Viacom’s international directors have vowed to legally fight their potential ousting from the US media giant.
A public letter from lead independent director Fredric Salerno on behalf of six independent Viacom directors – Cristiana Falcone, Blythe McGarvie, Deborah Norville, Charles Phillips, William Schwartz and himself – was released ahead of anticipated action from Viacom founder and controlling shareholder Sumner Redstone (pictured).
This said the directors would fight any plan to relieve them of their duties, and that they would push on with plans to sell a stake in film arm Paramount Pictures. They assert 93-year-old Redstone Redstone is no longer mentally capable of overseeing his own affairs and that they have not been able to communicate with him directly despite repeated attempts.
Redstone recently removed Philippe Dauman, Viacom’s executive chairman and CEO, and George Abrams from the National Amusements board, a Redstone family trust that controls both Viacom and CBS Corp. He then replaced them with new trustees.
The Viacom directors have intimated that National Amusements president and Viacom vice chair Shari Redstone, Sumner Redstone’s daughter, is manipulating proceedings.
The letter revealed the directors will raise a legal challenge in Delaware, where Viacom is incorporated, should a move be made to remove them from the Viacom board.
“As speculation grows that Viacom’s directors, other than Sumner and Shari Redstone, face the possibility of a direct attempt to remove them from Viacom’s board of directors, we want our many important constituencies to understand, clearly and without rhetoric, what we are thinking and why,” the letter to constituents read.
“We know that none of us is ‘entitled’ to his or her board seat. But we were elected, until our terms expire or we are properly removed, to look after the interests of all the stockholders of Viacom. That is what Delaware law requires – and that is what Sumner Redstone has always expected.”
The letter claimed removing them would be “completely inconsistent with Sumner’s lifetime commitment to an independent board”, and with his “stated judgment for many years that his daughter, Shari, should not control Viacom or his other companies”.
Salerno said the idea Sumner Redstone was acting of his own free will was an “inexplicable assertion”, and said the directors were acting in the interests of shareholders.
He added that the board was “not happy” with Viacom’s performance – the company share price has nose-dived 34% in the past in the face of falling ratings and weak box office returns.
“We know Viacom needs to do better – and we are very focused on that objective and on the need for management to drive it,” read the letter.
“To that end, one important step we are considering is a minority investment in Paramount that can contribute not only direct financial funding, but commercial and strategic opportunities as well. We hope that the fight over control does not impair or completely undermine this potential step with Paramount.”
Salerno acknowledged that the independent directors could be legally removed from their posts for exploring the strategic sales if Sumner Redstone is found to be competent.
A statement on behalf of Redstone released on Friday read: “Sumner Redstone will make every decision with the same deliberation and consideration with which he removed Phillippe Dauman and George Abrams as trustees, based on the best interests of shareholders.”
This came after Shari Redstone said she was “looking forward to an expedited dismissal” of the “meritless suit” Dauman brought to a Massachusetts court last week.