Viacom CEO Says Paramount Stake Sale Slowed by Fight With Sumner Redstone
June 09 2016 - 12:48PM
Dow Jones News
By Joe Flint
Viacom Chief Executive Philippe Dauman said a planned sale of a
stake in Paramount Pictures has been delayed because of corporate
infighting between the media giant and its controlling shareholder
Sumner Redstone, who has signaled his objections to a sale of the
movie and television studio.
Earlier this week, National Amusements Inc., the holding company
that oversees Mr. Redstone's almost 80% voting stakes in Viacom and
CBS Corp., amended Viacom's bylaws to require a unanimous board
vote on any transaction involving Paramount. Mr. Redstone, who is
93 years old, and his daughter, Vice Chairman Shari Redstone, each
have a vote on the board.
"Recent events have slowed down the process," Mr. Dauman, who is
also Viacom's chairman, said at an investor conference Thursday
morning.
Viacom had originally said it expected to close a sale of a
minority stake in Paramount by the end of June. Mr. Dauman again
defended the move, saying the sale of a 49% stake in the studio
would create value for the Redstone family and unlock $10 or more
in value in Viacom's stock price. Mr. Redstone has criticized the
plan through his attorneys, who say he doesn't want the company to
sell what he considers to be Viacom's crown jewel.
"It is strategically important to look at what is the best way
to enhance and accelerate the growth of Paramount into the future,"
Mr. Dauman said at the conference, which was hosted by Gabelli Co.,
the second-largest shareholder of Viacom.
Viacom shares are down 2% to $43.69 in midday trading Thursday.
The stock has fallen 35% from a year ago.
Mr. Dauman and Viacom board member George Abrams are in a legal
battle with Mr. Redstone and Ms. Redstone over their dismissal from
the trust that will oversee the mogul's media empire after he dies
or is declared incapacitated. Messrs. Dauman and Abrams have said
Mr. Redstone lacks the capacity to be making these decisions and
that his daughter is behind the moves. Both Redstones have denied
that charge.
Mr. Dauman declined to offer any specifics on potential suitors
for Paramount, saying only that initially over 40 entities
expressed interest in a deal and now the company is having
"detailed discussions" with a "more limited group" of strategic
global partners.
The studio has been struggling as of late, losing $282 million
in the six months ended March 31 and revenue was down 9% to $1.27
billion. Recent movies including "Whiskey Tango Foxtrot" and
"Teenage Mutant Ninja Turtles: Out of the Shadows" were
disappointments at the box office.
"Paramount has had a tough year, it's no secret," Mr. Dauman
said. The company has been "working to ensure that going forward
Paramount will have a vibrant pipeline" and "many franchises that
will play in the international marketplace," including a new
"Transformers" movie for the next three years, he said. Mr. Dauman
also said there will also be a greater focus on animation and
increasing television production.
Despite the soap opera surrounding Viacom's future, Mr. Dauman
wasn't asked about his legal battle with Mr. Redstone and Ms.
Redstone during the session, nor did the CEO offer any insights
into how things are playing out and what it means potentially for
the company and its shareholders. Mr. Redstone was quoted by his
doctor last week criticizing Mr. Dauman's performance as CEO.
All Mr. Dauman would say of the current corporate drama is, "the
one takeaway I have is it is a lot more fun creating the content
than being the content."
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
June 09, 2016 12:33 ET (16:33 GMT)
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