It took two days longer than expected, but Shari Redstone’s victory in the drawn-out battle for control of Viacom finally received a stamp of official approval.
Viacom announced Saturday that CEO Philippe Dauman had been ousted after nearly a decade in control, with his long-time lieutenant, Viacom chief operating officer Thomas Dooley, taking the interim helm of a conglomerate that controls Nickelodeon, MTV, Comedy Central, VH1, BET and the Paramount Pictures studio. Five new board members proposed back in June by controlling shareholder National Amusements, the holding company owned by Shari Redstone and her father, Sumner Redstone, will also join the board.
The settlement calls for Dauman immediately relinquish his CEO title to Dooley but remain on board as non-executive chairman until Sept. 13. He will leave the board of directors and receive an exit package worth more than $72 million — a continuation of the lavish compensation that frequently made him a target for critics during his decade atop the company. He will also be given the opportunity to try to persuade the Viacom board to move ahead with his plan to sell a 49% stake in Paramount.
Dooley, meanwhile, will serve as CEO through Sept. 30, which marks the end of Viacom’s fiscal year. By that point, the expectation is that Viacom’s new board will be prepared to make a decision about the best CEO candidate to lead Viacom into the future. Dooley was chosen for the short-term post because his institutional knowledge will be invaluable during the new board’s review process. He will be among the candidates to become permanent CEO.
A press release confirming these changes did not hit in-baskets until 7:15 p.m. ET, 48 hours after the Thursday night vote in which Viacom’s board voted to settle lawsuits surrounding the control of the corporate empire assembled by Sumner Redstone over the course of more than half a century. The board of National Amusements also approved the settlement — which encompassed lawsuits in Massachusetts, Delaware and California.
The settlement marks a watershed in Viacom’s history. Shari Redstone has emerged as the quiet but forceful hand behind the corporate throne that her father had vowed he would never leave, because, he often said, he had no intention of dying.
Sumner Redstone’s only daughter began her professional career as a prosecutor in the Boston area, the city where she was reared. She later joined the family business, which began with a chain of movie theaters, National Amusements Inc., before her father willed it into one of the most sprawling media empires on the planet, now worth some $40 billion. Sumner Redstone bought out the holdings of his only other child, Brent, in 2006.
Shari Redstone, 62, has said since the start of a struggle over the family empire that she was only supporting her father against those who were trying to manipulate him. Her only wishes were for good corporate governance and for the ouster of Dauman, who she considered too timid to lead Viacom into the future, according to those around her.
Shari Redstone is said to be much like her father — bright, determined to win and prepared to take on any foe viewed as threatening the family fortune. In finally winning her way back to her father’s side, she first saw (or orchestrated, depending on who is telling the story) the dispatch of two of Sumner Redstone’s long-time female companions.
First, Sydney Holland and then Manuela Herzer were forced out of Redstone’s hilltop mansion above Beverly Hills. Both were cut out of his estate, with Redstone’s lawyers also threatening to go after $150 million in cash and gifts the two women purportedly received during their years with the magnate.
Next, Shari and her allies — including her father — took aim at Viacom and Dauman. The elder Redstone moved in May to oust Dauman and another venerable family advisor, George Abrams, from the trust that will one day oversee the family’s shares in both Viacom and CBS. In June, the patriarch picked five new members for the Viacom board — corporate and media veterans who are viewed as loyalists of the new regime, whose most forceful leader is now Shari. Notably the younger Redstone, who serves as vice chair of the boards of Viacom and CBS, spoke for National Amusements in the settlement announcement.
“We thank Philippe for his many years of dedicated service and the important role he has played at Viacom,” Shari Redstone said. “We also welcome the new board members who join us today. By strengthening Viacom’s governance and leadership, these changes will enable the company to embark swiftly on a strategy that strengthens its position as an industry leader. Viacom has extraordinary assets and people, and we look forward to taking the necessary steps to realize the Company’s full potential to the benefit of all stockholders.”
(Redstone’s other media conglomerate, CBS Corp. has been much more successful in recent times at maintaining shareholder value. It is made up of the television network and its subsidiaries, along with Showtime Networks, Smithsonian Networks and the publisher Simon & Schuster,)
Dauman, also 62 and six weeks older than Shari, rode high for most of the first eight years of his tenure. He made frequent visits to Redstone’s Western home in Beverly Park and was a constant presence at the billionaire’s side, at corporate occasions and forays out into the business community.
Other than a pronounced swoon during the Great Recession, Dauman mostly presided over good times until the past two years. He managed a more than 130% increase in Viacom (Nasdaq: VIA) shares, to almost $88 a share in early 2014, only to see the price tumble nearly 50% to its current $48.70. The youth-oriented cable outlets that had once been the conglomerate’s jet fuel, now seemed powered by something more like bio-diesel, with many of their viewers scattering to a thousand corners of the Internet.
“I care deeply for Viacom, which has been an important part of my life since I joined Sumner in the acquisition of the company 30 years ago,” Dauman said. “I believe this agreement will give the company and its employees the best opportunity to continue a smooth evolution into the future. I will do my utmost to ensure an effective board and management transition in my remaining time as non-executive chairman.”
Dauman’s plan to sell nearly half of Paramount reportedly infuriated Redstone, as much because he didn’t want to give up any of the “baby” he (and Dauman) had worked so hard to acquire, as because of the fact that he felt like the sale plan had been hatched without properly consulting with him. Dauman, for his part, insisted that he had always kept Redstone fully informed of everything happening within the company.
The final announcement of the settlement had been delayed for two days, following Thursday evening’s approval by the Viacom board, said several people familiar with the talks. Before it could issue a press release, the sources said, Viacom needed approval from the roughly two dozen parties to the lawsuits, filed in May and June, that all centered on the conglomerate’s governance and the ability of the frail, 93-year-old Redstone to maintain a central role. The broad terms of the settlement had leaked out Thursday evening after the boards of both Viacom and National Amusements gave the plan their approval.
While Dooley will be eligible to remain in the top job, the board is expected to cast a wide net to find other potential candidates.
“With the resolution of these issues, I am looking forward to working closely with the board to develop a strategy to position Viacom for growth and success,” Dooley said. “I have very much enjoyed partnering with Philippe over many years and am grateful for the opportunities that have been presented to me by the Redstone family. We share a strong commitment to Viacom’s future and to guiding the company through an orderly and successful transition.”
The five new directors named by Redstone in June to join the board are corporate veterans and experienced media hands who are not expected to be shy about forging a new direction for the company. The five newcomers are: Buzzfeed Chairman and tech investor Kenneth Lerer, former Sony executive Nicole Seligman, former Discovery CEO Judith McHale, Bank of America alum Thomas J. May and former DreamWorks COO Ronald Nelson.
One published account cited a source saying that Thomas May, chairman of Eversource Energy, is expected to be named Viacom chairman, once Dauman exits that post. Three other veteran board members will depart after next month’s annual meeting.
Saturday’s announcement made a point of noting the special power that will be held by the new board members, who were reportedly chosen with strong input from Shari Redstone. Three critical Viacom board committees — overseeing governance, audits and compensation — will each be chaired by one of the newcomers. Seligman will head the Governance and Nominating Committee, Nelson will top the Audit Committee and McHale will lead the Compensation Committee. The five new directors also will comprise a majority of each of those committees.