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Viacom’s Fate Hinges on the Well-Being of a 93-Year-Old Billionaire

Sumner RedstoneSumner Redstone
Sumner RedstonePhotograph by Michael Tran FilmMagic/Getty Images

The seemingly interminable Game of Thrones over control of $40-billion entertainment conglomerate Viacom is being played out primarily in courtrooms now. And one of the most contentious points is the health and mental acuity of 93-year-old billionaire Sumner Redstone, who controls about 80% of Viacom’s shares through his family holding company, National Amusements.

On Monday morning, lawyers for Viacom’s chairman and CEO Philippe Dauman and another member of the Viacom board, both of whom were abruptly removed last month from the trust that will control the company after Redstone’s death, filed a motion in the case. The two men allege that Redstone’s actions are the result of undue influence by his daughter Shari, and they are asking for an immediate physical exam.

In a filing on Friday, Redstone’s legal team said an expert in geriatric psychology had already visited the former Viacom chairman twice last month, and after discussing a variety of topics, decided that the entrepreneur had the legal capacity to make decisions.

Until recently, Dauman seemed to have an iron grip on power at Viacom, despite the company’s poor stock performance (VIAB). He has been the CEO since 2006, and in February he added the title of chairman (a move opposed by Shari Redstone). Until his sudden removal, the Viacom CEO was also a key member of the Redstone family trust, a man whom Sumner Redstone often called “a great friend” and “the wisest man I’ve ever known.”

Why would Redstone change his mind so completely and have Dauman removed from the trust? Dauman says it’s because the aging billionaire is in poor health, unable to speak or communicate easily, and possibly not mentally capable of making informed choices. Dauman alleges that Shari Redstone is manipulating her father into making decisions he would otherwise never make.

Ironically, Dauman took the exact opposite position a couple of months ago. A case launched by former live-in girlfriend Manuela Herzer argued that Redstone was not in good health and was incapable of making decisions like the one that removed her as his medical advisor and wrote her out of his will. Dauman, however—who took over responsibility for Redstone’s medical care—testified that he was both mentally and physically competent.

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In a public deposition in that case, Redstone seemed to have difficulty swallowing and speaking, and could not answer certain questions (including what his birth name was) but he made it clear that he still has at least some of his legendary temper, by swearing repeatedly about his former girlfriend, whom he referred to using an offensive word and multiple expletives.

Now, Dauman is making the same kinds of arguments Redstone’s former girlfriend did: Namely, that the billionaire is physically frail, can’t speak or eat properly, and may be suffering from dementia or other mental conditions that impair his judgement. Redstone’s legal representatives, however, said that he is “physically stable, engaged with legal counsel, and participating in strategic decisions,” and that his decision about Dauman should stand.

In another legal step designed to thwart Dauman, the Redstone family holding company filed a notice on Monday that it has changed the terms of Viacom’s charter to require that any sale of the Paramount movie studio must be approved by a unanimous vote. Dauman’s announcement of a plan to sell some or all of the movie business was reportedly seen as a betrayal by Redstone, and so the billionaire is trying to make it impossible to do so.