Viacom Parent Changes Bylaws to Block Paramount Sale
A unanimous vote is now required for any financial transaction involving Paramount Pictures.
The trust that control's Sumner Redstone's controlling interest in Viacom on Monday moved to block any sale of Paramount Studios without unanimous approval by the media giant's board of directors.
National Amusements Trust, which controls 80 percent of the company's voting stock, said it has “amended Viacom’s corporate bylaws … in order to protect the long-term interests of all Viacom shareholders.” The changes take effect immediately, according to a statement released by the trust.
The changes effectively put an end to chief executive Philippe Dauman’s plan to sell a stake in the fabled movie studio. Requiring a unanimous vote would make it next to impossible for Dauman to achieve since both Sumner Redstone and daughter Shari — who both oppose any dealmaking — are both directors.
“National Amusements has one objective with regard to Viacom and that is to create long-term value for the company’s stockholders,” according to the statement. “While National Amusements is not opposed to a transaction that would unlock value at Paramount, it firmly believes that any proposed transaction should be thoroughly vetted and approved by Viacom’s full Board, and the rationale for such a transaction should be clearly articulated to Viacom’s stockholders in advance.”
Dauman announced plans in February to sell off a stake in Paramount to a strategic investor as a way to juice up Viacom’s ailing stock price. Analysts had pegged an outright sale of the studio by up to $5.5 billion — a big drop from the $9.8 billion Viacom paid for it in 1994. Shari Redstone and Dauman have often been at odds in recent years, especially as Viacom's stock has lost more than 30 percent of its value during the past year.
“These illegitimate actions stem directly from the invalid changes made to the National Amusements, Inc. board and are completely at odds with good corporate governance," a Viacom spokesman said in a statement. "They are clearly intended to impede the ability of the Viacom Board of Directors to fulfill its obligations to all stockholders, including the public non-controlling stockholders who own 90% of the equity of Viacom."
Dauman said that he visited Redstone at his home in Beverly Park and briefed the 93-year-old mogul on the plan to sell a part of the studio, and that Redstone approved. However, Redstone's camp has subsequently said he never backed the sale and has since stated his opposition to it in court documents.
The latest legal maneuvering by Redstone comes after the trust threw Dauman and another associate off its board. Dauman also has asked for a medical examination of Redstone in his own claims against the trust in which he hopes to declare the mogul not competent to manage his affairs.
A hearing will be held on that case Tuesday morning.