Billionaire media baron Sumner Redstone axed his former confidant and protege Philippe Dauman from the board of Viacom, where Dauman is CEO, on Thursday. Dauman oversees MTV, VH1, Comedy Central, Nickelodeon, movie studio Paramount Pictures and a host of other valuable properties.
If the instruction holds up in court, Dauman will exit with four more directors on the Viacom board amid an increasingly acrimonious boardroom battle that has pitted the 93-year-old Redstone and his family against the media combine’s management. One analyst called the day’s events “the Red Wedding” after one of the goriest episodes of Game of Thrones.
A statement from Viacom said the board members apparently fired today would fight the order in court. Dauman remains as CEO for now. But the new board, if it survives a court challenge, would “evaluate the current management team and take whatever steps it deems appropriate to ensure that Viacom has in place strong, independent and effective leadership”, Redstone’s team said in a statement.
National Amusements, Redstone’s holding company, through which he maintains majority control of voting shares in Viacom, said in a detailed five-page statement that it was explicitly allowed by Viacom’s bylaws to abruptly terminate everyone involved “without a meeting, without prior notice and without a vote”. In the same statement, the company said it had removed George S Abrams, Philippe P Dauman, Blythe J McGarvie, Frederic V Salerno and William Schwartz.
Newly installed are Kenneth Lerer, chairman of Buzzfeed, Thomas May, Judith McHale, Ronald Nelson of rental car company Avis Budget, and former Sony America president Nicole Seligman.
Salerno blamed Redstone’s daughter, Shari, for the coup. In a statement provided by Viacom he said the senior Redstone is being manipulated. “With the support of the independent directors of the board, I am filing today a lawsuit in Delaware Chancery Court seeking an expedited determination that Ms Redstone’s attempted removal and replacement of Viacom directors is invalid and that the directors elected at the 2016 Annual Meeting continue to serve. I am also seeking an expedited hearing, expedited discovery and an order of the court to maintain the status quo pending resolution of the litigation.”
Rich Greenfield, an analyst with BTIG who has followed the conflict closely, said that whether the Viacom board is fighting with Sumner Redstone or Shari Redstone is immaterial. “If Sumner does not have capacity then the SMR trust [Redstone’s trust, which governs National Amusements] kicks in and Shari has four votes out of the seven,” Greenfield said. For the board to win the fight, it would have to prove not that Shari was manipulating her ailing father but that Sumner was entirely compos mentis and wanted the current board intact. “Eventually, yes, this will stick, I believe. The only thing I don’t know is how long it will take.”
“I no longer trust Philippe or those who support him,” Sumner said on Wednesday in a letter addressed to Salerno, according to Variety. Salerno was perceived to be an ally of Dauman’s in the battle for primacy at the company between its CEO and its primary shareholder. Redstone stepped down from his position as chairman in February; the company stopped paying the salary he drew as chairman emeritus altogether in May. National Amusements also filed an injunction to keep the current board from taking any further action.
Greenfield has predicted what he called a “red wedding” at the company for weeks. Corporate drama spilling over from Redstone’s personal life into the workings of some of the most influential media properties on the planet are “confusing and surprising and would likely make for a great movie at Paramount one day combining family drama, love, rage, corporate intrigue and more”, Greenfield wrote.
Over Redstone’s objections, Dauman had been exploring the sale of a significant minority stake in Paramount to prop up the company’s growing list of troubled assets – ratings and ad sales at Viacom have suffered from declines, with Comedy Central losing more than a third of its viewers in the past two years.
Tom Freston, the CEO replaced in the previous unceremonious ouster of senior leadership at Viacom in 2006 after Freston declined to outbid News Corp for MySpace, broke a long silence on the topic of the company’s leadership on CNBC yesterday, saying the Dauman should be replaced.
Comments (…)
Sign in or create your Guardian account to join the discussion