Viacom Inc Chief Executive Philippe Dauman on Monday sued media mogul Sumner Redstone's daughter in a battle to keep his position on a trust that will determine the direction of the media conglomerate and CBS.
Dauman's lawsuit is the latest turn in the struggle for control between the CEO and Shari Redstone, who is vice chair of both Viacom and CBS and president and a director at National Amusements, which controls Viacom Inc and CBS Corp .
Control of the trust will determine the future of the $40 billion media empire after Sumner Redstone dies or is declared mentally incapacitated – deciding issues that come up for a shareholder vote at CBS and Viacom, including potential mergers and acquisitions.
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Dauman filed a lawsuit in Massachusetts Probate and Family Court to stop Sumner Redstone, who ran Viacom for decades, from removing him and longtime Viacom director George Abrams from the trust.
The lawsuit also seeks to invalidate the removal of Dauman and Abrams as directors of National Amusements.
Redstone, who turns 93 on Friday, suffers from diminished mental capacity and is dependent on his daughter, Shari Redstone, the lawsuit said.
“Shari Redstone is attempting to illegally hijack her father's well-established estate plan,” Dauman said in a statement on Monday morning.
The complaint named Shari Redstone, her son Tyler Korff, as defendants and trust members David Andelman, Norman Jacobs and Leonard Lewin as nominal defendants.
A statement from Shari Redstone said, “It is absurd for anyone to accuse Shari of manipulating her father … Sumner makes his own decisions regarding whom he wants to see both in his home and elsewhere.”
Separately, Sumner Redstone on Monday asked a Los Angeles Court for an order validating his removal of Dauman and Abrams from his trust and from the board of National Amusements Inc.
'SELL THIS BUSINESS'
Viacom, like other media companies, has suffered from falling ratings at its cable networks such as Nickelodeon and MTV as younger viewers migrate to online and mobile video.
Viacom shares rose 3.6 percent to $40.34 on Monday, signaling some investors welcome a change in management.
The legal fight is a distraction, said Salvatore Muoio, principal with New York-based S. Muoio & Co, a major owner of Viacom voting shares.
“This whole company should be a case study of how to destroy shareholder value,” Muoio said. “Operationally, I had thought they were on the right track and would like to see some of their plans unfold, but all of this stuff is very distracting to management … They should sell this business to the highest bidder and get it over with.”
Over the past 12 months, Viacom is down 40 percent, lagging the Standard & Poor's 500 Media Index, which is off 4.7 percent. CBS shares added 0.1 percent at $52.78.
BATTLE FOR CONTROL
On Friday, Sumner Redstone removed both Dauman and Abrams from the trust and from the board of directors of National Amusements after concerns about Viacom's performance went unanswered, according to Redstone's attorney Michael Tu.
Viacom said in a statement its board has tried to meet with Sumner Redstone many times, adding that he was silent during a recent call about the company's strategy.
Sumner Redstone has not participated in an earnings conference call or an annual investor meeting since 2014.
The Sumner M. Redstone National Amusements Inc Trust owns about 80 percent of Redstone's privately held National Amusements, which in turn holds 80 percent of the voting stock in both Viacom and CBS.
Sumner Redstone has the power to remove Dauman, but not his daughter Shari, from the trust, giving her a more secure position, Reuters reported last week.
Sumner Redstone plans to name National Amusements general counsel Tad Jankowski and family friend Jill Krutick to the trust, sources told Reuters on Sunday.
Besides Shari, trust members include her son, lawyer Tyler Korff; David Andelman, another lawyer who is on the CBS board; Norman Jacobs, Sumner Redstone's divorce lawyer; and Leonard Lewin, who represented Redstone's first wife, Phyllis, in her divorce from Redstone.
'LIVING GHOST'
Sumner Redstone and Dauman have worked together for more than 30 years, and Redstone has called Dauman “a great friend.”
In February, Shari Redstone was the only one to vote against Dauman's elevation to executive chairman of Viacom to replace her father.
This month, a judge dismissed a lawsuit by a former girlfriend who had argued Redstone was not mentally competent to remove her from his advance healthcare directive.
The case, which claimed that Redstone was “a living ghost,” shined a spotlight on Redstone's health.
The mogul struggled to speak when questioned by attorneys. But he was clear about wanting ex-girlfriend Manuela Herzer out of his life, and putting his daughter in charge of healthcare decisions if he could no longer make them.
In that trial, Dauman submitted statements in November that Redstone was “engaged and attentive” in recent conversations.
However, the complaint filed Monday claims that Redstone suffers from dementia, impaired cognition, a slowness of mental processing, a loss of memory, apathy and depression.
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