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

Viacom Board Shake-Up: Legal Battle Heads
Gregory Pace/BEI/REX

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.


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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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  1. Mark says:

    Oh boy…viacom is definitely not creative.They really do need a new staff for their creative department.

  2. Robert says:

    I guess from his disconnected position Dauman thinks viacom is creative.. Having worked at the studio on projects for over 10 years I can tell you it’s the least creative place on earth. Certainly the least creative of all the film studios.

    And it shows; in the protect-your-turf attitude of senior management, the lack of creative developement from with the studio and the lack of production generated from within that has paid off in large BO. And before you mention Transformers.. Remember Dreamworks developed that property.

    Most of the people who actually do the work have left to make movies elsewhere, the whole place is staffed by more accountants than creatives.

    Us creative saw what was going to happen when you Stop Taking Risks in film 10 years ago at parampunt… why senior management took so long to notice is also a question that should be asked. Oh that’s right, they didn’t! The market finally woke them up to what the lack of creative pipeline was doing to the business.

  3. lorenzo demetrius jackson says:

    Et tu, Dauman? Dauman talked Redstone into canning Tom Freston, who had actually built MTV from scratch as well as the Paramount tv sector and had assumed the CEO role for all the companies. Now Dauman gets back what he did and he gets it back in spades. Freston, who was prescient in all matters for Viacom, knew that My Space was history, but Dauman convinced the boss it was a big loss to Fox, when in reality it was dog. And Dauman spoke in dark places at night that Freston should go and OMG, who should replace him? Dauman! Now it’s Dauman’s turn to eat the dirt he dished out – but instead of the class Freston showed, Dauman whines and cries for more compensation. Freston was a gentleman and said he enjoyed working and was extremely gracious to Redstone. Employees loved Freston and Paramount and CBS and all the spokes were turning just fine till Dauman got a hold of things and the wheels fall off. Dauman’s Viacom was bleeding cash, and he even tried cheap tactics to make it look like he saved money – example – sending Paramount’s accounting department to Tennessee to save paying California payroll tax. Nickle-dime stuff. A Hollywood studio that has made its living in Hollywood, California, for 100 years, sends its accounting department to Tennessee? That is so tacky. But that’s Dauman.

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