You will be redirected back to your article in seconds

Sumner Redstone Trust ‘Bombshell’: Ownership Provision Comes to Light in CBS-NAI Hearing

Even after his death, Sumner Redstone sought to ensure that his heirs retain a significant stake in CBS Corp. and Viacom.

A provision in the trust agreement that will govern Redstone’s controlling stakes in CBS and Viacom after his death is designed to put some restrictions on sale options for CBS and Viacom by stipulating that the trust must maintain at least 30% of the voting interest in the resulting entity in the event of a sale, according to multiple sources. That would make it difficult for CBS or Viacom to be acquired by a significantly larger entity.

The provision came to light during an exchange between lawyers on Wednesday in Delaware Chancery Court, where CBS and Redstone’s National Amusements Inc. are battling over CBS’ lawsuit challenging NAI’s control of CBS Corp. The suit is a byproduct of the battle between CBS Corp. chief Leslie Moonves and NAI president Shari Redstone over the future of CBS and CBS’ resistance to reuniting with Viacom.

CBS is challenging Shari Redstone’s ability to act on behalf of her father, arguing that the ailing Sumner Redstone is not capable of making decisions and never explicitly transferred his interests in NAI to his daughter, Shari Redstone, who owns about 20% of NAI while Sumner Redstone owns the rest. Shari Redstone is vice chair of CBS and Viacom, both of which are controlled by NAI. NAI itself is governed by a seven-member board, of which Shari Redstone is a member.

Attorney Joseph Allerhand, representing the independent members of CBS’ board of directors in the lawsuit, referred to the trust provision during an exchange before Judge Andre Bouchard. Allerhand raised the specter of the trust provisions being a concern for investors in CBS and Viacom, because those investors have not been made aware of the constrictions around a sale following Redstone’s death or incapacity.

“There are terms in the trust which I think are fairly described as bombshells, if the public knew about them,” Allerhand said.

NAI attorney Meredith Kotler acknowledged the provision — although she did not spell out the specifics — but argued that it was not significant because the trustees of the Sumner Redstone trust could vote to amend those terms.

“If they think that provision would preclude the trustees after Mr. Redstone’s lifetime from doing something, they’re wrong about that, because the trustees can amend it,” Kotler said. “There’s no bombshell, nothing big, nothing special. We weren’t even going to raise it, but they had raised to you this question: does the trust allow this? And how important this is. And all we said is, no, it doesn’t preclude it. No bombshell.”

CBS is expected to file a motion soon to address the trust provision in more detail. CBS lawyers have also complained that they have not been able to review the trust in full. Allerhand told the judge that only “a select group of 11” people have been allowed to review the terms of the trust, and none of them are tied to CBS.

“We have to let CBS’ general counsel and other people have access to this. These aren’t personal family issues. These are issues that go to what happens to the CBS stock. People have to know this,” Allerhand said.

Reps for CBS and NAI declined further comment.

More Biz

  • Plume of black smoke rising from

    Lawsuit Expected Next Week in Response to Universal Music Fire

    A Los Angeles law firm representing several Universal Music recording artists affected by the 2008 fire that destroyed a huge number of master recordings is expected to file a lawsuit as early as next week. King told Variety that he expects to sue for negligence and other torts. He declined to identify his clients, saying [...]

  • Nicholas Sparks

    Nicholas Sparks Responds as LGBT Discrimination Claim Resurfaces

    Nicholas Sparks, the prolific author of romance novels, is facing renewed allegations that he discriminated against gay students at his Christian school in North Carolina. The allegations were first leveled by Saul Benjamin, the former headmaster of the Epiphany School of Global Studies, in a wrongful termination suit he filed in 2014. Benjamin’s suit alleged [...]

  • Tyler the Creator and DJ Khaled

    Inside the DJ Khaled-Tyler, the Creator Chart Battle

    The controversy surrounding the recent chart battle between DJ Khaled and Tyler the Creator — in which a bundle promoting Khaled’s album was disqualified from adding to its sales tally for the May 24 Billboard 200 album chart, allowing the No. 1 spot to go to Tyler’s “Igor” — has been a first-class problem for [...]

  • Cuba Gooding Jr. Diversity

    Cuba Gooding Jr. Charged with Misdemeanor Forcible Touching

    Actor Cuba Gooding, Jr., has been charged with a misdemeanor count of forcible touching following an incident at a nightclub, the New York Police Department said Thursday. Gooding turned himself in to NYPD detectives on Thursday, surrounded by a throng of media. Later in the day, he was arraigned in front of Judge Herb Moses. [...]

  • Contract Placeholder Business WGA ATA Agent

    CAA Challenges Writers Guild of America's Legal Standing in Packaging Fee Lawsuit

    CAA has challenged the Writers Guild of America’s legal standing for bringing forth the lawsuit against Hollywood’s four largest talent agencies over the issue of packaging fees. CAA’s latest legal response to the suit filed by the WGA in Los Angeles Superior Court in April asserts that the guild does not have the right to [...]

More From Our Brands

Access exclusive content