The months-long battle over 93-year-old Sumner Redstone's $40 billion (€35 billion) media empire has come to an end. Viacom on Saturday night announced that chief executive Philippe Dauman would step down immediately, marking a victory for the Redstones after a battle for control of the group that owns MTV and Paramount Pictures.
As part of a settlement between Viacom and National Amusements, the Redstone-owned vehicle that holds a majority of Viacom voting shares, all lawsuits between the companies will be terminated. Mr Dauman will leave with a $72 million severance package, according to sources.
Thomas Dooley, Viacom’s chief operating officer, will become interim chief executive to the end of September as the board makes succession plans, Viacom said.
Mr Dooley told internal staff on Friday night that the settlement will “help us get back to full strength as quickly as possible”, while Mr Redstone said: “We look forward to taking the necessary steps to realise the company’s full potential to the benefit of all stockholders.”
Abruptly ousted
Mr Dauman, who has served as chief executive since 2006, was a close friend and confidante of Mr Redstone for three decades. However, their relationship soured in recent months, and Mr Redstone in May abruptly ousted him from the family trust that will control his holdings when he dies. A month later, he moved to drop Mr Dauman and four other directors from Viacom’s board.
Mr Dauman challenged the removal in court, accusing Shari Redstone, his daughter, of manipulating her ailing father.
Under Mr Dauman, Viacom’s shares have slumped as the company grapples with the shift to digital streaming that hit ratings at its cable channels including MTV, Nickelodeon and Comedy Central.
Mr Dauman has struggled to improve Viacom's performance, with the Redstones arguing that he has failed to adequately adapt to changing viewer habits. This month, the company reported that profit dropped 29 per cent in the third quarter, marred by the box office flop of Paramount's latest Teenage Mutant Ninja Turtles film and lower advertising revenues at its cable channels.
The battle over the future of Viacom created an “overhang” for the company, according to Mr Dauman. National Amusements fired back, saying the company’s performance “continues to highlight the need for changes to leadership”.
Poor performance
Mr Dauman, along with Frederic Salerno, Viacom’s lead independent director, accused Ms Redstone of taking advantage of her father’s poor health in a bid to take control of his empire.
The removal of Mr Dauman and George Abrams, another Viacom director, from the family trust in effect gives Ms Redstone control of CBS and Viacom if her father dies. The infirm 93-year-old struggles to speak and cannot identify simple shapes or colours, according to a doctor who examined him recently.
Ms Redstone, a Viacom director and president of National Amusements, has pointed to Viacom’s poor performance under Mr Dauman even as he enjoyed rich rewards. Mr Dauman’s combined salary and stock awards climbed more than 20 per cent to $54 million last year even as Viacom’s shares sank 40 per cent and full-year operating income dropped 25 per cent.
As part of the settlement, Viacom will add to its board five new directors who were put forward in June by National Amusements. The board members include Kenneth Lerer, chairman of BuzzFeed and Nicole Seligman, the former president of Sony Entertainment.
– Copyright The Fiancial Times Limited 2016
