Delaware Chancery Court Judge Andre Bouchard said in a hearing today that he wants to know how competent Sumner Redstone is before he decides whether to endorse an effort by Viacom’s controlling shareholder to replace five directors.
The judge didn’t approve a discovery process just yet, however. Bouchard doesn’t want to duplicate a similar effort that a Massachusetts court might authorize to determine whether Redstone, 93, is capable of running his media empire.
“If discovery proceeds there, I want to know about it,” Bouchard said. “If discovery is shut down there, I want to know about it. I want to be kept abreast of what’s going on in the other litigations that bear on the status of competency issues in play.”
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He added that he won’t “wade into that terrain right now” in part because “there are questions of human dignity to a very elderly person. That’s treacherous ground to dive into too quickly. And so I am going to be cautious in that respect.”
Viacom and Redstone-controlled National Amusements asked the court in Delaware, where the entertainment giant is incorporated, to weigh in on a dispute over whether the theater chain can change Viacom’s board and bylaws.
National Amusements owns 80% of Viacom’s voting shares, and said last week that it wants to replace five directors — including CEO Philippe Dauman. Its holdings give give it broad discretion to make changes.
But Viacom says that Redstone is incompetent, and being manipulated by his daughter, Shari — a charge that National Amusements disputes.
A similar debate is taking place in a case that Dauman raised at the Massachusetts Probate and Family Court.
The Viacom chief wants a judge there to determine whether Redstone was competent in May when he moved to replace Dauman and director George Abrams on the Redstone family trust and the board of National Amusements. The seven-member trust will control his holdings in the theater chain — and, by extension, in Viacom and CBS — if Redstone is deemed unable to reason.
The Massachusetts court is expected to decide on or before a June 30 hearing whether it’s the right venue for the case, and whether it needs to authorize independent doctors to examine Redstone.
In addition to looking at the competency issue, Judge Brouchard urged lawyers to agree on a plan for running Viacom while he determines whether National Amusements can make changes.
He wants an agreement by end of day tomorrow. “I think it is very significant that it works with the incumbent board in place and that that’s agreed-upon terrain,” the judge said.
If they can’t agree, then lawyers should be prepared to return to court on Friday although “I’d rather not have to do that.”
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