In a move that could end one of the more sensational court proceedings surrounding a media-industry chieftain, attorneys acting on behalf of media mogul Sumner Redstone have reached a preliminary settlement with Manuela Herzer, a former girlfriend who had filed a lawsuit that challenged the mental competency of the controlling shareholder of Viacom Inc. and CBS Corp., according to people familiar with the situation.
The settlement means information about Sumner Redstone’s health and well-being, which has become a source of concern for investors in his holdings in recent months, will remain private. In the suit, Herzer had challenged Redstone’s competency. Had the legal proceeding continued, Philippe Dauman, Viacom’s executive chairman and chief executive, would likely have been deposed and asked about his knowledge of the elder Redstone’s condition. Dauman had recently been named Redstone’s health-care proxy.
The terms of the settlement make Shari Redstone, Sumner Redstone’s daughter, his health-care proxy, and establish a family friend in the Los Angeles area as a person who will oversee the executive’s care on a day-to-day basis, according to the people familiar with the matter. A judge is expected to review the settlement, which is likely to award a substantial monetary amount to Herzer, by the end of this week.
The lawsuit cast a shadow over both of the glitzy media companies Redstone controls, and is widely believed to have prompted a decision by the boards of both corporations to have Redstone step down as chairman of each. In February, CBS CEO Leslie Moonves was elevated to chairman of that company, while Viacom CEO Philippe Dauman was named chairman of that concern. As the lawsuit continued to wend its way through the courts, investors grew worried that Sumner Redstone, 92 years old, lacked the capacity to govern each company. Redstone controls 80% of each company’s voting shares through stakes held by National Amusements, a movie-exhibition company owned by his family.
The case also laid bare schisms among executives and family members. Shari Redstone suggested in a public statement that Dauman should not be made chairman of Viacom, citing his being named Redstone’s health-care proxy. That condition has now been rendered moot by the new decisions.
At issue, or so the court proceeding alleged, was Redstone’s care and capacity to understand decisions being made around him. Those concerns appear to have dissipated, now that the prospect of a settlement is now in the offing.