Viacom CEO explains succession planning for aging media mogul Sumner Redstone
Viacom Chief Executive Philippe Dauman on Monday sought to calm investors worried about the ailing health of Executive Chairman Sumner Redstone — and the future of the media empire he controls.
Redstone, 92, is the controlling shareholder of both Viacom and CBS Corp. His health has been steadily declining in recent months, prompting concern among investors about the ultimate fate of the two media companies.
But on Monday, Dauman said there were plans in place to determine what happens to Redstone’s ownership interests in Viacom and CBS. He also chastised the media and others for speculating about the mogul’s condition. Redstone is chairman of the company that owns the MTV, VH1, Nickelodeon and Comedy Central cable channels as well as the Paramount Pictures movie studio.
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“What has been said is disturbing,†said Dauman, who was speaking Monday at the UBS Global Media and Communications Conference in New York City. “I would ask those who speak or write about him to look at themselves in the mirror. ... We should retain a sense of decency here.â€
Dauman’s extraordinary comments came as Viacom has been under increasing pressure from investors — including the second-largest voting shareholder of Viacom and CBS — to be more transparent about Redstone’s health. Redstone has not taken part in public company events for the last year, including annual meetings or quarterly earnings calls.
Last month, Redstone’s former girlfriend, Manuela Herzer, filed a lawsuit that seeks to have Redstone declared mentally incompetent.
Herzer’s suit alleges that the health of the mogul — who has difficulty speaking intelligibly — took a turn for the worse in September and that he no longer enjoys his favorite activities, including watching stock news on CNBC. Herzer had been the agent in charge of Redstone’s advance healthcare directive until mid-October, when Dauman assumed that role.
Viacom executives have strongly disputed Herzer’s claims.
“He is fully in charge of his own healthcare decisions today,†Dauman told investors. “It is not a big secret that he is 92 and has physical ailments that require him to be under medical supervision.â€
Dauman detailed the succession process that Redstone designed more than two decades ago to ultimately oversee his interests in the media companies. A framework is in place to ensure the companies would continue to have “professional governance,†including a group of independent board members, Dauman said.
The Redstone family — through its holding company, National Amusements Inc. — controls nearly 80% of the voting stock in the two media companies, Viacom and CBS. Sumner Redstone owns 80% of National Amusement shares; his daughter Shari Redstone holds the remaining 20% and is vice chairman of Viacom and CBS.
Dauman explained that a trust was established to oversee Sumner Redstone’s 80% stake in National Amusements after Redstone dies or when there is a legal determination that he is mentally incapacitated. “Neither of which has happened,†Dauman said. “He has an incredible will to live ... and an enjoyment of life.â€
Under the succession plan, seven trustees would oversee Redstone’s National Amusements interests, including two family members, daughter Shari Redstone and her son, Tyler Korff. Dauman, the Viacom chief, also is a trustee.
The four other trustees are David R. Andelman, Redstone’s estate planning attorney from Boston; George S. Abrams, a Viacom board member and longtime Redstone friend; and two other Boston attorneys, Norman I. Jacobs and Leonard L. Lewin.
“There will be seven trustees ... and each of them are independent-minded and each of them would have a fiduciary responsibility to exercise,†Dauman said. “There is no one individual that will control the trust; it will operate by a majority vote.â€
Redstone’s health was topic No. 1 at Viacom’s presentation at the UBS conference, which was held at a Hilton hotel in midtown Manhattan.
Investors were largely silent and attentive as Dauman launched into his prepared points about the mogul’s health and the future of Viacom and CBS.
At the same conference, CBS Chief Executive Leslie Moonves downplayed concerns about Redstone’s health.
“It hasn’t been a distraction and nothing is going to change,†Moonves said. “I hope Sumner lives to be 150. ... We have a great board of directors. We’re very secure. We’ve been running the company very well.â€
CBS shares have lost about 10% of their value this year while Viacom shares dropped more than 35%, reflecting Wall Street’s worries about the effect of consumers’ paring back their pay TV subscriptions.
Cable programming fees are the most profitable source of revenue for many media companies, including Viacom.
On Monday, Viacom shares gained 2%, or 93 cents, to $47.15. CBS shares closed up nearly 1%, or 44 cents, to $50.45.
Herzer’s lawsuit, filed in Los Angeles County Superior Court, seeks to have Redstone declared mentally incompetent. She filed the suit after she was removed as Redstone’s agent in charge of his advance healthcare directive and contends that Redstone was not in charge of his faculties when the decision was made to remove her.
A judge has ruled that Redstone’s healthcare situation is not an emergency and a hearing will be held early next year.
Times staff writer Stephen Battaglio contributed to this report.
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