Redstones' National Amusements: No Paramount Sale

Sumner Redstone's holding company on Friday sent Viacom CEO Philippe Dauman a loud and clear message: Don't even try to sell a minority stake in Paramount Pictures.
By Leon Lazaroff ,

Sumner Redstone's National Amusements on Friday sent embattled Viacom (VIAB) - Get Report CEO Philippe Dauman an unequivocal message: Don't even think about selling a minority stake in Paramount Pictures.

The unambiguous declaration from Viacom's controlling shareholder followed reports this week that Dauman was moving ahead with plans to sell a 49% stake in the Hollywood studio to China's Dalian Wanda Group. National Amusements, Redstone's privately-held theater chain, owns nearly 80% of the controlling shares in Viacom and CBS (CBS) - Get Report , the largest pieces of Redstone's $80 billion media empire.

"National Amusements has one goal for Viacom, which is to create long-term value for all of Viacom's shareholders," the Norwood, Mass., company said in an emailed statement. "Undertaking a Paramount transaction at this time would undermine rather than advance this goal."

Viacom responded with a statement of its own, accusing National Amusements of meddling in the company's operations.

"It is beyond understanding that "National Amusements" would continue in its attempts to interfere with a potential transaction that would create a unique opportunity to drive long term value for both Paramount and Viacom, without even waiting for the facts," Viacom said. "We will continue to pursue the best outcome for all of Viacom's shareholders."

Dauman, who is battling Redstone's daughter, Shari, for control of Viacom's management, has said a minority sale of Paramount would allow the television and film company to pay down debt and invest in its online platforms. Shari Redstone, who oversees National Amusements, booted Dauman off its board last month before taking similar actions to remove him from Viacom's list of directors.

Dauman has contested those moves in separate cases that are pending in courts in Massachusetts and Delaware. As a result, Dauman and four other directors who support the company's CEO continue to sit on Viacom's board. However, a Delaware judge instructed the current board to give the court five days warning before making any significant decisions, thereby allowing National Amusements an opportunity to contest those actions.

Sumner Redstone, through a representative, has said he opposes a sale of a minority stake in Paramount though Dauman has challenged that assertion in court, contending that Shari Redstone is taking advantage of her father's declining health to take control of the company which also owns cable-TV networks including MTV and Nickelodeon.

As it has previously stated, National Amusements said its actions are aimed solely at improving operations at Viacom, which has struggled in recent years following a series of financial and programming missteps. National Amusements last month removed Dauman and four of his supporters from the Viacom board, a step it said was integral to installing new management at the company.

A decision about the future of Paramount, and by extension Viacom, should be made by a new management team, National Amusements said.

"Paramount is one of Viacom's most valuable assets," the holding company said Friday. "Any short-term benefits that might result from a Paramount transaction would be outweighed by the severe negative impact on Viacom's future strategic flexibility to best capitalize on this important asset."

National Amusements added that "any Paramount transaction would chill the interest of parties that may be interested in a larger transaction involving all of Viacom."

Shares of New York-based Viacom were falling 1.7% on Friday to $44.03.

Loading ...