with his previous plans.
“Under Mr. Redstone’s long-standing estate plan, control and management would remain independent of Shari, for whom Mr. Redstone generously provided but who he determined did not have the skills to control or manage Viacom and from whom he was bitterly estranged for many years,” the suit says.
It charges that Shari Redstone is exerting undue influence and manipulating her father.
“Shari now seeks to become Mr. Redstone’s puppet master, pulling his strings behind the scenes to improperly seize control of Viacom. In doing so, Shari is attempting to use her father’s control to dismantle his own estate plan to serve her personal interests. Her attempt to do so, however, is based on exercising undue influence over her defenseless father and/or manipulating him to purportedly exercise authority when he was not mentally competent to have done so,” the suit says. “Now, when Mr. Redstone’s physical and mental conditions have dramatically declined and he is unable to fend for himself, Shari has moved into his home, taken over his life, isolated him from contact with others and purports to speak for him.”
It also charges that Shari Redstone is acting in her own interests rather than in the interests of all Viacom shareholders.
Here's the statement from Salerno:
"Today Viacom received notice from National Amusements, Inc. that purports to remove Viacom directors and replace them with new directors, subject to a ruling by the Delaware Court. This 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.
"With the support of the independent directors of the Board, I am filing today a lawsuit in Delaware Chancery Court seeking an expedited determination that Ms. Redstone's attempted removal and replacement of Viacom directors is invalid and that the directors elected at the 2016 Annual Meeting continue to serve. I am also seeking an expedited hearing, expedited discovery and an order of the court to maintain the status quo pending resolution of the litigation.
"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. He said repeatedly that the Board will be responsible for making decisions about governance, leadership and succession, and he hand-selected a group of trusted advisors and independent directors to fulfill this role.
"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."
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
By Kent Gibbons