Sumner Redstone has power to remove Viacom CEO from his trust

Tue May 17, 2016 1:06am EDT
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By Jessica Toonkel

(Reuters) - Sumner Redstone has the power to remove Viacom Inc (VIAB.O: Quote) Chief Executive Philippe Dauman, but not his daughter Shari, from the trust that will control his $40 billion media empire after his incapacitation or death, according to two sources familiar with the matter.

There is no evidence that Sumner Redstone is considering replacing Dauman. But the fact that Shari Redstone has a more secure position on the seven-person trust, which has not previously been reported, could embolden her in efforts to wield more influence at Viacom as it struggles with falling ratings.

Shari Redstone, who sits on Viacom's board, voted against Dauman's elevation to executive chairman of Viacom to replace her father in February, arguing that a member of the Redstone trust should not serve as executive chair of Viacom or CBS (CBS.N: Quote), the other media company majority owned by her father. Sumner Redstone supported Dauman taking the new role.

A spokesman for Dauman and Viacom declined to comment. Shari Redstone declined to comment through a spokeswoman. Leah Bishop, Redstone's estate lawyer at Loeb & Loeb, did not reply to requests for comment.

The matter of standing on Redstone's trust may end up being moot. If Redstone dies or is incapacitated and the trust takes effect, the only way a trustee can be replaced is if they die or if the beneficiaries of the trust - Redstone's five grandchildren - appeal to a judge. That effectively puts Shari Redstone and Dauman on a level footing.

But while Sumner Redstone is alive and able, and he retains ultimate power over his empire, it raises the question of who has the most influence over him.

Shari, who at times has been estranged from her father, has recently been spending 30-40 percent of her time with him at his Los Angeles mansion, a spokeswoman for her said in response to a question.

In April, Redstone gave Shari and a friend of the family authority over his health care if he becomes incapacitated, sources have told Reuters, replacing Dauman and Viacom's chief operating officer, Thomas Dooley.   Continued...

Sumner Redstone, executive chairman of CBS Corp. and Viacom, arrives at the premiere of "The Guilt Trip" starring Barbra Streisand and Seth Rogen in Los Angeles December 11, 2012.  REUTERS/Fred Prouser/File Photo