93-Year-Old Sumner Redstone wins back control of Viacom media empire

>In the summer of 1987, Sumner M. Redstone wrested control of Viacom in a hostile corporate takeover that left scorched relationships with the company’s management. Still bitter, executives sent Thomas E. Dooley, Viacom’s 30-year-old treasurer, to greet Mr. Redstone when he visited the Viacom office, the new boss wearing a plaid jacket bought on his way, the Filene’s Basement price tag still visible.

>Nearly three decades later, Mr. Redstone, with his daughter, Shari Redstone, at his side, has won yet another caustic fight for control of Viacom and the future of his $40 billion media empire. The battle has ruined relationships with some of Mr. Redstone’s longest confidants, exposed family feuds and sent Viacom into turmoil. Once again, Mr. Dooley is acting as the go-between for the entrenched Viacom regime and the Redstones.

>On Friday, Viacom elevated Mr. Dooley to interim chief executive from chief operating officer. He was appointed as Viacom announced that the embattled Philippe P. Dauman had stepped down as chief executive, with a severance package valued at about $72 million. (Since being named chief executive of Viacom in 2006, Mr. Dauman’s total reported compensation was $409.7 million even as the company has struggled in recent years.)

>With a truce declared in the battle for control of the 93-year-old Mr. Redstone’s companies, a harsh spotlight now is focused on Viacom’s struggling business. The company, which owns the MTV, Comedy Central and Nickelodeon cable television networks and the Paramount Pictures film and television studio, has had a nearly 50 percent plunge in its share price in the last two years.

>This was the company that ignited the careers of Jon Stewart and Stephen Colbert, brought to life characters like SpongeBob SquarePants and Dora the Explorer and had generations demanding the music videos of MTV.
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>But in recent years, the company has been overshadowed by popular digital outlets like Netflix, Amazon and Snapchat and plagued by weak ratings and declines in advertising sales across several of its TV networks. At the same time, its film studio has delivered dismal results. “Ben Hur,” Paramount’s production with Metro-Goldwyn-Mayer, is expected to be yet another box-office disappointment.

>The resolution to the legal dispute left investors and analysts with a list of questions about the fate of Viacom: Would the company pursue a sale of Paramount? Will the Redstones push to reunite Viacom with CBS after the two companies split a decade ago? Will the genial Mr. Dooley, who is interim chief executive through Sept. 30, take on the chief executive title permanently?

>“You and I are buying a house together, and it is called a fixer-upper, darling,” Mario Gabelli, whose investment firm, Gamco, is the second-largest voting shareholder in Viacom and CBS, said in an interview when discussing the state of the company.

>“The main question is, what is Shari going to do?” added Mr. Gabelli, who said that he had met with Ms. Redstone twice in the last 12 months.

>The settlement, which Viacom’s board approved Thursday night, firmly put the fate of the company under the control of Mr. Redstone, who is in failing health, and his daughter. The board of National Amusements, the private theater chain company through which Mr. Redstone controls about 80 percent of the voting shares in Viacom and CBS, met later and approved the deal.
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>The executive shake-up at the media company was part of a complex settlement agreement to a public battle, in which Mr. Redstone and his daughter faced off against Mr. Dauman, long his most trusted adviser, and the Viacom board. The vicious three-month dispute included lawsuits in Massachusetts, Delaware and California, challenging Mr. Redstone’s mental capacity to make decisions about his businesses and asserting that he had been manipulated by his daughter in an “unlawful corporate takeover.”

>“The agreement serves the best interests of Viacom, its shareholders, and you, our employees, and it paves the way for our future,” Mr. Dooley said in a memo to the Viacom staff on Friday. “I know we all share a desire to guide the company through this transition in the best possible way.”

>The settlement makes way for Viacom’s board to expand to include the five new directors that National Amusements put forward in June. They include Nicole Seligman, a former Sony executive and lawyer who represented President Bill Clinton during his impeachment trial; and Kenneth Lerer, a venture capitalist, a co-founder of The Huffington Post and chairman of BuzzFeed.

>Mr. Dooley, who started at Viacom in 1980, is expected to work closely with the new board during the next month and a half to develop a new plan for the struggling company. He is said to want the top job but also is committed to working with the new board through a transition period on whatever outcome is best for the company.

>Mr. Dooley, a longstanding partner to Mr. Dauman who helped create much of the company’s strategy in the last several years, has much to prove. In his memo to staff, Mr. Dooley wrote more than 200 words about his close friendship with Mr. Dauman, recognizing and thanking the ousted chief executive.
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>“He is a solid guy, with institutional knowledge, but is he a creative guy?” Mr. Gabelli said of Mr. Dooley. “He is a compromised guy.”

>Mr. Dooley and Viacom’s new board are expected to try to figure out how to reinvigorate the company and change the perception of its current businesses, without the overhang of the public power struggle that impeded business. That includes evaluating programming across the TV networks, new digital distribution methods, the international business and Paramount.

>Other options include exploring strategic partnerships, asset sales and other merger and acquisition activity.

>Some investors and analysts have pushed for Viacom and CBS to combine. Michael Nathanson, an analyst with MoffettNathanson Research, said such a deal would cut costs for executive salaries and put “a real programmer in charge of the business,” a reference to Leslie Moonves, CBS’s well-respected chief executive.

>Yet other analysts said such a deal was unlikely, as the boards of both companies must act in the best interests of all of their shareholders.

>In addition, the settlement states that Mr. Dauman will stay on as nonexecutive chairman of Viacom until Sept. 13. He will have the opportunity to present his proposal to sell a 49 percent stake in Paramount to the Viacom board. Yet that transaction would require the unanimous approval of the Viacom board and is unlikely to receive the green light.

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>93-Year-Old Sumner Redstone wins back control of Viacom media empire
Maybe with new leadership, Viacom can actually do better now. Hopefully it can work with CBS better.

But either Paramount starts to pull its weight, or something. It's more of a drain on finances than anything.