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Philippe Dauman, the former Viacom CEO who is still non-executive chairman of the board, has effectively left the conglomerate, waiving a deal where he would present an offer from Dalian Wanda Group to purchase a 49 percent stake in Paramount Pictures. At the same time, the Viacom board could be facing a potential legal standoff with the top executive at the film studio.
Those close to the situation tell The Hollywood Reporter that Dauman simply will submit a memo outlining Wanda’s bid for a portion of the film studio rather than make his presentation in person to his fellow board members.
The newest wrinkle in a yearlong drama that pitted Dauman against Sumner and Shari Redstone, Viacom’s chairman emeritus and vice chair, respectively, comes after what sources describe as an intense meeting between Paramount head Brad Grey and the Viacom board.
Grey met with the board, including interim CEO Thomas Dooley, six days ago to present a turnaround plan for the studio, which has released recent flops including Ben-Hur, Zoolander 2 and Teenage Mutant Ninja Turtles: Out of the Shadows. After the meeting, the board issued a statement saying it remains “fully supportive” of Paramount under Grey’s leadership.
But Viacom’s regulatory filings suggest Grey, who has run Paramount since 2005, could be asked to give up some of the autonomy he has enjoyed at the studio. Unless the board backs down from that stance, Grey could claim a breach of contract. Grey’s deal, according to insiders, gives him a certain amount of autonomy, including the right to greenlight films with budgets up to $125 million. But the recent regulatory filing says that, going forward, the Viacom board might require Paramount to seek its approval for “co-production, co-financing or other financing activities.” Paramount also might need board approval for distribution agreements and first-look deals with certain talent.
“Brad Grey’s contract has not been breached,” Dooley tells THR in a brief interview. “He has the full authority he needs to run the studio.”
However, it remains unclear whether the language in the regulatory filing will be altered or withdrawn. The board is prepared to consider the matter at its next scheduled meeting on Sept. 14.
As for Dauman’s unofficial exit from the company, it punctuates the end of a decade-long reign, which began to unravel months ago over his brutal feud with the Redstones.
Dauman stepped down as CEO two weeks ago and was replaced on an interim basis by Dooley, but Dauman’s exit deal called on him to remain as non-executive chairman until three days after the board voted on possibly selling a minority stake in Paramount, or until Sep. 13, whichever was first.
There’s no indication such a vote has occurred already, but sources say Dauman has, figuratively at least, packed up his things and left Viacom and that his role there is basically over.
Dooley declined to comment on Dauman’s status. A rep for Grey referred questions to Viacom.
While Viacom’s stock decline — shares have been more than halved in the past two years — is a result of falling ratings and profit at several of its cable TV channels more than recent bombs at the film studio, Wall Street appears fixed on the Paramount dilemma. “The best Tom Dooley can do is sell 100 percent of Paramount to the highest bidder,” says analyst Michael Nathanson of MoffettNathanson. Counters Michael Morris of Guggenheim Securities: “Paramount needs a significant leadership overhaul, which is not addressed in a proposed sale.”