Perspectives from ISB

92 year old Sumner Redstone recently ousted Viacom CEO Philippe Dauman and Viacom director George Abrams, as trustees of the entity that will have voting control of Viacom and CBS upon Redstone’s death or incapacity. He also removed them as directors of National Amusements, the private holding company that holds his 80% voting stake in Viacom and CBS. Thereafter Thaddeus Jankowski and Jill Krutick have been named to replace the duo.

These changes were expected, as they would provide majority control to his once-estranged daughter Shari. However the timing is important, as the Sumner M Redstone National Amusement Inc. Trust is an irrevocable trust and any changes have to be made before he dies or becomes incapacitated. However the two ousted trustees have since sued Shari Redstone over their removal from the seven-member trust. This legal battle would jeopardize Viacom’s plan to sell a stake in its film studio, Paramount.

Interestingly these changes come after a Los Angeles County Superior Court dismissed a lawsuit that challenged the mental competence of media mogul Sumner Redstone. A former girlfriend of Redstone’s, Manuela Herzer had filed the suit after being removed as the person in charge of his health care. Thereafter, Herzer has also filed a $100 million lawsuit against Shari Redstone. Following this Viacom’s board voted to stop paying an annual salary to founder Sumner Redstone.