The long struggle for power in Sumner Redstone's media empire is
nearing a conclusion.
Viacom Inc. Chief Executive Philippe Dauman would relinquish
that post as part of a settlement the company is completing with
Mr. Redstone's National Amusements Inc., people familiar with the
situation say, a deal that would end a bitter feud and leadership
crisis that has engulfed the media giant.
Under terms of the deal being negotiated, they would cease
litigation over control of Viacom and National Amusements Inc.,
through which the 93-year-old Mr. Redstone owns a nearly 80% voting
stake in the media company, the people say.
Viacom Chief Operating Officer Tom Dooley would become interim
CEO through September under the deal, and National Amusements would
appoint five new directors to the board.
Mr. Dauman, who would be due an exit package valued at around
$72 million, would remain as nonexecutive chairman until Sept. 13
and would have a chance to present plans to sale a stake in
Paramount Pictures to the board, the people familiar with the
situation say.
Thomas May, chairman of Eversource Energy, is expected to be
named chairman after Mr. Dauman leaves that role. Three Viacom
directors would depart the board after the annual meeting under the
deal.
The settlement deal is expected to be announced Thursday night,
the people familiar with the matter said, but lawyers were still
completing the details.
A settlement would complete the stunning rise of Mr. Redstone's
daughter Shari Redstone, a Viacom director and National Amusements
president. Often at odds with her now-ailing 93-year-old father
over the years, she is poised to take pole position in his empire.
Under the proposed settlement, Mr. Dauman, her longtime rival,
would be gone, and she would likely have far more influence over
the reconstructed boards of Viacom and National Amusements than she
has had in the past.
She also would have effective control of the seven-member trust
her father set up to manage his assets after he dies or is
incapacitated, given that she appears to have support from a
majority of the trustees.
What a settlement is unlikely to resolve, once and for all, is
the status of Mr. Redstone, whose mental competency has been a
matter of debate throughout the ordeal. Trials could force
testimony or medical examinations that clarify his condition for
investors and observers.
Mr. Dauman is coming up on a decade as Viacom's CEO. A friend
and associate of Mr. Redstone's for over three decades, he had a
major hand in the big transactions the mogul carried out to
assemble his assets, including big cable TV networks like MTV and
Comedy Central, CBS, and Paramount Pictures.
But Mr. Dauman's critics on Wall Street and in the media world
say that as chief executive he failed to navigate the company
through the myriad challenges hitting the traditional media
business. Ratings at many of Viacom's cable networks have fallen as
the young audience the company targets have fled to online
platforms. There has been an exodus of creative talent from Viacom
over the years and Paramount Pictures has struggled to develop
hits.
Sal Muoio, whose S. Muoio & Co. owns shares in Viacom, said
Mr. Dauman and his team have been "acting like caretakers" and that
the company would be better off under new leadership.
As part of the proposed settlement, Mr. Dauman and George
Abrams, a Viacom director, would drop the Massachusetts lawsuit in
which they were seeking to be reinstated as members of the Redstone
trust and directors at National Amusements.
Mr. Redstone removed them in May. But Messrs Dauman and Abrams
argued that he wasn't mentally competent when he made those
decisions, and is being manipulated by his daughter. Ms. Redstone
denied the charge.
Separately, Viacom's lead independent director, Frederic
Salerno, filed suit in a Delaware court to block National
Amusements from replacing five board members, including Messrs.
Dauman, Salerno and Abrams, William Schwartz, and Blythe McGarvie.
That litigation would end as well under a settlement.
The two lawsuits were headed for trial this fall—raising the
prospect of a messy discovery process and courtroom battle that
both sides wanted to avoid.
Under the proposed settlement National Amusements would add
directors to Viacom's board including Kenneth Lerer, chairman of
BuzzFeed and managing partner of a venture-capital firm; Mr. May,
chairman of Eversource; Judith McHale, a former Discovery
Communications Inc. executive; Ronald Nelson, chairman of Avis
Budget Group Inc., and Nicole Seligman, a former president of Sony
Entertainment.
If a deal is completed, Ms. Redstone and National Amusements
would be under pressure to show that the shake-up produces results
at Viacom.
"The question is where do we go next," said Mario Gabelli, whose
Gabelli Co. holds the second-largest voting stake in Viacom. "What
is required to become successful in a world that was going to
digital? What is necessary to make Paramount great again?"
Write to Amol Sharma at amol.sharma@wsj.com and Joe Flint at
joe.flint@wsj.com
(END) Dow Jones Newswires
August 18, 2016 21:25 ET (01:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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