Sumner Redstone appears to have moved out two longtime allies as trustees of the group that will determine the fate of his corporate empire after his death. The move, the latest in the extraordinary battle raging around the mogul in his waning days, is viewed as benefiting his daughter, Shari, according to a source familiar with the situation.
Redstone reportedly sent notices to Viacom chairman-CEO Philippe Dauman and to Viacom director George Abrams, informing both that they would no longer be part on the panel that oversees the trust that will inherit Redstone’s shares of National Amusements, the company that holds Redstone’s controlling interest in Viacom and CBS, according to the source.
The news, first reported by Fortune, is likely to help Shari Redstone, an attorney and businesswoman who holds a 20% interest in National Amusements and is a board member of Viacom and CBS. The younger Redstone has been feuding with Dauman, with the two reportedly holding divergent views on the management of Viacom and the question of what will become of Sumner Redstone’s media empire. When Sumner Redstone stepped down as executive chairman of Viacom in February, under pressure for shareholders, Shari was the only board member who voted against Dauman’s ascension into the post.
A spokesman for Dauman issued a statement Friday evening, challenging the action to oust the Viacom CEO from the National Amusements post.
“These steps are invalid and illegal,” the spokesman said in a statement. “They are a shameful effort by Shari Redstone to seize control by unlawfully using her ailing father Sumner Redstone’s name and signature. As she knows, and as court proceedings and other facts have demonstrated, Sumner Redstone now lacks the capacity to have taken these steps. Sumner Redstone would never have summarily dismissed Philippe Dauman and George Abrams, his trusted friends and advisors for decades.”
Redstone holds an 80% voting stake in both CBS and Viacom – owner of Paramount Studios and MTV Networks – via National Amusements. Fortune reported that notices were faxed to Dauman and Abrams Friday, informing both they had been removed from the board of National Amusements and from the seven-member trust that will determine what happens to Redstone’s holdings after he dies.
Nothing has been disclosed about who will replace the two men, if their ouster is confirmed. The statement from Dauman’s spokesman also did not say whether he plans to take any action to block his removal.
Shari Redstone also sits on the National Amusements board and on the seven-member trust, along with her son, Tyler Korff. The rest of the panel had included Dauman and Abrams, a Boston attorney who has been a Viacom director for years; David R. Andelman, a Boston attorney who is a director of CBS and National Amusements; Norman I. Jacobs, another attorney who has advised Redstone and Leonard L. Lewin, an attorney with ties to Phyllis Redstone, Sumner Redstone’s ex-wife.
It’s previously been reported that Shari Redstone and her allies hold a majority, or near majority, on the trust panel, though the sentiments of the members have never been disclosed publicly. Fortune speculated that the ouster of the two long-time Redstone allies would “virtually assure majority control” by Shari, though the publication did not elaborate.
The action does not directly involve Viacom or CBS, just Redstone’s holding company. Dauman had long been seen as a trusted confidant of the company’s controlling shareholder for more than 30 years, but Redstone now appears removed from the conglomerate’s routine operations. The company this week took away the magnate’s salary, which had stood at $2 million for 2015. His other corporate holding, CBS, is soon expected to follow suit, zeroing out his pay. Shareholders had filed a lawsuit, protesting pay for Redstone at a time they said he was contributing nothing to the operations of the two companies.
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The businessman, nearing his 93rd birthday is in frail health and receives round-the-clock care at his mansion in Beverly Park. He just weathered a trial over his mental competency. Los Angeles Superior Court Judge David J. Cowan ruled that he would allow the billionaire to be in charge of his own affairs, determining that he clearly wanted longtime companion Manuela Herzer out of his life, leaving Shari Redstone in charge of overseeing his health care decisions, should he be deemed incapable of making his own decisions.
Herzer was abruptly ousted from Sumner Redstone’ s mansion last October, when decisions about the mogul’s health care were transferred to Dauman and later to Shari Redstone. Herzer’s suit alleged that Shari Redstone was the force behind the decision because Sumner Redstone does not have mental capacity to make such a decision.
In that case, Redstone’s lawyers and Dauman repeatedly argued that the 92-year-old had not lost his mental competency. Now that the lawsuit has been thrown out, Dauman is asserting that he has.
Cowan did not make a ruling on Redstone’s mental capacity, though doubts about it were raised following a deposition in which the magnate did not respond to some basic questions, including about a change in his family name, made earlier in his life.
Fortune described the ouster of the two long-time Redstone confidantes from the panel overseeing his holdings “a big victory” for Shari Redstone. Representatives for Sumner Redstone and Shari Redstone could not be immediately reached.
