The current Viacom Board of Directors may take umbrage that some of its members are being shown the door, but investors seem to like the idea.
Shares in the New York owner of MTV, Nickelodeon and Comedy Central climbed $2.85 a share, or 6.75%, in late trading Thursday after the company’s controlling shareholder National Amusements Inc., said it had moved to oust Philippe Dauman, the company’s chief executive and executive chairman, and four other members of the board. Dauman is a longtime advisor to Sumner Redstone, the 93-year-old company founder who controls both Viacom Inc. and CBS Corp. through holdings in National Amusements, a movie-exhibition chain controlled by his family.
Shares recently rested at 45.05, up from $42.18 at the market’s open. Trading volume in the stock was high, reaching 10.58 million, compared with average daily volume of 4.07 million.
“We think all the Viacom shareholders and employees got rewarded today with this move. The board has been significantly upgraded,” said a statement from Spring Owl Asset Management, a hedge fund that has a small position in Viacom and has been critical of management in recent months.
Redstone and his daughter, Shari, have been critical of Dauman and other directors in recent months, and removed Dauman and George Abrams, another director from a governing board that would oversee Redstone’s estate in a trust in the event he dies or becomes incapacitated. Dauman and other Viacom executives have charged that Shari Redstone has begun to exert undue influence on her father, who is said to be in frail health. The elder Redstone has issued statements questioning the value of selling off a piece of Paramount, the movie studio owned by Viacom that has suffered from poor operating performance.
Thursday’s move to oust board members was labeled a “brazen and demonstrably invalid attempt by Ms. Redstone to gain control of Viacom and its management in disregard of Sumner Redstone’s wishes and to undermine the current Board’s ability to represent the best interests of all of the stockholders of Viacom,” in a statement by Frederic V. Salerno, the lead independent director of the company’s current board.
Viacom said it would file a lawsuit in Delaware Chancery Court to block the action. National Amusements filed papers in the same venue to have the actions sanctioned.
National Amusements said it would oust Abrams, Dauman, Salerno, Blythe J. McGarvie, and William Schwartz. Thomas Dooley, Viacom’s chief operating officer, would remain, as would Cristiana Falcone Sorrell, Deborah Norville, and Charles E. Phillips, Jr.
Viacom has for months suffered from lower ratings at many of its flagship networks. At the same time, it has worked to construct new deals for advertisers and installed new management at MTV and Comedy Central.