The root cause of the crisis started when in efforts to boost Viacom’s bottomline Dauman proposed and pushed for the sale of Paramount Studios, a company which Sumner Redstone acquired after a long battle with media mogul Barry Diller in 1994.
According to two sources who are familiar with the situation at hand, Sumner Redstone and Viacom have agreed to the terms of a settlement which would see the departure of Viacom’s Chief Executive Philippe Dauman from the company.
A formal announcement by Viacom is expected sometime later today, said the sources.
This agreement to settle marks the end of the battle for control over the media mogul’s $40 billion empire which includes CBS and Viacom and comes after months of uncertainty.
If the terms of the current settlements are finalized, Viacom’s Chief Operating Officer will replace Dauman as the company’s CEO until September 30. However, he may continue to retain that position said sources on the condition of anonymity.
Spokesmen for National Amusement and Viacom declined to comment on this development.
Earlier this year in May, since Sumner Redstone was unhappy with Dauman’s plans to sell a stake in Paramount Pictures he removed him and George Abrams from Viacom’s board. A spokesman for Redstone said the media mogul was unhappy with the company’s performance.
Dauman and Abrams responded to the move with their independent lawsuits arguing that Redstone was being manipulated by Shari Redstone, Sumner Redstone’s daughter. Shari had termed the allegation as “absurd” and had responded saying her father made his own decisions.
Under the current settlement, Viacom’s board will add five directors that National Amusements had proposed earlier in June. It is as yet unclear as to when National Amusements will move to replace Viacom’s board.
Significantly, Sumner Redstone’s granddaughter, Keryn Redstone, has filed a cross-complaint in connection with this lawsuit and plans on proceeding with her lawsuit irrespective of this settlement said a source who is familiar with the situation at hand. Her suit is however unlikely to affect Dauman’s removal from Viacom and National Amusements.
Dauman has worked with Sumner Redstone for more than 30 years and gained the title of executive chairman when Redstone relinquished that role in February this year. Shari Redstone had opposed his elevation as executive chairman.
In the past two years Viacom’s shares have fallen by nearly 50% as younger viewers migrated from MTV and Nickelodeon to online media platforms and mobile video.
Dauman tried to turn this tide by wooing advertisers with data to better target commercials. Under him the company renewed multi-year distribution contract with Dish Network Corp, a satellite TV provider.
His plan to sell a stake in Paramount Pictures, which was cheered by investors, however caused him to get fired. Sumner Redstone had acquired the film studio after a long battle with media mogul Barry Diller in 1994. He opposed the sale of a stake in the movie studio.
Despite Sumner’s opposition, Dauman pushed for the potential sale causing Viacom’s shares to surge by 40%. a move that many investors saw as the first step in a change in management that could eventually lead to a sale of the media company.
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