Philippe Dauman Asks Massachusetts Court To Block His Removal From Redstone Trust

Associated Press

Here’s the legal action that Viacom CEO Philippe Dauman hinted over the weekend that he would file after his boss, Sumner Redstone, fired him and fellow board member George Abrams from the trust that will control the mogul’s media empire when he becomes incompetent or passes. (Read it here.)

Dauman and Abrams filed a complaint in the Commonwealth of Massachusetts Probate and Family Court challenging the changes “by an attorney claiming to represent Mr. Redstone.”

If the court agrees, then it would invalidate the actions to take the two execs off the seven-member family trust as well as the board of National Amusements. The theater chain, which is 80% owned by Redstone, holds 80% of the voting shares in Viacom and in CBS.

The complaint says that Redstone “suffers from profound physical and mental illness. In particular, he is afflicted with a ‘subcortical neurological disorder’ that can be characterized by dementia, impaired cognition, a slowness of mental processing, a loss of memory, apathy, and depression.”

It adds that he “can no longer stand, walk or coherently communicate. He can no longer read or write. He has lost the ability to swallow and requires a feeding tube in order to eat or drink. He also requires suctioning of phlegm and saliva multiple times during the day and at night in order to avoid serious breathing complications.”

Dauman says that Redstone’s daughter Shari — who’s Vice Chair of Viacom and CBS — “is attempting to illegally hijack her father’s well-established estate plan by removing professional managers” and replacing them with people who “are firmly under her control.”

He adds that Sumner Redstone is “clearly being manipulated by his daughter, Shari. After years of estrangement, she has inserted herself into his home, taken over his life, and isolated him from anyone not under her control, including long-time business colleagues….Her singular goal is to assume complete control of his businesses, despite Mr. Redstone’s long-term desire for a professionally managed Trust and an independent Board of Directors. Shari’s actions amount to an unlawful corporate takeover, and if effectuated, could have far-reaching consequences for thousands of shareholders and employees of Viacom.”

Shari Redstone countered, just as news of Dauman’s legal action was released, that it’s “absurd for anyone to accuse [her] of manipulating her father or controlling what goes on in his household. Sumner makes his own decisions regarding whom he wants to see both in his home and elsewhere, and he has his own team of independent advisors to counsel him on corporate and other matters.

She also countered that it’s “utterly ridiculous” to say that she, as a lawyer, “would ‘unlawfully’ use his name.”

Dauman defended Redstone’s ability to govern his own affairs in a suit by the mogul’s former companion, Manuela Herzer, that challenged his decision to take away her authority to manage his health care — and give it instead to Dauman. {It has since been transferred to Shari Redstone.] The Viacom chief said that Redstone had been “engaged and attentive” in a November business meeting.

A Los Angeles judge this month decided that Redstone’s decision could stand.

But Dauman says in today’s complaint that he “made no observations about Mr. Redstone’s capacity to make significant business decisions. And, indeed, Mr. Redstone’s health has rapidly declined since that time.”

Dauman’s complaint, citing “media reports,” says that Shari Redstone wants to replace the Viacom CEO and Abrams with “friends and family who are under her influence and control.”

National Amusements General Counsel Thaddeus Jankowski and a friend, Jill Krutick are said to be in line to join the family trust. Shari Redstone’s daughter, Kimberlee Korff Ostheimer, would be up for a board seat at the privately held theater chain.

The filing also says that, according to “court papers filed under penalty of perjury,” Sumner Redstone’s granddaughter  Keryn Redstone, said that Shari has “consistently expressed hostility” towards
her father and told one of his grandchildren that “I will get your grandfather, even if I have to hurt you.’”

Wall Street is closely watching this epic corporate battle that could determine the fates of Viacom and CBS. Viacom shares opened this morning up 3.9% and CBS is up less than 1%.

If the court sides with the Redstones, then Dauman likely would be out at Viacom. A statement from Sumner Redstone over the weekend said that he opposes Dauman’s effort to sell a minority stake in Paramount, a deal that the CEO has said should be complete by the end of June.

It also would probably be good news for CBS chief Les Moonves. He has been close to Shari Redstone: She supported the CBS board’s recent decision to make him chairman when her father stepped down to become Chairman Emeritus. She was the lone vote against a similar decision at Viacom for Dauman.

Some analysts speculate that, with Dauman out, there’s a chance that Viacom and CBS would be reunited, putting Moonves in charge of its many cable networks — including MTV, Nickelodeon, Comedy Central, and BET — as well as the Paramount studio.

This article was printed from