Updated with statements from Shari Redstone & Viacom board members: Viacom CEO Philippe Dauman this morning said National Amusements President Shari Redstone “has isolated her father [Sumner Redstone] and put his residence on lockdown” and is manipulating him “to accomplish her long-held goal, which Mr. Redstone has always opposed, of gaining control of National Amusements and Viacom.”
The statement follows Sumner Redstone’s surprising move last night to hand his daughter control over his media empire. His lawyer faxed letters to Dauman and Viacom board member George Abrams telling them that they have been kicked off the board of National Amusements and Redstone’s seven-member trust.
In response to Dauman’s allegations, Shari Redstone said: “l fully support my father’s decisions and respect his authority to make them.”
Sumner Redstone, 92, owns 80% of the theater chain which in turn controls 80% of the voting shares at Viacom and CBS. The trust will control the National Amusement stake — and, by extension, the entertainment giants — when Redstone either passes or is deemed incompetent to make his own decisions.
In a statement today, Dauman calls the actions “completely inconsistent with [Redstone’s] long expressed wishes and intent and extremely disruptive and damaging to Viacom and all its shareholders.”
He adds that there has been “no communication from Sumner Redstone,” including during a Viacom board strategy session on late Tuesday and Wednesday.
“[N]ot a sound was heard from Sumner [now Chairman Emeritus], who was connected by phone.” Shari Redstone, who’s Vice Chair, was “also connected by phone, [and] did not raise a single concern during the Board session on any topic,” Dauman says.
The company received “a written communication” Tuesday from Los Angeles lawyer Michael Tu who was “previously unknown until this week to anyone associated with Sumner other than Shari Redstone.”
That suggests she is exercising “undue influence.”
“Despite many attempts by members of Viacom’s board, including the lead independent director, to meet with Sumner they have been denied access,” Dauman says. “Mr. Tu, when asked by the board’s independent counsel in response to Mr. Tu’s letter, could not even confirm he has met Mr. Redstone.”
Dauman last night called the efforts against him and Abrams “illegal.” The Viacom chief appears to be preparing to argue that the elder Redstone is no longer competent to decide who should control his affairs.
Statements this afternoon from Lead Independent Director Frederic Salerno, and Abrams, (included below) support that view. Salerno says that the board eliminated Redstone’s compensation this week “based upon his recent complete lack of communication with the Viacom Board and management team and his silence during recent board meetings, as well as recent public disclosures raising concerns about his health.”
If that’s the case, then the trust could only be changed by its members or by Redstone’s five grandchildren if they take the matter to court. The trust has a mandate to vote the National Amusement shares to benefit Redstone’s grandchildren and succeeding generations.
Dauman’s argument would be a shift: He helped to persuade Los Angeles Superior Court Judge David Cowan, in a decision this month, that Redstone was competent enough last year to let Dauman manage his health care directives — authority that has since shifted to Shari Redstone.
The judge rejected arguments by Sumner Redstone’s former companion, Manuela Herzer, that he was a “living ghost” not competent enough to take away her authority to make health care decisions on his behalf.
The Viacom chief said that Redstone had been “engaged and attentive” in a November business meeting. His new statements suggest he would now say that things have changed.
Here’s the statement that Abrams released this afternoon:
I have known and represented Sumner Redstone for over 50 years. I worked closely with him on the building of his theater chain, the acquisitions of Viacom, Paramount and CBS and countless business matters relating to all three of those entities as well as National Amusements. I have also handled many personal matters for Sumner. Above all, he is my friend. The Sumner Redstone I knew would never have taken this action. What is going on now is unsettling and sad.
And here’s the one from Salerno:
In March, the Board of Viacom elected me to serve as Lead Independent Director to ensure a continuation of good governance at Viacom, particularly as a result of Sumner Redstone’s diminished role.
The majority of the full Board and every Board Committee is comprised of independent directors and we are completely focused on ensuring that the interests of all shareholders are considered and fully protected. The Board has taken a number of steps including, most recently, eliminating Mr. Redstone’s compensation. We took this action based upon his recent complete lack of communication with the Viacom Board and management team and his silence during recent board meetings, as well as recent public disclosures raising concerns about his health. In addition, despite numerous requests, I, along with the Chair of Viacom’s Governance and Nominating Committee, have been denied access to Sumner for a face-to-face meeting.
The Independent Directors are fully engaged and will carefully monitor actions at National Amusements, which is the controlling shareholder of Viacom. We are also continuing to work closely with the management team of Viacom and we fully endorse the strategy for the future of Viacom that the team presented at the Board’s day-long strategy meeting this week.
We have great respect for Sumner and what he has accomplished. Our overarching duty is to represent the interests of all shareholders — in the same spirit that Sumner Redstone always led our Board to do. We will continue to fulfill that role and uphold our fiduciary responsibility to ensure that Viacom’s interests are protected in concert with good governance practices.
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