Battle over Redstone's media empire sparks hope for change
By Jessica Toonkel
(Reuters) - The legal battle over control of Sumner Redstone's $40 billion media empire has investors hopeful that change will come to underperforming Viacom Inc (VIAB.O: Quote).
On Friday, Sumner Redstone removed both Viacom CEO 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.
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.
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 $40.02 on Monday.
“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.”
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 also 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. Continued...