UPDATE with Viacom statement: The new war between Viacom and CBS Chairman Emeritus Sumner Redstone — or, depending on whom you believe, the people around him — and Viacom CEO Philippe Dauman just became more intense.
Redstone’s camp released a lengthy statement challenging Dauman’s assertions that his nearly 93-year-old boss isn’t competent enough to have decided for himself on Friday to oust Dauman and Viacom board member George Abrams from the family trust.
Over the weekend, Dauman said the effort to remove him and Abrams from the family trust and the board of Redstone’s National Amusements — which owns 80% of Viacom and CBS — was “illegal” and engineered by his daughter, Shari Redstone.
The Viacom and CBS Vice Chair had manipulated her father, Dauman said, “to accomplish her long-held goal, which Mr. Redstone has always opposed, of gaining control of National Amusements and Viacom.”
The trust will control Redstone’s National Amusement stake — and, by extension, the entertainment giants — when Redstone either passes or is deemed incompetent to make his own decisions.
Today’s statement from Redstone attacked the specifics Dauman offered to support his case that the paterfamilias is out of it, and being used by his daughter.
One charge, that Viacom’s board has been “denied access” to Redstone is “untrue,” it says. It seems Redstone’s counsel sent a letter on May 16 to Dauman, Abrams, and another board member Frederic Salerno asking to be briefed on management’s strategic plans.
“This was an opportunity for direct engagement, but the board leadership did not respond,” Redstone’s statement says.
It adds that “Viacom’s false and unfair statements to the media, as well as Mr. Dauman’s opportunistic claims of incapacity, now make it problematic to move forward with any direct meeting and briefing as Mr. Redstone had previously requested. However, Mr. Redstone remains intent on receiving the briefing through his advisers — a request that still has not been responded to despite Mr. Redstone’s rights as a director.”
What’s more, “Unless Viacom’s board presents a concrete plan that convinces him otherwise, Mr. Redstone continues to believe that it is in the best interest of Viacom that Paramount Pictures should remain wholly owned by the parent company.”
Dauman noted that Redstone didn’t speak when the board recently held a teleconference. But today’s statement says that he has a “significant speech impairment and, for much of the past two years, has not relied on verbal statements at board meeting to make his opinion known.”
The statement challenged Dauman’s assertion that Redstone was being “isolated” at home.
“Over the past several days alone, Mr. Redstone has hosted family and friends at his home, and met with several attorneys and an executive from National Amusements,” the statement says. “He also visited his grandson’s home to watch a baseball game and is looking forward to celebrating his birthday with family later this week.”
The statement also rejected Dauman’s allegation that Shari Redstone had picked a new lawyer for her father.
“The counsel was recommended to Mr. Redstone by his existing lawyers, and Mr. Redstone has met with and is working closely with his new counsel,” it says.
Redstone’s camp says that he is “engaged, attentive, and as opinionated as ever” — the terms Dauman used in a recent court case to describe his boss’s condition at a business meeting in November.
The statement says the decision to remove Dauman and Abrams from the family trust and his theater chain reflect Redstone’s views about “the best interests of beneficiaries and shareholders.”
Redstone “regrets that Mr. Dauman has diverted resources to these baseless attacks and misrepresentations, rather than focusing on the continuing challenges that are faced by Viacom,” the statement says. “Mr. Redstone will continue to act in what he believes are the best interest of Viacom’s shareholders.”
Viacom issued this response:
We continue to be deeply troubled and saddened by this state of affairs. We have the deepest respect for Sumner Redstone, but it is clear he is being shamefully manipulated. The facts are clear. Viacom’s 12-hour strategy meetings on May 17 and 18, that Sumner attended by phone, addressed all issues, including Paramount, to the satisfaction of all the independent directors. Despite numerous requests, Lead Independent Director Fred Salerno and a fellow board member, who represent all shareholders, have still been unable to meet with Mr. Redstone. The Sumner Redstone we knew would never refuse a meeting about his businesses and he certainly would not want advisors to stand in for him. Mr. Salerno and his fellow Directors remain willing and eager to meet with Sumner at any time.
Redstone may name National Amusements General Counsel Thaddeus Jankowski and an unnamed friend of Shari Redstone to replace Dauman and Abrams on the family trust, the New York Times reports. Shari Redstone’s daughter, Kimberlee Ostheimer, also may join the National Amusements board.
Sumner Redstone has the authority to make the changes to his trust, and at privately held National Amusements.
But that would change if Dauman persuades a court that Redstone has lost his capacity to make reasonable decisions. In that case, 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 would have to argue that Redstone’s condition has significantly deteriorated over the last few months. The CEO 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.
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