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The battle for control of Viacom is over. Media mogul Sumner Redstone has emerged victorious in a dramatic tale of entertainment-industry gossip, legal wrangling and corporate intrigue that has captivated Hollywood for months.
Philippe Dauman, the son of a famous Life magazine photographer who later climbed up the corporate ladder from his start as a financial lawyer, is out as chief executive of Viacom. He ruled over the media conglomerate behind MTV, Nickelodeon and Paramount Pictures since being named to the top post in 2006. He will continue as non-executive chairman until Sept. 13, according to the settlement reached Saturday.
As part of the settlement, Dauman will be succeeded by Thomas Dooley, who will serve as interim through Sept. 30, 2016. Viacom also created an expanded board of governors, which includes Kenneth Lerer, Thomas May, Judith McHale, Ron Nelson and Nicole Seligman.
The ouster, not unexpected in both Hollywood or Wall Street circles, still marks a dramatic turn of events for a powerhouse entertainment executive that Redstone once publicly called “the wisest man” he’s ever known. It also brings to fore how Viacom will slug its way through this regime change and get back on track to reinvigorating sagging ratings and winning back investors.
“I care deeply for Viacom, which has been an important part of my life since I joined Sumner in the acquisition of the Company 30 years ago,” Dauman said in the release announcing the settlement. “I believe this agreement will give the Company and its employees the best opportunity to continue a smooth evolution into the future. I will do my utmost to ensure an effective Board and management transition in my remaining time as Non-Executive Chairman.”
He continued: “It has been a privilege to lead Viacom and have the rare opportunity to work side by side with so many friends and colleagues to build great brands and implement successful initiatives in the U.S. and around the world. Most of all, I am proud of our people, our culture and our inclusive values.”
Added interim CEO Dooley: “With the resolution of these issues, I am looking forward to working closely with the Board to develop a strategy to position Viacom for growth and success. I have very much enjoyed partnering with Philippe over many years and am grateful for the opportunities that have been presented to me by the Redstone family. We share a strong commitment to Viacom’s future and to guiding the Company through an orderly and successful transition.”
Viacom’s board has now put forth a plan to try to heal the fractured company, placing command in the hands of Dooley, who has been with the company for three decades and remains popular with employees. He will take over the role of chief executive on an interim basis, giving Redstone and the board some breathing room to determine a way forward. The board also will be temporarily expanded to add five new members backed by Redstone, though the size is expected to shrink back down to 11 members by Viacom’s annual meeting next year.
The board approved a complex proposal that hands Dauman, who has led Viacom since 2006, a $72 million-plus exit package, according to sources close to the company. His golden parachute once he leaves Viacom will go down as one of the most lucrative in corporate America history.
The rich payday ends months of legal wrangling and maneuvering from both sides after the 93-year-old Redstone tried to kick Dauman and four others off of Viacom’s board of directors. Dauman had claimed his ailing boss did not have the mental or physical capabilities to make such a decision and was under the undue influence of his daughter, Shari Redstone.
In the release, she thanked Dauman “for his many years of dedicated service and the important role he has played at Viacom. We also welcome the new Board members who join us today.” She continued: “By strengthening Viacom’s governance and leadership, these changes will enable the Company to embark swiftly on a strategy that strengthens its position as an industry leader. Viacom has extraordinary assets and people, and we look forward to taking the necessary steps to realize the Company’s full potential to the benefit of all stockholders.”
The case was scheduled to be heard next month. Dauman’s departure also ignites intense speculation about what Redstone, whose family trust National Amusements controls the voting rights for both Viacom and CBS, plans to do to invigorate the beleaguered company.
Shares of Viacom rose 1.5 percent on Friday, a signal that Wall Street was cautiously optimistic that the drama between Redstone and Dauman might finally be winding down. The stock and Viacom’s market value had been sliced in half under Dauman’s leadership in the last year, though the deflated stock has recovered as investors pumped money into it on speculation of a management change.
Dauman’s ouster marks the final chapter in a long and colorful history working for Redstone. The two met when Dauman worked for a law firm and had to handle a Securities and Exchange Commission filing for Redstone. Dauman then got an advisory role in Redstone’s 1987 hostile takeover of Viacom.
“I have worked closely with Philippe Dauman for many years, and I have a comfort level with him and high regard for his leadership abilities, strong financial and operational skills, and superb judgment,” Redstone said at the time of Dauman‘s appointment. In recent years, Redstone often called him “the wisest man” he has ever known.
In early 2015, Viacom extended Dauman’s employment contract through the end of 2018. But when he was also named chairman in February, with Redstone becoming chairman emeritus, vice chair Shari Redstone opposed him. Many in Hollywood believe she has for months been orchestrating a careful campaign to strip the executive of his duties. One person with knowledge of their relationship said that Sumner Redstone used to task Dauman with communicating things to his daughter, including bad news, contributing to their more than rocky relationship.
In May, the corporate and family drama erupted as Dauman and another longtime Redstone ally were ousted from the mogul’s trust, which will control both Viacom and CBS once Redstone dies or is no longer able to oversee things. Redstone controls both companies via his National Amusements, which holds nearly 80 percent of the voting stakes in the companies. Redstone in June followed that up by firing Dauman, George S. Abrams, Blythe McGarvie, Frederic Salerno and William Schwartz from the Viacom board in one of the biggest assertions of power in corporate history.
Kim Masters contributed to this report.
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