Updated with Viacom response: Any deal to sell “all or a portion of Paramount Pictures” would require the unanimous approval of Viacom’s directors, according to a change in the bylaws endorsed today by Sumner Redstone’s National Amusements — which controls 80% of the voting stock.
The terms would ensure that there’s no sale: National Amusements President Shari Redstone is a Viacom director — and along with her father, Chairman Emeritus Sumner Redstone, opposes a sale of a stake in Paramount.
Sumner Redstone, 93, is also a Viacom director, but CEO Philippe Dauman has asked a Massachusetts court to rule that he is not competent to manage his affairs. It will hold a procedural hearing tomorrow.
Dauman has said that he expects to have a deal to sell a minority stake in Paramount by the end of this month. That helped to lift Viacom’s stock price, which has lost about a third of its value over the last 12 months.
Viacom called today’s announcement by National Amusements “illegitimate” because it followed “invalid changes” made to the theater company’s board last week when members voted to replace Dauman and Abrams.
Viacom also characterized the bylaw changes as “completely at odds with good corporate governance. They are clearly intended to impede the ability of the Viacom Board of Directors to fulfill its obligations to all stockholders, including the public non-controlling stockholders who own 90% of the equity of Viacom.”
National Amusements says today that it has “delivered written consents to Viacom that have amended Viacom’s corporate bylaws, effective immediately, in order to protect the long-term interests of all Viacom stockholders.”
The Redstone-controlled theater chain says it is “not opposed to a transaction that would unlock value at Paramount.” But any deal would have to be “thoroughly vetted and approved by Viacom’s full Board, and the rationale for such a transaction should be clearly articulated to Viacom’s stockholders in advance.”
It adds that any deal to sell a “key asset …must be part of a carefully constructed long-term strategy; it is not an end in and of itself.”
In addition to the change for Paramount, National Amusements says that it amended Viacom’s bylaws to require a unanimous vote if the board wants to change the bylaws, or repeal any amendment adopted after September 15, 2011 (when the most recent revision took place).
A unanimous vote would also be needed to move “certain types of corporate litigation” away from the jurisdiction of the Delaware Chancery Court.
National Amusements says it made the changes “to safeguard the interests of all stockholders.”
It challenged a recent statement by Lead Independent Director Frederic Salerno saying that the independent directors are looking out for all investors, not just the Redstones.
His statements indicate that directors are more interested in “preserving their own positions and those of Viacom’s management team rather than on exercising their fiduciary duty to promote the long-term interests of all Viacom stockholders,” National Amusements says.
The company says Article II, Section 10 of Viacom’s corporate bylaws give it the right — as the owner of a majority of the voting Class A shares — to make the change “without a meeting, without prior notice and without a vote” by Viacom stockholders.