Sumner Redstone again opposes Paramount sale as Viacom battle heats up
Ownership of movie studio Paramount Pictures has become a key issue in the high-stakes battle over the future of Sumner Redstone’s media empire.
On Sunday, for the second time in three months, the ailing Redstone has made known his opposition to the proposed sale of a stake in Viacom’s legendary Los Angeles movie studio, Paramount Pictures, which has long been one of Redstone’s most treasured assets.
The latest salvo came via a lengthy statement released by Mike Lawrence, a newly hired representative for the ailing 92-year-old media mogul. Lawrence’s statement blasted Viacom’s unprecedented move this weekend to announce that it believes that its founder is incapacitated, and under the undue influence of his daughter, Shari Redstone, who is vice chair of Viacom and CBS.
The drama is pitting Shari Redstone against her longtime adversary, Philippe Dauman, Viacom’s chief executive and chairman. Until Friday, both served as members of a trust that eventually will oversee Sumner Redstone’s voting stakes in Viacom and CBS.
But Sumner Redstone late Friday abruptly dismissed Dauman and another longtime advisor, Viacom board member George Abrams, as designated trustees of the Sumner Murray Redstone National Amusements Inc. Trust. In addition to Shari Redstone, the seven trustees include her youngest son, Tyler Korff, and four other attorneys, including David Andelman, who serves on CBS’ board and is Sumner Redstone’s longtime estate attorney.
Dauman’s proposal to sell a piece of Paramount Pictures to raise money to pay down company debt appears to have contributed to Redstone’s ire over the stewardship of Viacom, which has seen its stock plummet in the last two years.
“Unless Viacom’s board presents a concrete plan that convinces him otherwise, Mr. Redstone continues to believe that it is in the best interest of Viacom that Paramount Pictures should remain wholly owned by the parent company,†Lawrence said in the statement, which came at the end of tense weekend of back-and-forth exchanges.
This is not the first time that Redstone has objected to the proposed studio sale. In February, Redstone reacted angrily over Dauman’s plan to sell a minority stake in Paramount Pictures, although Dauman more recently has said the Paramount sale was proceeding, with an investor expected to be named by the end of June.
Now, the sale of a stake of the studio could be derailed -- or perhaps challenged by Redstone, introducing another messy chapter in Viacom’s corporate woes.
“The chain of events ... are confusing and surprising and would likely make for a great movie at Paramount one day combining family drama, love, rage, corporate intrigue and more,†BTIG media analyst Richard Greenfield wrote in a blog post Sunday night.
“The question becomes can Sumner Redstone change his mind about the makeup of the SMR Trust, even if he is in failing health?†Greenfield asked. “This issue is of critical importance as the SMR Trust has effective control of both Viacom and CBS.â€
As part of his statement, Lawrence disputed Viacom’s contention that Shari Redstone had her father “on lockdown†at his Beverly Park mansion and that she was refusing to allow other Viacom board members to visit him. On Wednesday, Viacom board members voted to strip Sumner Redstone, who has not participated in public Viacom events for 18 months, of his annual salary of $2 million a year.
The chain of events ... are confusing and surprising and would likely make for a great movie at Paramount one day combining family drama, love, rage, corporate
— BTIG media analyst Richard Greenfield
That decision apparently angered the elder Redstone, according to someone with knowledge of the situation.
“We continue to be deeply troubled and saddened by this state of affairs,†Viacom spokesman Carl Folta said in a statement late Sunday. “We have the deepest respect for Sumner Redstone, but it is clear he is being shamefully manipulated.â€
Viacom board members have discussed the proposed Paramount sale on three occasions, with Redstone listening in to the meetings when the discussions occurred. Redstone, who has a severe speech impediment, did not vocalize dissatisfaction with the plan during these board discussions, said one person familiar with the discussions.
An in-depth discussion of the Paramount sale occurred as late as last week, Folta said.
“The facts are clear. Viacom’s 12-hour strategy meetings on May 17 and 18, that Sumner attended by phone, addressed all issues, including Paramount, to the satisfaction of all the independent directors,†Folta said.
This is the second time that various Redstone insiders have given dramatically different accounts of Sumner Redstone’s mental fitness. In late November, Redstone’s former companion, Manuela Herzer, brought a court action, seeking to have Redstone declared mentally incompetent after he removed her as his healthcare proxy. In that case, Herzer described Redstone as a “living ghost,†prone to crying spells and forced to communicate through a speech pathologist and a nurse.
The statement by Lawrence took issue with Viacom’s contention that Shari Redstone was exercising undue influence over her father.
“Viacom’s statement claimed that Shari Redstone has “isolated†her father, putting his residence ‘on lockdown.’ These claims are false,†Lawrence said. “Over the past several days alone, Mr. Redstone has hosted family and friends at his home, and met with several attorneys and an executive from National Amusements.â€
“He also visited his grandson’s home to watch a baseball game and is looking forward to celebrating his birthday with family later this week,†Lawrence said. Redstone turns 93 on Friday.
Lawrence said Redstone had wanted to meet with Viacom board members -- but not any longer.
“Mr. Dauman’s opportunistic claims of [Redstone’s] incapacity, now make it problematic to move forward with any direct meeting and briefing as Mr. Redstone had previously requested,†Lawrence said in the statement. “However, Mr. Redstone remains intent on receiving the briefing through his advisors.â€
Lawrence also noted that late last year, it was Dauman who, in court records, described Redstone as “engaged, attentive, and as opinionated as ever.†That description came from a November meeting that Dauman had with Redstone.
Redstone’s decision to remove Dauman and Abrams as trustees of the Sumner M. Redstone National Amusements Trust and as directors of the Redstone family holding company, National Amusements, Inc., came down to a lack of trust, Lawrence said.
In response, Viacom’s Folta said that Viacom board members have made “numerous attempts†to meet with Redstone, but such attempts have been spurned.
“The Sumner Redstone we knew would never refuse a meeting about his businesses and he certainly would not want advisors to stand in for him,†Folta said. Viacom board members, he said, “remain willing and eager to meet with Sumner at any time.â€
In a deposition earlier this month in the Herzer case, the mogul failed to respond when asked to provide his given name: Sumner Murray Rothstein. After watching a videotape of Redstone’s deposition, the Los Angeles County judge overseeing the case stopped short of deciding whether Redstone was mentally competent.
Instead, Los Angeles Superior Court Judge David J. Cown concluded that Redstone made it clear that he wanted his daughter in charge of his healthcare.
Now, the battle is over whether Shari Redstone will succeed in consolidating control of the seven-member trust that will oversee her father’s voting shares in the two media companies. A spokeswoman for Shari Redstone did not comment.
Neither Shari Redstone nor Sumner Redstone have said who will take over for Dauman and Abrams on the Sumner Murray Redstone National Amusements Inc. Trust.
One of the seats probably would go to Kimberlee Ostheimer, Shari Redstone’s daughter, according to two people briefed on the matter. Another trustee position might be filled by Thaddeus Jankowski, general counsel of National Amusements, one of the knowledgeable people said. At National Amusements, Jankowski reports to Shari Redstone.
The New York Times first reported the possible appointments of Ostheimer and Jankowski.
UPDATES:
9:09 p.m.: This story was updated with additional information.
This story was originally posted at 7:02 p.m.
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