Friday, June 14, 2024

Corporate governance crisis at Viacom: Redstone v. Dauman

split dauman redstone viacom

Sumner Redstone has officially broken with his protege and friend of 30 years, Viacom CEO Phillippe Dauman.

In a blistering statement on Sunday night, a self-described spokesman for Redstone detailed the split between the two men and accused Viacom -- the company Redstone controls -- of saying "false and unfair" things about him.

The spokesman, Mike Lawrence, said Redstone removed Dauman and another confidant, George Abrams, from his trust because Redstone believes it's in "the best interests of beneficiaries and shareholders."

The lengthy statement also seemed to confirm news reports that Redstone is opposed to Dauman's plan to sell a minority stake in Viacom's Paramount Pictures movie studio.

"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," Lawrence said.

The Sunday night statement heightened the stakes in a corporate governance crisis at Viacom, one of the biggest media companies in the world.

Viacom owns MTV, Nickelodeon, Comedy Central, Paramount, and a long list of other television and movie assets.

And right now Redstone, the controlling shareholder, is publicly at war with the CEO.

Many observers suspect that Redstone, who is in very poor health, is being influenced by his daughter Shari. But both father and daughter -- once estranged, now back in each other's lives -- have rejected those assertions via statements from representatives.

Clearly something cataclysmic is going on. Redstone and Dauman have been exceedingly close since the late 1980s, but no more.

On Friday evening, lawyers for Redstone said the ailing 92-year-old mogul had decided to remove Dauman and Abrams from the trust that will control both Viacom and CBS after his death. The move appeared to give Shari Redstone more control over the sprawling media empire.

Viacom, speaking for Dauman, called the moves "invalid and illegal" and alleged that Redstone is "being manipulated and used by his daughter."

As statements flew back and forth, Shari said, "I fully support my father's decisions and respect his authority to make them."

Redstone is barely able to speak. A recent court case involving an ex-girlfriend raised questions about Redstone's competency to make decisions, but the judge sided with Redstone.

During the court proceedings, Dauman was on Redstone's side, testifying that Redstone was "engaged" and "attentive" despite his difficulty communicating.

Now, however, Dauman is challenging Redstone's competency and blaming Shari for the rupture.

Earlier this year, when Redstone gave up his Viacom chairman position, Shari was the sole board member to vote against Dauman's ascension to the chair.

Sunday night's statement by Lawrence ticked through all the weekend's claims by Dauman's camp.

Lawrence, a Boston-based public relations executive, has not previously represented Redstone. But he said Redstone's lawyers have been meeting with him "frequently, including today. They are quite clear about his wishes and the strength of his feelings, from those meetings."

Lawrence began by saying that, "Viacom's claim that members of the board have been 'denied access' to Sumner Redstone is untrue."

He asserted that Redstone "asked to briefed" about Viacom's business by Abrams and another board member, Fred Salerno, last Monday, "but the board leadership did not respond."

Viacom responded on Sunday night by noting that Redstone listened in to board meetings for the next two days, last Tuesday and Wednesday.

"Despite numerous requests," Salerno and a "fellow board member, who represent all shareholders, have still been unable to meet with Mr. Redstone," the company's statement said.

The Viacom statement added, "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."

Those board meetings would still like to meet with Redstone, Viacom said.

But Lawrence said earlier in the evening 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," Lawrence added, "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."

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