Philippe Dauman succeeds Sumner Redstone in Viacom board battle

split dauman redstone viacom

Defying the wishes of activist investors and Sumner Redstone's own daughter, Philippe Dauman is succeeding Redstone as the executive chairman of Viacom.

Dauman, the CEO of Viacom (VIAB), was promoted by the company's board of directors on Thursday morning.

Shari Redstone was the lone vote against Dauman, a source close to the company told CNNMoney.

In a statement shortly after the meeting, her representative said, "Shari is going to continue to advocate for what she believes to be in the best interests of Viacom shareholders."

"The battle lines are drawn" now, Shari Redstone versus Dauman, another source close to the company said.

Redstone, whose deteriorating health has been a cause for Wall Street concern, gave up the chairmanship of his other company, CBS Corporation, on Tuesday. CBS CEO Les Moonves was named the new chair on Wednesday.

The twin announcements symbolize the beginning of the end of the Redstone era. He will be chairman emeritus of both companies.

The transition at Viacom -- the owner of MTV, Nickelodeon, BET, Comedy Central, and Paramount Pictures -- had an added layer of intrigue because of Shari Redstone's role.

On Wednesday evening, after nominating Moonves to take the CBS chairman position, she suggested that she did not want Dauman to succeed her father as Viacom chairman.

"It is my firm belief that whoever may succeed my father as chair at each company should be someone who is not a trustee of my father's trust or otherwise intertwined in Redstone family matters, but rather a leader with an independent voice," Shari Redstone said in a statement.

The comments seemed aimed at Dauman, who is both a trustee of the elder Redstone's trust and Sumner's personal health care agent.

But Shari Redstone apparently did not have the necessary support from other board members to install someone else as chairman.

Viacom said that she was offered the position of non-executive chairman, but turned it down. She will remain as non-executive vice chair.

Sumner Redstone had no comment on any of the maneuverings.

The other Viacom board members rallied around Dauman after the meeting.

"In choosing a successor to Sumner, the board considered the need for seasoned leadership in this time of unprecedented change," board member William Schwartz said in a statement.

Schwartz said "we believe" Dauman "becoming executive chairman is in the best interests of the company and all shareholders."

The market didn't react quite as positively.

Viacom stock, up 3% earlier in the morning, sagged a bit after the announcement of Dauman's promotion. At midday it was up about 1%.

Viacom has underperformed other major media companies, including CBS, during a period of rapid change and turnover in the television business.

That's partly why activist funds like Springowl Asset Management have targeted Viacom. Springowl renewed its efforts to remove Dauman and Redstone on Wednesday night.

"We strongly urge management and the board to appoint an independent director as executive chairman and that it not be Philippe Dauman," it said in a statement. "We hope management and the board will continue to act responsibly in addressing Viacom's depressed stock price relative to its much higher asset value."

Redstone's decision to step aside may relieve investors.

His health has been a matter of much speculation in recent months. His competency has been repeatedly challenged in court proceedings.

Court papers filed by an ex-girlfriend last fall described Redstone as a "living ghost" who is practically unable to make decisions for himself.

Manuela Herzer described him as "vacant, expressionless and out of touch." She said he was basically unable to talk and "cannot walk or stand by himself."

Dauman has challenged many of her accusations.

Shari Redstone said Wednesday that her father has "flourished" since the break-up with Herzer last fall.

"Once Ms. Herzer was out of my father's life, my family and I were able to reunite with my father," Redstone's daughter said in a court filing.

Now attention may turn to the financial futures of both Viacom and CBS.

Widely read media analyst Michael Nathanson called the Redstone news "change we can believe in."

"Thinking about what this change for CBS and Viacom could mean for the broader media landscape, we believe that changes for the Redstone controlled empires could be the trigger for media company consolidation as each company will be forced to figure out if they are a buyer or seller in the coming months," Nathanson wrote in a note to investors Wednesday night.


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