
The Latest Episode in the Viacom Soap
The tumult that is Viacom (VIAB) - Get Report is becoming more tumultuous.
CEO Philippe Dauman is said to be in talks with China's entertainment-focused Dalian Wanda Group Co. to sell a minority stake in Paramount Pictures, according to reports from both The Wall Street Journal and Reuters.
While such a transaction is unlikely to get the blessing of Shari Redstone, Sumner Redstone's daugher and Dauman's nemesis, the New York Post on Thursday reported that attorneys for the Viacom CEO had begun talks with representatives for the Redstones on a broad settlement to convoluted legal disputes playing out in both Massachusetts and Delaware.
According to The Post, lawyers for Dauman at the New York law firm Paul Weiss were seeking a deal that would ensure that the embattled CEO remain at the head of Viacom for 18 months and be allowed to install an "independent" chief executive at National Amusements Inc., the Redstones' privately-held theater chain that controls both Viacom and CBS (CBS) - Get Report .
Just what Dauman would give-up in exchange for a settlement was unclear.
Either way, The Post's report of an out-of-court settlement was a surprise to observers on both sides of the long-running battle for control of Viacom, owner of cable-TV networks including MTV and Nickelodeon.
As for Paramount talks with Wanda, Dauman last month said that Viacom was already well along in efforts to sell a 49% stake in the studio in order to pay down debt and invest in new projects. In an appearance in New York at the Gabelli Movie & Entertainment Conference, Dauman said Paramount sale talks had moved from "40 players" to "a limited group."
It remains unclear whether Wang Jianlin, Wanda's billionaire chairman, would consider buying into Paramount given his stated preference for owning majority stakes. In an interview in February with Bloomberg News, Wang said, "many people come knock at my door, but Wanda is only interested in the big players and we want control."
Yet even if Dauman and Wang shook hands on a minority stake sale in Paramount, the Redstones would have little trouble blocking the transaction.
Viacom is currently required to give a Delaware Chancery Court five days notice before making any significant business decisions. That ruling came last month after Dauman and four other Viacom director challenged a decision by National Amusements to remove them from the company's board.
The Delaware court isn't expected to make a decision on Viacom's board until later this month, at the earliest. At present, Dauman and his supporters remain company directors.
A source close to the court proceedings said it's unlikely the Redstones and National Amusements would sign off on a Paramount sale by Viacom's "lame duck" board of directors.
National Amusements has further leverage over Dauman after moving to change Viacom's bylaws last month to require the unanimous decision of company directors before selling "all or a portion of Paramount Pictures." That enables Shari Redstone, Viacom's vice-chairman and a board member, to block a Paramount stake sale on her own.
Viacom hasn't challenged that move.
Before a Delaware ruling, all parties to the months-long feud must wait for a Massachusetts probate judge to determine whether National Amusements had the right to remove Dauman and George Abrahms from the trust that will oversee the elder Redstone's $80 billion media empire when he dies or becomes mentally unfit.
The Redstones contend that Sumner Redstone is competent to remove Dauman and Abrahms. The two longtime Viacom directors say otherwise, and have asked the Massachusetts court to appoint an independent examiner to determine the mental competency of their longtime boss.
The Redstones have often cited a Los Angeles court's May ruling that Redstone was sufficiently competent to make decisions about his health as proof that he is fit to make decisions regarding Viacom.
A decision is expected by the Massachusetts court by the end of the month. Shares of Viacom were little changed on Thursday at $44.80.









