Date
15 December 2017
Sumner Redstone suffers from diminished mental capacity and is dependent on his daughter Shari Redstone, accrding to a lawsuit. Photo: CNN
Sumner Redstone suffers from diminished mental capacity and is dependent on his daughter Shari Redstone, accrding to a lawsuit. Photo: CNN

US billionaire, 93, hangs tough in Viacom battle

Investors in Viacom, the entertainment and media flagship of ailing US billionaire Sumner Redstone are hoping that the legal battle over control of the US$40 billion empire will bring change to the company. 

“This whole company should be a case study of how to destroy shareholder value,” said Salvatore Muoio, principal with New York-based S. Muoio & Co, a major owner of Viacom voting shares.

“They should sell this business to the highest bidder and get it over with.”

On Friday, Redstone, 93, removed both Viacom chief executive Philippe Dauman and Viacom board member George Abrams from the trust that will determine the future of CBS and Viacom after controlling shareholder Redstone dies or is declared mentally incapacitated, Reuters reports.

Dauman fired back on Monday saying the moves to replace him and Abrams from both the trust and National Amusements board would amount to an “unlawful corporate takeover” by Sumner’s daughter, Shari Redstone.

Sumner Redstone’s privately held movie theater chain National Amusements holds 80 percent of the voting stock in both Viacom and CBS.

Separately, Sumner Redstone on Monday asked a Los Angeles Court for an order validating his removal of Dauman and Abrams from his trust and from the board of National Amusements Inc.

Redstone, who turns 93 on Friday, suffers from diminished mental capacity and is dependent on his daughter, Shari Redstone, the lawsuit said.

“Shari Redstone is attempting to illegally hijack her father’s well-established estate plan,” Dauman said in a statement.

The outcome of the court cases, and who ends up with control over the trust, and over the National Amusements board, will have wide-ranging implications for Viacom and CBS shareholders and could result in changes at the top of both companies, possibly through mergers and acquisitions.

Some investors are hopeful that change is imminent. Viacom shares rose 2.5 percent to US$40.02 on Monday.

Michael Cuggino, president and portfolio manager at San Francisco-based Permanent Portfolio Family of Funds, which owns voting shares of CBS and Viacom, said he would welcome some change at Viacom, including a sale, but had concerns about what kind of premium Viacom could get from a potential buyer right now.

Cuggino said he would welcome the idea of Viacom becoming part of CBS again but would need to make sure it made sense for CBS.

Viacom spun off CBS in 2006.

“There are certainly a lot of good synergies there,” he said.

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RA

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