Sumner Redstone says Philippe Dauman has ‘done a bad job running Viacom’
Sumner Redstone is mentally competent, according to a UCLA geriatric psychiatrist who has examined the ailing media mogul twice during the last two weeks.
Redstone, during those visits with the doctor, had harsh words for his protege, Viacom Chief Executive Philippe Dauman, saying he had done “a bad job running Viacom.â€
Redstone’s mental capacity is expected to be one of the main points of contention in a lawsuit that pits the Redstone family against members of Viacom’s board of directors -- the latest salvo in a bitter struggle for control of Redstone’s $40-billion media empire.
Despite a severe speech impediment that makes it difficult to communicate, the 93-year-old controlling shareholder of Viacom Inc. and CBS Corp. “retains the legal mental capacity to make the decisions,†according to portions of a report compiled by Dr. James Spar of UCLA who has treated Redstone since 2014.
Redstone’s legal team on Thursday night released snippets of Spar’s findings from his two recent visits with the mogul at his Beverly Park mansion in Los Angeles. The doctor’s account was intended to counter dramatic claims by Dauman that Viacom’s controlling shareholder is “in the grip of a neurological disorder and other serious ailments†that could include dementia.
An attorney for Dauman quickly cast doubt on whether the words attributed to the mogul were actually his.
“Once again Mr. Redstone is heard only through carefully crafted remarks distributed by his advisors,†attorney Les Fagen, who represents Dauman and George Abrams, another Viacom board member, said in a statement late Thursday.
“This evaluation was conducted by a paid medical consultant and does not answer the question of whether Sumner Redstone had sufficient capacity to make complex decisions impacting the governance of billion-dollar publicly-held corporations, nor does it acknowledge that undue influence was exercised to manipulate his views,†Fagen said.
Lawyers for Redstone have been gearing up for the latest challenge over Redstone’s mental capacity. They are seeking to blunt allegations that the mogul has been under the undue influence of his daughter, Shari Redstone, who is Dauman’s chief adversary.
Spar visited with Redstone on May 20, which was the day that Dauman and Abrams were notified by fax they were being removed from the Sumner Murray Redstone trust and from the board of National Amusements Inc., the Redstone family investment vehicle that holds the controlling shares of Viacom and CBS.
Spar visited again on May 24.
That visit came a day after Dauman and Abrams filed a lawsuit in Massachusetts in an attempt to block their removal from Redstone’s trust, which will oversee the mogul’s controlling stakes in the two companies after he dies or becomes incapacitated.
The initial hearing in that case is scheduled for Tuesday in Canton, Mass.
During the May 20 meeting, Dr. Spar described Mr. Redstone as “well dressed and groomed, alert and in no distress, and quite cooperative with the examination.†The psychiatrist said he questioned Redstone about his rationale for booting his longtime friends and business associates, Dauman and Abrams.
“I asked Mr. Redstone why he was removing Mr. Dauman as trustee and director, and he said, ‘He’s done a bad job running Viacom,’†Spar recounted in the statement.
“I asked the same question about Mr. Abrams, and Mr. Redstone said, ‘He’s not listening to me,’†Spar said.
Viacom board members have said that, despite repeated requests, they have been prevented from visiting Redstone at his home. During recent board meetings, Viacom executives have kept open a phone line to Redstone at his Beverly Park home – but the former chairman has not made any audible comments, according to someone close to the board who asked not to be identified.
“It is clear more than ever that a complete and objective examination of Mr. Redstone will be required to answer these important questions,†said Fagen, the lawyer for Dauman and Abrams.
The burden of proof is on Dauman and Abrams to prove that Redstone lacks capacity or is under the undue influence of his daughter, according to legal experts.
In his report, Spar said he delved into Redstone’s thinking, asking him to explain why he was unhappy with Dauman.
“He indicated that he had been following the value of Viacom stock over the past year, and knew that it had declined significantly,†Spar said. “He spontaneously added that the value of the stock had gone up since his decisions about Mr. Dauman and Mr. Abrams had become public.â€
The proposed sale of a stake of Paramount Pictures has become a central factor in the dispute between Redstone and Dauman.
“Mr. Redstone was particularly displeased with Mr. Dauman’s decision (supported by Mr. Abrams) to sell part of Paramount Pictures (a company which Mr. Redstone acknowledged is ‘his baby’),†Spar said.
Several times during the discussion, Redstone expressed “his emphatic disapproval of that move,†Spar added. “Mr. Redstone said that he had clearly expressed his feelings about the Paramount sale to both Mr. Dauman and Mr. Abrams, but in his view they ignored his wishes,†Spar said.
Dauman’s attorney, Fagen, indicated that assertion was not accurate.
“As for Dr. Spar’s report on Paramount, evidently neither the doctor nor his patient understand that as of yet there is no Paramount deal to oppose,†Fagen said. “Such a deal, if it matures, will be the subject of evaluation and review by all board members.â€
Spar’s opinion could carry great weight in the court case.
The statement also said that Spar administered a mini-mental state exam, which is used to test cognitive functions. Spar determined that Mr. Redstone had only a “mild degree†of cognitive impairment.
Spar was previously used to bolster Redstone’s case against his former companion, Manuela Herzer, in a lawsuit filed last year in Los Angeles. That dispute was dismissed early last month, although the Los Angeles judge deciding the matter stopped short of declaring Redstone mentally competent.
Herzer’s legal team plans to file an appeal, and may ask for a new trial.
“The judge in California never found that Sumner has capacity,†Columbia University Law School Professor John C. Coffee said in an interview last week. “People say that he can’t tell the difference between squares and circles or the colors yellow and blue.â€
Redstone’s lawyers likely will have to demonstrate that Redstone has the ability to make complicated business decisions, he said.
“The factual question that needs to be established is whether the decision to remove the Viacom directors falls in the outer reaches of his mental cognition – or did Redstone recognize that he did not have the members of the trust whom he wanted,†Coffee said.
UPDATES:
7:52 p.m.: This article was updated to include a statement from Les Fagen, an attorney for Viacom Chief Executive Philippe Dauman and Viacom director George Abrams.
This article was first published at 7:02 p.m.
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