Sumner Redstone's National Amusements Inc amended the bylaws of Viacom Inc (VIAB.O) to require unanimous approval from Viacom's board for any deal related to Paramount Pictures, creating a new hurdle for Chief Executive Philippe Dauman's plan to sell a stake in the movie studio.
The change, effective immediately, was made "to protect long-term interests of stockholders," National Amusements, a privately held movie theatre company that owns 80 percent of Viacom's voting stock, said in a news release on Monday.
Dauman is trying to sell a minority stake in Paramount, and has said he expects to announce a deal in June. Sumner Redstone, who sits on Viacom's board, has voiced concern about the idea, according to recent statements issued by a spokesman.
National Amusements "is not opposed to a transaction that would unlock value at Paramount," the company's statement said. But it added 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."
The move is the latest turn in a power struggle between Redstone's family and company executives over control of the 93-year-old media mogul's business empire amid questions about his mental competence.
Dauman is suing over his removal last month from the Sumner Redstone trust that will eventually control Viacom and CBS Corp (CBS.N) as well as the National Amusements board.
A Viacom spokesman said the bylaw change was "completely at odds with good corporate governance."
"These illegitimate actions stem directly from the invalid changes made to the National Amusements Inc board," the spokesman said.
In a court filing on Monday, Dauman said a judge should expedite his lawsuit because Redstone is in ill health and may soon not be able to provide needed evidence.
The filing in Massachusetts state court describes Redstone as unable to "speak, stand, walk, eat, write or read."
A spokesman for Redstone did not have an immediate comment.
The outcome of the Massachusetts case and a similar one in California, and who ends up controlling the trust and the National Amusements board, will have wide-ranging implications for Viacom and CBS and could result in changes at the top of both companies, possibly through mergers and acquisitions.
A judge is expected to hear arguments on Tuesday on Dauman's request to expedite discovery and hold a trial by the end of September.
Dauman's lawsuit - brought with another Viacom board member George Abrams, whom Redstone also removed from his trust - questions Redstone's mental competence and argues that Redstone is being manipulated by his daughter, Shari Redstone. She has called that charge "absurd" and said her father makes his own decisions.
(Reporting by Anna Driver and Jessica Toonkel in New York and Lisa Richwine in Los Angeles; Editing by Nick Zieminski and Bill Rigby)
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Updated Date: Jun 07, 2016 04:30 AM