Legendary Media Mogul and self-proclaimed immortal being, Sumner Redstone, who once survived a fire by hanging from the window ledge outside his hotel window, is not looking so immortal these days. The bed-ridden 93 year-old is reportedly in failing health, and the future of a 40 billion dollar empire is at stake.
Sumner Redstone acquired Viacom back in 1987 when it was still a part of CBS. He split the two companies and controls about 80% of Viacom voting shares through a trust. Recently, he abruptly dismissed two men, Viacom CEO Phillipe Dauman and George Abrams, from the trust. The two immediately filed suit challenging Mr. Redstone’s mental capacity and alleged that he is being manipulated by his daughter, Shari Redstone. They assert that Shari Redstone is orchestrating the dismissals so that she can replace them with individuals she can control.
Viacom operates via two primary segments, media networks (Nickelodeon, Comedy Central, MTV, Spike) and filmed entertainment business (Paramount Studios). The film studio has some pretty well known franchises, such as Mission Impossible and Transformers, but they are still lacking in successful franchises. Their media networks are suffering because American consumers are “cutting the cord,” ending their cable subscriptions in favor of streaming services.
Sumner Redstone has had some major health issues. In October 2015, Long time caretaker and partner, Manuela Herzer, was booted from Redstone’s home. Mr. Redstone requested that his daughter, Shari, be his primary caretaker. A psychiatrist hired by Herzer, Dr. Stephen Read, who described Redstone as suffering from “mild to severe dementia.”
Shari Redstone will eventually own all of her father’s stock or have control of it through a trust. The reason this is important is whoever controls that trust eventually controls Viacom and CBS. The Viacom board is alleging that Shari Redstone is orchestrating all of this so that she can replace these people so she can have control. Shari Redstone is saying, “No, this is what my father wants, he’s not happy with the performance at Viacom.”
After Dauman and Abrams were removed from the trust, Shari Redstone replaced them with her daughter and another close confidant. It isn’t far-fetched that she would name these folks to the trust, but expect a fight from Dauman, Abrams and the board of Viacom. The judge has not yet set a date for a trial to determine whether or not Mr. Redstone is and was competent when removing the two men from the trust.
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