Legal Battle Over Viacom Board Shake-Up Headed to Delaware Court

A Delaware courthouse will be the next stage for the ongoing legal battle for control of Viacom.

Wednesday marks the first hearings on an ongoing dispute about National Amusement’s decision to remove five of the directors of Viacom. Those directors include CEO Philippe Dauman, who remains in control of the media conglomerate behind Paramount Pictures, MTV and Comedy Central while he awaits a decision on the legality of the moves. National Amusements is the theater company owned by Sumner Redstone. It has an 80% controlling stake in Viacom.

The hearing will take place an 2 p.m. in the Delaware Court of Chancery and both parties have until Tuesday afternoon to submit motions. Lawyers for National Amusements want the court to uphold the shakeup, while Dauman and the ousted members are asking to keep the board intact. Both sides are asking for an expedited ruling.

That dispute could be consolidated with another pending decision about how Viacom will be governed while the case unfolds.

The corporate shakeup unfolded last week. In addition to Dauman, Redstone and his loyalists moved to oust George S. Abrams, Blythe J. McGarvie, Frederic V. Salerno and William Schwartz.

His team hopes to replace them with Kenneth Lerer, co-founder of the Huffington Post and chairman of Buzzfeed; Nicole Seligman, a lawyer and former Sony executive who represented President Bill Clinton during his impeachment trial; Judith McHale, former Discovery Communications chief executive; Thomas J. May, the chairman of the Eversource Energy utility and director at Bank of America; and Ronald Nelson, chairman of Avis Budget Group and former co-chief operating officer of DreamWorks SKG.

Dauman has been criticized for earning tens of millions in compensation while Viacom properties such as MTV and Comedy Central suffered ratings dives and lost top talent like Jon Stewart and Stephen Colbert to other networks. Paramount, the film studio Viacom controls, has also suffered at the box office, stumbling with such recent releases as “Teenage Mutant Ninja Turtles: Out of the Shadows” and “Zoolander 2.” On Monday, Dauman defended his tenure in an interview with Fortune, blaming the media for fixating on the corporate wrangling while ignoring the creative culture he has fostered. He also said that much of his compensation was tied to stock performance, which meant he had lost money as the share price fell.

“The press loves drama,” Dauman told Fortune. “People are missing the business story. This is a great place to work. We have great values. Creativity is at the center of it. We want to do good while we do well. We attract great millennial talent.”

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