A powerful media magnate has reached an agreement with two high-level employees of Viacom and CBS Corp., potentially putting an end to the heated power struggle for the broadcast conglomerates.
CEO Philippe Dauman and director George Abrams filed a lawsuit against Sumner Redstone, the majority owner of Viacom, to nullify their removal from the eponymous Sumner M. Redstone National Amusements Inc Trust. The seven-member trust was formed to manage Redstone’s majority ownership of Viacom and CBS Corp. when he is no longer physically able.
Redstone tried to have them removed from their posts because he was displeased with the business’s performance, a spokesman for the mogul told Reuters.
Redstone also stated that he doesn’t trust the company’s board of directors or Dauman. “I no longer trust Philippe or those who support him,” Redstone said in email, feeling as if they defy his intentions.
Shari Redstone, the mogul’s daughter, will now acquire control of the seven-member trust that her father established, according to The Wall Street Journal.
Dauman and Abrams claim that Shari manipulated her father in order to wrest the reins from them, since just two years ago Sumner tried to buy Shari out of the 20 percent stake she had in National Amusements. Dauman claims the mogul is more susceptible of being influenced because of his old age and mental state.
Dauman was appointed chairman by the board of directors in a 10-1 vote in February. The only dissenter was Shari, reports Bloomberg. Dauman is known as Shari’s long-time rival.
The two sides were strongly considering litigation to settle the debate, but apparently prefer to keep the issue out of court.
Under the terms of the agreement, Dauman would step down from his position as CEO, and COO Tom Dooley would replace him in the interim.
“Philippe [Dauman] has been instrumental with Sumner in every aspect of Viacom’s success for nearly 30 years,” William Schwartz, chairman of the board’s governance and nominating committee, explained in a statement in February. “We believe his becoming executive chairman is in the best interests of the company and all shareholders.”
But apparently that is no longer so. If the settlement materializes, Dauman would be owed $72 million as part of a severance package. Many people blame Dauman for failing to adapt to the ever-changing environment of media in the 21st century. The cable networks under the Viacom umbrella have had faltering ratings as younger generations turn to online platforms.
“What is required to become successful in a world that was going to digital? What is necessary to make Paramount great again?” Mario Gabelli, whose company is the second-largest stakeholder in Viacom, told The WSJ.
The settlement avoids sticky circumstances that would have arisen in court, like having the magnate undergo further medical examinations and have his peers and subordinates testify on his health. Viacom management also feared the drama was creating a spectacle that made it hard to focus on operations and further development as a business.
Viacom’s board of directors endorsed the settlement in principle Thursday night, according to WSJ, and the formal announcement is expected to occur in the near future.
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