By Joe Flint and Keach Hagey 

The legal battle over media mogul Sumner Redstone's mental competence, which finally heads to court this week after transfixing Hollywood and Wall Street for months, features a cast of characters befitting a reality TV show.

Besides Mr. Redstone, the 92-year-old chairman emeritus and controlling shareholder of Viacom Inc. and CBS Corp., there is his much younger ex-girlfriend-turned-companion, a once-estranged daughter, an unpredictable granddaughter, an embattled chief executive and a nurse who wields unusual power in Mr. Redstone's Beverly Park mansion because he interprets the ailing billionaire's extremely impaired speech.

The dispute, which centers on Mr. Redstone's former companion Manuela Herzer's claim that he was mentally incompetent last October when he removed her as his health-care agent, is heading toward its final episode. The Herzer versus Redstone trial begins on Friday in Los Angeles Superior Court, unless a last-minute settlement is reached. A deal seemed close last month but talks fell apart. Ms. Herzer's lead counsel, Pierce O'Donnell, said in late April that "we're going to trial."

In the six months since the suit was filed, court documents have aired salacious details of Mr. Redstone's alleged mental and physical state, family disputes, business relationships and wealth. At the heart of the case are serious questions about an elderly man's ability to make decisions, a fight over inheritances and the control over more than $40 billion of media assets.

If the judge rules that Mr. Redstone did indeed lack mental capacity, it could have implications for the fate of his media empire, which today spans such household names as MTV, CBS and Paramount Pictures. Legal experts say such a ruling would put pressure on Mr. Redstone's associates to trigger the trust that he set up years ago to take control of his 80% voting stakes in Viacom and CBS. The stakes are held by his company National Amusements Inc.

"The question of Redstone's competence is very important to investors," said Tuna Amobi, an analyst at S&P Global Market Intelligence. There is already pressure on Viacom to make strategic moves, he said.

On Thursday, Viacom Chief Executive Philippe Dauman told analysts the company is continuing to look for ways to "unlock the value" of the business, including by selling off a piece of Paramount Pictures and expanding internationally.

Bankers are already knocking on CBS's door to pitch deals in which the media company could gain control over National Amusements' voting shares, should Mr. Redstone's status as controlling shareholder change, a person with knowledge of the matter said.

Mr. Dauman unsuccessfully fought having to be deposed, and his role in the trial is "definitely an overhang" for Viacom's stock, Mr. Amobi said. In a sworn affidavit backing Mr. Redstone's side in the case, Mr. Dauman said Mr. Redstone was "engaged and attentive" during an October visit. Ms. Herzer has charged this is false, saying Mr. Dauman's alleged conversation was actually a "monologue" with a "living ghost" who can barely follow the thread of conversations.

Mr. Redstone stepped down as chairman of Viacom and CBS in February, days after he was examined by a geriatric psychiatrist retained by Ms. Herzer's legal team.

Besides losing her status as the potential overseer of Mr. Redstone's health, in favor of Mr. Dauman in October, Ms. Herzer was booted out of his mansion and removed from his will, in which she had stood to inherit $70 million in real estate and cash. The health-care agent role more recently passed from Mr. Dauman to Shari Redstone, whose own relationship with her father had been rocky for years before a recent rapprochement.

Mr. Redstone's lawyers, as well as his daughter, charge that Ms. Herzer is just seeking money.

Ms. Herzer has maintained her concern is only with Mr. Redstone's well-being. In her lawsuit, she accused Mr. Dauman and Ms. Redstone, a Viacom and CBS board member, of manipulating Mr. Redstone for their own financial gain. Ms. Redstone and lawyers for Mr. Redstone have disputed the claim.

One of the big questions hanging over the trial is whether Mr. Redstone himself will be compelled to make an appearance, either in person or through video testimony. His lawyers have been trying to prevent that and the judge has previously ruled that he doesn't need to testify, but Ms. Herzer's team has him on their witness list.

A courtroom appearance by Mr. Redstone, who turns 93 in late May, is highly unlikely.

Besides Ms. Herzer, Ms. Redstone and Mr. Dauman, the lawyers may also call other witnesses including Sydney Holland, another former girlfriend of Mr. Redstone's, and the nurse, Jeremy Jagiello, who has been coined "The Sumner Whisperer" by people close to the saga.

Several other nurses have been listed as potential witnesses, leading Judge David Cowan to ask at a recent hearing, "Do we need all these nurses?"

Judge Cowan has indicated he's not interested in score-settling or tawdry gossip.

"I don't want this case to turn into a history of Mr. Redstone's family, " he said.

Write to Joe Flint at joe.flint@wsj.com and Keach Hagey at keach.hagey@wsj.com

 

(END) Dow Jones Newswires

May 01, 2016 16:13 ET (20:13 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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