Tue | Sep 19, 2017

Redstone replaced as Viacom chair

Published:Friday | February 5, 2016 | 2:00 AM
In this October 3, 2011 file photo, Sumner Redstone arrivs at the premiere of "Footloose" in Los Angeles. CBS says media mogul Redstone has resigned as chair of the company’s board and now serves as chairman emeritus. (AP Photo)

Redstone replaced as Viacom chair

Ageing media mogul Sumner Redstone stepped down as executive chairman of Viacom on Thursday and was replaced by CEO Philippe Dauman, a move that immediately disappointed investors.

Although the decision mimicked a similar move at sister company CBS, Thursday's action has the potential to set off a future board fight. Redstone's daughter Shari said Wednesday she was against Dauman's promotion to the role because of his deep involvement in Redstone family affairs.

Investment adviser SpringOwl, which holds a stake of undisclosed size in Viacom, had also opposed Dauman's bid for the chairmanship, calling instead for an independent director.

Dauman is one of seven trustees who will control nearly 80 per cent of the voting stakes at both CBS and Viacom after 92-year-old Redstone dies. That fortune is worth around US$4 billion. Shari Redstone and her son Tyler Korff are also trustees along with several other lawyers close to the family.

Viacom shares, which had been trading as much as six per cent higher earlier Thursday, immediately dropped to a level about 1 per cent higher after the news was announced at around 11 a.m. Eastern time.

Shari Redstone said in a statement Thursday she "is going to continue to advocate for what she believes to be in the best interests of Viacom shareholders".

Viacom director William Schwartz said the board considered the "need for seasoned leadership" in appointing Dauman.

The board voted 10-1 in favour of Dauman's ascension, with only Shari Redstone opposed, according to two people close to Thursday's events. The people requested anonymity because the vote was confidential. Sumner Redstone also participated in the meeting, which made him chairman emeritus, according to one of those people.

Mario Gabelli, whose Gabelli Asset Management Inc owns 10 per cent of Viacom's voting shares, told CNBC on Thursday that Dauman has "bought himself six more months or nine more months to indicate how he plays his cards".

The comments reflect investor dissatisfaction with Viacom, whose shares have fallen by almost half since July 2014. Gabelli suggested putting the company or its movie studio, Paramount Pictures, up for sale.

- AP