Home / Business / Fight for Viacom Is Said to End With the Redstones in Control – New York Times
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Fight for Viacom Is Said to End With the Redstones in Control – New York Times

Mr. Dauman and Mr. Abrams filed suit in Massachusetts, challenging Mr. Redstone’s mental competency and depicting Ms. Redstone as a villain who unduly influenced her father as part of an “unlawful corporate takeover.” Mr. Dauman, in turn, was depicted as a failing, egoistic executive who oversaw the loss of $ 7 billion in market capitalization at Viacom in the previous year.

That suit was scheduled to go to trial in September.

Another legal battle emerged in June, when National Amusements moved to replace Mr. Dauman and four other directors on the Viacom board. Viacom’s lead independent director immediately filed suit in Delaware, seeking to block the changes. That case was scheduled to go to trial in October.

Over the last three months, the two sides made a series of attempts to resolve the dispute out of court. Settlement talks picked up in the last 10 days, after Viacom’s latest earnings report, in which the company said its profits plunged 29 percent during the latest fiscal quarter. The company reported weakness across both its television and film groups, with soft TV ratings at some networks, declines in domestic advertising sales and the dismal box-office performance of its film “Teenage Mutant Ninja Turtles: Out of the Shadows.”

Reaching a settlement helps to preserve the privacy and the dignity of Mr. Redstone, who has suffered a series of strokes and has a severe speech impediment. And it prevents the public airing of the relationship between Mr. Redstone and his daughter, which was been strained in the past. The resolution also provides a path for Mr. Dauman to leave the company less contentiously and while still being well compensated.

And, most importantly, Mr. Redstone and Ms. Redstone now are decidedly in charge of the company’s future.

As part of the agreement, Thomas E. Dooley, Viacom’s chief operating officer, will become the interim chief executive through Sept. 30, the end of the company’s fiscal year. Mr. Dooley is expected to work closely with the Viacom board during the next month and a half to develop a new strategic and financial plan for the company, the people said, and could potentially become the permanent chief executive, pending board approval.

War has spread across the empire of Sumner Redstone, one of the entertainment industry’s most tenacious titans. At stake are the fortunes of his family and confidants, as well as the fate of Viacom and CBS.

Mr. Dooley, a longtime Viacom executive, has been a member of Viacom’s board since 2006. He started at Viacom in 1980 and has been part of Mr. Redstone’s inner circle since the mogul wrested control of the company in 1987.

The agreement also calls for Viacom’s board to expand to include five new directors that National Amusements put forward in June. They include Nicole Seligman, a former Sony executive and lawyer who represented President Bill Clinton during his impeachment trial; and Kenneth Lerer, a venture capitalist, a co-founder of The Huffington Post and chairman of BuzzFeed.

While the fight for control over Mr. Redstone’s business empire has reached a resolution, Viacom’s business is in dire straits. The company has reported persistent declines in profit and revenue, and its share price has plunged about 47 percent in the last two years.

As part of the agreement, Mr. Dauman will continue as nonexecutive chairman of Viacom until Sept. 13, the people said. During that period, Mr. Dauman will have the opportunity to present Viacom’s board with his proposal to sell a 49 percent stake in Paramount. The deal would require the unanimous approval of the Viacom board.

While Mr. Dauman has pushed for the deal, Mr. Redstone’s National Amusements holding company has opposed the transaction and the board is unlikely to approve it.

Mr. Dauman, who formed a close bond with Mr. Redstone in the late 1980s when he was a young corporate lawyer, was named chief executive of Viacom in 2006. Described as reserved and calculating, Mr. Dauman didn’t let his guard down publicly amid the dispute in recent months as Mr. Redstone turned against him and opponents attacked his character, motives and performance as chief executive.

“I’m steady in all things,” Mr. Dauman, 62, said in June, just before stepping onto an elevator after making a business presentation at an investor conference. The quip was in response to a question from a reporter about whether he had lost weight in the midst of the drama.

Photo

Thomas E. Dooley will be interim chief of Viacom. Credit Mike Coppola/Getty Images for MTV

During his tenure, a number of longtime executives and creative talent left the company. Comedy Central, for instance, said goodbye to three of its biggest stars: Jon Stewart, Stephen Colbert and John Oliver. Critics, meanwhile, attacked the company for failing to transform the business from its traditional roots into a media company for the digital age.

Mr. Dauman long maintained that he was positioning Viacom for growth through new initiatives, including the Paramount deal, TV ratings improvements, a new data unit and its international business.

Despite Viacom’s business struggles, Mr. Dauman was handsomely compensated during his tenure. Mr. Dauman was awarded $ 54.1 million last year, making him the third highest paid chief executive in the country. Since being named chief executive of Viacom in 2006, Mr. Dauman’s total reported compensation was $ 409.7 million, according to Equilar, a compensation research firm.

Thomas J. May, one of the people that National Amusements has put forward as a new director, is expected to be named chairman. Mr. May is the chairman of Eversource Energy, one of New England’s largest energy delivery companies, and also is on the board of Bank of America and the Liberty Mutual Holding Company.

While the corporate dispute may well be resolved, one family feud continues. Keryn Redstone, Mr. Redstone’s 34-year-old granddaughter, filed court documents in Massachusetts this month to join the lawsuit over his mental capacity.

Keryn Redstone has asserted that she has been disinherited of $ 6 million and potentially $ 1 billion more. (The beneficiaries of the National Amusements trust, now valued at more than $ 5 billion, include Keryn Redstone and Mr. Redstone’s four other grandchildren.)

Keryn Redstone earlier insisted that she would not settle without the inclusion of a deal for Manuela Herzer, a former companion and onetime romantic partner of Mr. Redstone. Last year, Mr. Redstone revoked plans to leave Ms. Herzer $ 50 million and his $ 20 million Los Angeles mansion.

Keryn Redstone has not participated in the settlement negotiations and has no information about the terms, according to her lawyer, Pierce O’Donnell. That trial is scheduled to start on Sept. 19.

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