Viacom CEO Philippe Dauman, left, and Viacom Chairman Sumner Redstone photographed at Redstone's home in Beverly Hills on September 27, 2007.
Photograph by Mel Melcon — LA Times via Getty Images
By Reuters
June 23, 2016

Viacom’s directors can stay in place, at least for now, as a Delaware judge said at a hearing on Wednesday that a legal fight over the media company’s board may turn on the mental competence of 93-year-old controlling shareholder Sumner Redstone, which may take some time to resolve.

Last week, Redstone and his National Amusements holding company removed five of Viacom’s directors, including Chief Executive Philippe Dauman and lead independent director Frederic Salerno, from the company’s board.

National Amusements owns 80% of voting shares of Viacom (viab) and CBS (cbs). The latest development ratcheted up the wrangling for control of Redstone’s $40 billion media empire, amid questions over whether he is making his own decisions or is even of sound enough mind to do so.

Redstone and National Amusements sought the approval of the Court of Chancery in Delaware—the state where Viacom is incorporated—to kick off the board members. Salerno filed a lawsuit in the same court last week seeking to block the move.

Judge Andre Bouchard on Wednesday brought together the two actions, and said he planned to hold a hearing in July to listen to arguments about whether National Amusements’ move was valid.

He quizzed attorneys on both sides on how the issue of Redstone’s mental competence factored into their arguments, indicating he was reticent to weigh in on the issue himself.

“I have some skepticism this can be resolved on this motion … the underlying issue of competency might be relevant, but that is playing out elsewhere and I won’t weigh in,” he added.


Redstone’s competence is at the center of litigation playing out in a court in Massachusetts involving the governance of National Amusements.

The judge declined to allow Salerno to begin discovery into Redstone’s decision-making capacity before the July hearing.

The two sides told the judge they anticipated reaching an agreement later this week to leave Viacom’s board in place while prohibiting directors from taking any actions outside day-to-day operations, including its planned minority stake sale of Paramount Pictures.


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