Sumner Redstone Opposes Sale of Paramount Stake: Report

Sumner Redstone has expressed his opposition to Viacom’s plan to sell a minority stake in Paramount Pictures to help revive the studio’s fortunes, according to a report by the Wall Street Journal.

The Journal reported Monday that Redstone had expressed his unhappiness with the plan announced in February by Viacom CEO Philippe Dauman to seek a strategic partner for the studio. Dauman has said Paramount was seeking a minority partner that could help the studio with international expansion or on the digital front. He’s said he expects to close a deal by the end of June.

The Journal reported that Dauman initially believed he received Redstone’s blessing for the sale but that Redstone has since told others including Paramount Pictures chief Brad Grey that he is opposed to selling any interest in the studio that he acquired after a hard-fought corporate takeover battle in 1994. The Journal also cites unnamed sources noting that Redstone did not raise the issue at a Viacom board meeting in February.

“The process continues,” a Viacom spokesman said late Monday.

The prospect of Redstone opposing Dauman’s plan for Paramount adds another layer of intrigue to the drama surrounding Viacom as its controlling shareholder grapples with failing health. Redstone was replaced as chairman of Viacom in February by Dauman amid an outcry from investors about the state of his mental and physical capacities. He became chairman emeritus of Viacom, and underwent the same transition at CBS Corp.

But Redstone is still believed to have an iron grip on Viacom and CBS through his ownership of preferred shares that give him about 80% of the voting control in both Viacom and CBS. That raises the possibility of Redstone moving to block Dauman, his longtime lawyer and confidant, or perhaps in an extreme scenario even seek to remove him as CEO. The Redstone-Dauman relationship has been so close over the past three decades that Dauman is a member of the trust that will oversee Redstone’s holdings after his death. And until just recently Dauman had control of medical decisions for Redstone as his health care agent. That authority has since been transferred to Redstone’s daughter, Shari Redstone, who has clashed with Dauman on management decisions involving Viacom.

The control of Sumner Redstone’s medical decisions sparked a lawsuit last year by Manuela Herzer, a former Redstone companion who had served as his health care agent until she was replaced last October by Dauman and removed from Redstone’s Beverly Park mansion. The suit raised the curtain on Sumner Redstone’s messy private life, his failing health and questions about the future management of Viacom and CBS Corp. after his death. Sumner Redstone’s legal team is now in the midst of hammering out a settlement agreement with Herzer.

A rep for Shari Redstone declined to comment on Journal report.

Dauman’s move to seek a strategic investor in Paramount came after calls from investors, including Mario Gabelli, to breathe new life into the asset by a sale to Alibaba or another Chinese conglom that is eager to invest in Hollywood assets. Viacom told the Journal last month that more than three dozen prospective buyers have come forth since Dauman announced the sale plan on Feb. 23 and he reiterated his focus on partners who could aid the studio with international operations or digital technology.

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