Viacom board members vow to fight removal attempt
Lawyers representing Sumner Redstone are expected to launch a battle to oust members of media company Viacom. Viacom directors on Monday vowed to fight any such action.
Gearing up for a battle for control of media company Viacom, board members on Monday took the unusual step of vowing to fight an expected campaign by Sumner Redstone and his family to shake up the board.
In a letter to shareholders and employees, Viacom’s lead independent director Frederic Salerno on Monday said the board would fight any board removals in court in Delaware, where Viacom is incorporated.
Sumner Redstone and his family are at odds with leaders of Viacom, which has seen its stock plummet more than 45% in the last two years. The family controls 80% of the Class A voting shares of Viacom, but their economic stake in the company is about 10%.
Sumner Redstone this month added to his legal team a prominent Los Angeles litigator, Michael Tu, who specializes in securities law – raising the possibility of a legal campaign to dump Viacom Chairman and Chief Executive Philippe Dauman and other members of the board.
“We will contest the purported removal if it comes, because we see that as our responsibility to the non-control shareholders of Viacom who own 90% of the equity of the company – and to the legacy of a man we greatly admire and consider a dear friend,” Salerno wrote in Monday’s letter.
Redstone’s daughter Shari Redstone is vice chair of the media company, which boasts such TV channels as Nickelodeon, MTV, VH1, Comedy Central and BET.
Some Viacom executives believe that Shari Redstone is orchestrating a campaign to get rid of Dauman and others.
“We know that such an attempt, on its face, would be completely inconsistent with Sumner’s lifetime commitment to an independent board and professional management for Viacom after his incapacity or death,” Salerno wrote. “More specifically, it would be equally inconsistent with his stated judgment for many years that his daughter, Shari, should not control Viacom or his other companies.”
A spokesperson for Shari Redstone declined to comment late Monday.
Viacom board members suspect that Sumner Redstone – who celebrated his 93rd birthday on Friday – might be incapacitated. He was in the hospital briefly more than a week ago, where he was treated for dehydration, according to a person close to the Redstone family.
Despite several recent requests, Salerno said that he and another independent board member have been denied the opportunity to visit Redstone at his Beverly Park home.
Ten days ago, Tu sent a letter to Dauman and another Viacom board member, George Abrams, notifying them that they had been ousted as directors of the Redstone investment vehicle, National Amusements Inc., as well as from the trust that will oversee Redstone’s controlling stake in the two media companies.
Dauman and Abrams last week filed a lawsuit in Massachusetts probate court to try to block their dismissals. A day later, two allies of Shari Redstone were named to the trust and to the board of National Amusements, which holds the family’s controlling shares in Viacom and CBS.
National Amusements is expected to call for an election and vote its shares to withhold support for Dauman and other Viacom board members. The move comes just two months after Viacom’s annual shareholders meeting.
“Should we acquiesce in or contest a removal attempt?” Salerno wrote. “Acquiescence is appealing – it would remove some of the antagonism and public controversy, and avoid contentious and time consuming litigation.”
However, he said, “we feel the responsibility to challenge in court what we honestly believe would be legally flawed removals.”
A spokesperson for Sumner Redstone declined to comment Monday. Late last week, a person close to the Redstone legal team said: “We will be responding to Mr. Salerno, but we do not believe discussions between Mr. Redstone and the board should be conducted through the news media.”
Viacom also plans to continue to pursue a planned sale of a minority interest in the Hollywood movie studio, Paramount Pictures, despite objections by Sumner Redstone.
The mogul has made it clear that he objects to the sale of any portion of his treasured studio.
“We know that none of us is ‘entitled’ to his or her Board seat,” Salerno said. “But we were elected, until our terms expire or we are properly removed, to look after the interests of all the stockholders of Viacom. ...That is what Delaware law requires – and that is what Sumner Redstone has always expected.”
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UPDATES:
9:05 p.m. This article was updated to note that a representative of Shari Redstone declined comment.
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