Viacom CEO Files Lawsuit In Corporate War With Sumner Redstone
ARI SHAPIRO, HOST:
A bromance gone awry, a family shaken by defiance and reconciliation - there have been so many plot twists in recent days from the entertainment conglomerate Viacom. Viacom owns Paramount Studios as well as cable channels including Comedy Central and Nickelodeon. And these plots are not just on the screens. As NPR's David Folkenflik reports, these dramas are playing out in boardrooms and courtrooms.
DAVID FOLKENFLIK, BYLINE: Back in November, Viacom CEO Phillipe Dauman said his 92-year-old billionaire patron Sumner Redstone was engaged, attentive and opinionated as ever. In February, Dauman, newly appointed as executive chairman, started a conference call this way.
(SOUNDBITE OF ARCHIVED RECORDING)
PHILLIPE DAUMAN: I want to thank my colleague, mentor and friend Sumner, who is listening on the phone, for his vision, his guidance and his inspiration, all of which will continue to energize us.
FOLKENFLIK: That was then. For months, Dauman and Redstone's daughter Shari have been waging a pitched battle for future control of the media mogul's trust. Even though Viacom is publicly traded, Sumner Redstone controls 80 percent of the company. The trust will determine Viacom's future.
On Friday, a lawyer who said he represented Sumner Redstone told Dauman he would be stripped of his place on the trust's board. Earlier today, Dauman filed a suit in Massachusetts, calling Redstone afflicted by dementia, impaired cognition, a slowness of mental processing, a loss of memory. Dauman says Redstone is being manipulated by his daughter, a charge she denies.
NELL MINOW: The drama is about the single reason that we have corporate governance rules in the first place.
FOLKENFLIK: Nell Minow is vice chair of Value Edge Advisers. She counsels large institutional shareholders on the soundness of their investments. She says Viacom is among the worst-governed she sees.
MINOW: You've got to have some system for making sure that they make decisions that are good for the long-term. And basically, the entire structure of anything that Sumner Redstone has been involved in has been based on the denial of the actuarial tables and his idea that he's going to be able to just push on forever.
FOLKENFLIK: Dauman is a lawyer who has worked closely with Redstone for more than three decades and has been CEO since 2006. Eric Jackson is managing director of Spring Owl Asset Management, an activist investor group.
ERIC JACKSON: The whole company traditionally made lots of money.
FOLKENFLIK: Jackson says that under Dauman, Viacom has failed to keep pace. And Jackson made his case publicly in an influential presentation.
JACKSON: They have suffered the worst of the lot. They have seen a tremendous decrease in their stock price. There's also been little evidence that there's a turnaround underway.
FOLKENFLIK: Dauman has said he has big plans to turn around Viacom's stock performance, but he was forced to reverse plans to sell a stake of Paramount Pictures to an outside investor, saying he misunderstood Redstone's intentions. David Folkenflik, NPR News, New York. Transcript provided by NPR, Copyright NPR.