The extraordinary battle between Sumner Redstone and Viacom CEO Philippe Dauman intensified Sunday evening as a statement from Redstone questioned Dauman’s plan to sell a partial stake in Paramount Pictures to a strategic investor, among other criticisms.
The lengthy statement issued by Redstone spokesman Mike Lawrence asserted that the 92-year-old mogul was mentally competent and acting independently in his decision on Friday to remove Dauman from his role as a board member of Redstone’s National Amusements holding company and from the trust that will inherit those holdings after Redstone’s death.
Viacom responded Sunday with another statement asserting “it is clear he is being shamefully manipulated.”
The verbal volleys that stretched through the weekend are taking a heavy toll on Viacom’s rank and file. Employees who gathered on Saturday for the Peabody Awards in Manhattan could only shake their heads in dismay at the open warfare playing out in the media among the already-embattled Dauman, Sumner Redstone and his daughter Shari. Employees received a memo on Saturday from Viacom lead independent director Frederic Salerno addressing the situation and urging them to stay focused on their work.
The public criticism over the planned Paramount sale is likely to complicate the process for Viacom. Bidders may be wary of engaging in a process that could well wind up in court. Industry observers predict that the warring between Dauman and the Redstone family is bound to wind up in litigation.
The latest Sumner Redstone statement countered claims leveled by Viacom on Saturday that Redstone has been unresponsive to requests by board members for face-to-face meetings. Dauman has acccused Shari Redstone of manipulating her father and making decisions in her own self-interest. In addition to Dauman, longtime Redstone lawyer and confidant George Abrams was also removed from the trust and from National Amusements.
“Viacom’s claim that members of the board have been ‘denied access’ to Sumner Redstone is untrue,” the statement from Redstone said. “In a letter sent on May 16 by his counsel to Viacom’s CEO Phillippe Dauman and board members George Abrams and Frederic Salerno, Mr. Redstone asked to be briefed concerning management’s plans for improving Viacom’s business outlook and share price. This was an opportunity for direct engagement, but the board leadership did not respond. Instead, Viacom criticized Mr. Redstone for not speaking while participating by phone in a board meeting that followed. As Viacom knows well, Mr. Redstone has significant speech impairment and, for much of the past two years, has not relied on verbal statements at board meeting to make his opinion known.”
The statement also refutes claims that Shari Redstone has him “on lockdown,” and insists that Redstone fired Dauman, saying, “He removed Mr. Dauman and George Abrams as trustees of the Sumner M. Redstone National Amusements Trust and as directors of National Amusements, Inc. based on what Mr. Redstone believes are the best interests of beneficiaries and shareholders.”
Redstone “continues to believe that it is in the best interest of Viacom that Paramount Pictures should remain wholly owned by the parent company.”
A statement issued by Viacom on Saturday claimed that Sumner Redstone was being “manipulated and used” by Shari Redstone so that she could gain control of the conglomerate. Shari Redstone responded by issuing a one-sentence statement, claiming that she respects her father’s decisions.
Sumner Redstone’s newest statement explicitly denies that Shari is pulling the strings or taking advantage of her father’s failing health. And it again asserts that Sumner Redstone has the wherewithal to make decisions about his personal affairs.
“Viacom implied Shari Redstone played a role in choosing Mr. Redstone’s legal counsel,” the statement reads. “That statement is false. In fact, neither that counsel nor his firm has ever before represented any member of the Redstone family. The counsel was recommended to Mr. Redstone by his existing lawyers, and Mr. Redstone has met with and is working closely with his new counsel.”
It also boasts Sumner Redstone’s independence, claiming that the mogul, who is turning 93 on May 27, has hosted friends and family at his home and gone to his grandson’s home for a baseball game in the past few days.
The fight over Viacom’s future reached new heights on Friday, after it was revealed that Dauman and Abrams were removed by Sumner Redstone as trustees of the trust that will oversee his holdings in Viacom and CBS Corp. after the mogul’s death.
It was a shocking move, given that the Dauman and Abrams had been friends and associates for decades.
On Sunday, the New York Times reported that Dauman and Abrams are expected to be replaced on the trust board by National Amusements general counsel Thaddeus Jankowski and an unnamed friend of Shari Redstone.
Viacom’s statement late Sunday reiterated that directors have yet to be granted an in-person meeting with Sumner Redstone.
“We continue to be deeply troubled and saddened by this state of affairs. We have the deepest respect for Sumner Redstone, but it is clear he is being shamefully manipulated,” the statement said.
“The facts are clear. Viacom’s 12-hour strategy meetings on May 17 and 18, that Sumner attended by phone, addressed all issues, including Paramount, to the satisfaction of all the independent directors. Despite numerous requests, Lead Independent Director Fred Salerno and a fellow board member, who represent all shareholders, have still been unable to meet with Mr. Redstone. The Sumner Redstone we knew would never refuse a meeting about his businesses and he certainly would not want advisors to stand in for him. Mr. Salerno and his fellow Directors remain willing and eager to meet with Sumner at any time.”