Viacom Inc. controlling shareholder Sumner Redstone's plan to replace five directors at the media giant is on hold until it can be determined if the 93-year-old is mentally competent to make those decisions, a Delaware court said Wednesday.

National Amusements Inc., the holding company through which Mr. Redstone controls Viacom, petitioned the Delaware court last week to affirm its board replacements. Viacom's lead independent director Frederic V. Salerno immediately filed a suit to invalidate the dismissals, which included himself and Philippe Dauman, the company's chairman and chief executive.

In a hearing Wednesday, Andre G. Bouchard, the chancellor of the Delaware Court of Chancery, said he wanted to wait until another case in Massachusetts regarding Mr. Redstone's competency was through its discovery process before ruling on the proposed board changes. He also said the cases from the two sides in Delaware would be consolidated.

The Massachusetts case stems from National Amusements' removal of Mr. Dauman and Viacom board member George Abrams from a trust that will oversee Mr. Redstone's media empire after he dies or is determined to be incapacitated. Besides Viacom, Mr. Redstone also controls CBS Corp.

Both sides in the Delaware dispute have advocated for maintaining the status quo during the legal process, during which time the existing Viacom board would continue to manage the company day-to-day but essentially be prohibited from taking any actions outside of the ordinary course of business. The two sides still need to hammer out the exact terms of what the board can and can't do during that time. Judge Bouchard called for an order on the issue by the end of the day Thursday with a potential hearing on the matter Friday if there are differences to work out.

With the Delaware court essentially taking a back seat to the Massachusetts discovery process, Viacom is left in a sort of limbo for an indeterminate period, dragging out the turmoil in Mr. Redstone's $40 billion media empire that includes household brands like MTV, Comedy Central and Paramount Pictures.

Mr. Bouchard said he was staying discovery in Delaware to avoid duplicative processes as well as to be mindful of Mr. Redstone's "human dignity." He said he wanted to be "kept abreast" of other litigation surrounding Mr. Redstone that touch on the competency issues at play, including whether discovery is expedited in the Massachusetts case where a hearing is scheduled for June 30.

On Wednesday, Edward Micheletti, a lawyer for Mr. Salerno, argued for an immediate medical examination of Mr. Redstone to establish his capacity, pointing to his age and declining health. Viacom's Mr. Salerno has charged that Mr. Redstone's daughter Shari Redstone, Viacom's vice chairman, is orchestrating the moves and exerting undue influence over her father. Ms. Redstone has repeatedly denied such claims.

Mr. Redstone's lawyers "don't want anybody to pull back the curtain and see if he's competent or not," Mr. Micheletti said, adding that Mr. Salerno sees his role as lead independent director to "step up when he sees something he thinks is wrong."

Robert Klieger, an attorney for Mr. Redstone, said that though Mr. Redstone does have speech difficulties, his client is in "no imminent health risk."

Donald Wolfe, a lawyer for National Amusements, said Mr. Salerno's lawyers "are interested in a circus here and we think it should be a backyard barbecue."

The legal proceedings are starting to take a toll on Viacom's senior management and staff, people close to the company said. Mr. Dauman recently sent a companywide memo saying he and the rest of senior management are "keeping our focus squarely on what matters most to all of us—moving our company rapidly and successfully into the future."

Viacom's next board meeting occurs Aug. 3 in New York.

--Joann S. Lublin contributed to this article.

Write to Nathalie Tadena at nathalie.tadena@wsj.com and Joe Flint at joe.flint@wsj.com

 

(END) Dow Jones Newswires

June 22, 2016 18:55 ET (22:55 GMT)

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