Judge Says Viacom Board Can Remain as Is, Sets Hearing for July

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Sumner Redstone

The makeup of Viacom's board of directors won't change just yet.

The makeup of Viacom's board of directors won't change just yet, a judge ruled Wednesday, despite the move by Sumner Redstone and his daughter Shari to remove CEO Philippe Dauman and others.

After the Redstones — through their control of National Amusements and that entity's control over Viacom — moved to get rid of Dauman and his board allies, Judge Andrew Bouchard said he'll have a hearing in July to, in part, determine if the action was valid.

The judge on Wednesday asked attorneys representing both sides about 93-year-old Redstone's mental capacity, at one point even suggesting that if a child had issued written consents about the running of a major company it would be within the company's right to challenge them.

"There are underlying issues of competency that might be relevant," Bouchard said, noting that a Massachusetts court is looking into that matter.

The lawyers from both sides agreed the incumbent board should stay in place until the matter is fully resolved, possibly months from now, though they are discussing restrictions.

In play is whether the incumbent board should stick only to actions related to day-to-day operations, and an agreement along those lines, which could come as early as Thursday, could hamper Dauman's plans to sell a minority stake in Paramount.

That plan has been a major bone of contention between the two camps, with Dauman and his allies claiming Redstone didn't object until he was manipulated to do so by his daughter.

The wheels were put in motion for Wednesday's hearing last week when National Amusements moved to oust Dauman, George Abrams, Blythe McGarvie, William Schwartz and Frederic Salerno from the Viacom board.

Salerno, the lead independent director, immediately blasted the move as "a brazen and demonstrably invalid attempt by [Shari] Redstone to gain control of Viacom and its management in disregard of Sumner Redstone's wishes."

Prior to that, Salerno issued an open letter complaining that he and other board members had no access to Sumner Redstone, who is chairman emeritus of Viacom's board.

Redstone responded to Salerno's letter with a statement reading: "I no longer trust Philippe or those who support him."

Around that time, the media mogul actually made a rare appearance on the Paramount lot, chatting with studio head Brad Grey, though it's not known what the two said to each other and Redstone never got out of the vehicle he was riding in.

The Massachusetts case, meanwhile, pertains to Redstone kicking Dauman and Abrams off of the National Amusements board a few months ago, and a judge could rule June 30 that Redstone should submit to a medical examination to determine his capacity for making that decision.

Bouchard on Wednesday was adamant that the Massachusetts decision would be relevant to the case he is presiding over in Delaware, but left the door open for launching separate discovery into Redstone's capacity should he feel the need to do so.

"I want to be kept abreast of developments in the other proceedings and reserve the right to revisit that," the judge said Wednesday.