Our client, 93-year-old media mogul Sumner M. Redstone, ousted Viacom Chairman and CEO Philippe Dauman from the trust that will control Viacom and CBS upon Mr. Redstone’s passing. Mr. Redstone then removed and replaced five members of Viacom’s board of directors, including Mr. Dauman. When Mr. Dauman and Viacom’s lead independent director filed suits in Massachusetts and Delaware challenging Mr. Redstone’s mental capacity, the control of a media empire worth billions of dollars was on the line.
After his removal as a trustee of the National Amusements trust that will control Viacom and CBS upon Mr. Redstone’s passing, Mr. Dauman filed suit in Massachusetts claiming that Mr. Redstone was mentally incapacitated and had been unduly influenced by his daughter, Shari Redstone, as part of an “unlawful corporate takeover.” Viacom’s lead independent director, Frederick Salerno, filed suit in Delaware Chancery Court the following month, seeking to block the removal and replacement of Mr. Dauman and four of his confidants from the Viacom board based on nearly identical allegations of incapacity and undue influence.
In anticipation of these challenges, we worked with Mr. Redstone to ensure that Mr. Dauman’s removal from the trust and the reconstitution of Viacom would be effective even if Mr. Redstone was adjudged mentally incapacitated. In particular, we arranged for Mr. Redstone’s actions to be contemporaneously ratified by the successor trustees and National Amusements board members who would have decision-making authority in the event of Mr. Redstone’s death or mental incapacity. This rendered Mr. Redstone’s mental capacity practically, if not legally, immaterial, as Mr. Dauman and his confidants would be out either way.
As a result of this proactive strategy, we were able to achieve a complete victory for Mr. Redstone after less than three months of litigation. Messrs. Dauman and Salerno dismissed their suits and withdrew their challenges to Mr. Redstone’s mental capacity as well as the changes he had made to the trust and composition of the Viacom board.
As The New York Times observed of Mr. Redstone’s victory, “Mr. Redstone and Ms. Redstone now are decidedly in charge of the company’s future.”
“The fight over Sumner M. Redstone’s $40 billion media empire is over, and the 93-year-old mogul has won.” —The New York Times
“Fight for Viacom Is Said to End With the Redstones in Control,” The New York Times (August 18, 2016)
“Viacom power struggle ends with Shari Redstone ushering in a new era for the media company,” Los Angeles Times (August 19, 2016)
“Viacom, Sumner Redstone Near Settlement Ousting CEO Philippe Dauman,” The Wall Street Journal (August 18, 2016)