An agreement on terms of a settlement that would result in the departure of Chief Executive Philippe Dauman has been reached between Viacom and controlling shareholder Summer Redstone, reports Reuters quoting sources familiar with the situation.
The battle has been a source of shareholder angst and months of uncertainty and the settlement of this battle would end the row for control over Redstone’s $40 billion empire that includes Viacom and CBS.
The CEO’s removal from the trust that will determine the fate of both media companies when the 93-year-old dies or is deemed mentally incapacitated as well as from National Amusements Inc, the privately held company that holds Redstone’s Viacom and CBS Corp voting shares, was dragged to court and a legal battle was on between Dauman and Redstone in Massachusetts. This agreement would also bring an end to that legal battle.
Reuters reported that Thomas Dooley, a his longtime right-hand man of Dauman, 62, will be the new CEO while Dauman will be interim CEO until Sept. 30 under terms of the settlement, if finalized. Dauman may also stay back longer, the sources said.
Dauman will be allowed to present his plan to sell a minority stake in Paramount Pictures to the Viacom board, as part of the agreement as Dauman will stay on as executive chairman until Sept. 13. The sources also said that under the agreement, Dauman will receive about $72 million.
Spokesmen for Viacom and National Amusements declined to comment.
Dauman and Viacom board member George Abrams were removed from the Sumner M. Redstone National Amusements Inc Trust by Sumner Redstone in May. Dauman’s plans to sell a stake in Paramount Pictures and the company’s performance had made the media mogul unhappy, a spokesman for Redstone said.
Arguing that Redstone was being manipulated by his daughter, Shari, Dauman and Abrams shot back with their own lawsuit to prevent their removal from the trust. Shari Redstone said her father made his own decisions and called the allegation “absurd”.
Sparking litigation in Delaware to block the attempt, Redstone also moved to kick Dauman and four other directors off the board in June.
The five directors that National Amusements put forward in June would be added to the board under the settlement. However when the directors that National Amusements moved to replace will leave the board is unclear.
Sumner Redstone’s granddaughter, Keryn Redstone, is planning to proceed with her lawsuit even if there is a settlement and has filed a cross-complaint in connection to that lawsuit. However, the removal of Dauman from Viacom and Redstone’s trust is not likely to impacted by that suit.
According to Equilar, Dauman has received over $409 million in reported compensation since he became CEO in 2006.
After the media mogul relinquished the position of executive chairman in FebruaryDauman, who has worked with Sumner Redstone for more than 30 years, gained the title. Shari Redstone had opposed Dauman’s elevation to executive chairman.
Due to factors of falling ratings because younger viewers were migrating online and to mobile video, its cable networks, including MTV and Nickelodeon has suffered and shares of Viacom have fallen around 50 percent in the past two years. For eight straight quarters, there has been a decline in Viacom’s U.S. advertising revenue.
By wooing advertisers with data to better target commercials, Dauman has tried to turn Viacom around. A multi-year distribution contract with satellite TV provider Dish Network was renewed by Viacom under his leadership.
(Adapted from CNBC)