Frederic Salerno, one of the Viacom directors controlling shareholder Sumner Redstone is seeking to remove, has asked the Delaware Chancery Court to move forward rather than wait for a decision by a judge in Massachusetts.
Salerno, aligned with Viacom CEO Philippe Dauman, also targeted for removal by Redstone, says the Delaware court is looking at different issues and that any delay could potentially hurt Viacom and make it more difficult to sell a stake in Paramount Pictures. Redstone opposes the sale. Salerno and the other directors sued in Delaware to invalidate Redstone’s action removing directors and changing the company’s bylaws.
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During a hearing last month Delaware Judge Andre Bouchard deferred to the Massachusetts court rather than impose a hardship on the 93-year-old Redstone. Massachusetts is handling a suit from Dauman, who wants Redstone’s effort to remove him from the board of National Amusements, the Redstone family company that holds 80% voting stakes in Viacom and CBS, and as a trustee of the trust that holds Redstone’s stake in National Amusements, thrown out.
The suits are part of a battle for control between Redstone and his daughter Shari Redstone and Dauman. In both cases Dauman and his allies assert that Redstone is not competent to make decisions and is acting under the undue influence of his daughter.
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In a letter to Delaware Chancellor Bouchard, Salerno’s attorneys say that following a June 30 hearing on Redstone’s motion to dismiss in Massachusetts, there is no indication of when the judge there will rule.
The letter urges the judge to move forward on discovery. “While some discovery will overlap, questions related to the governance of Viacom will be largely issues for discovery in this Section 225 proceeding alone,” the letter says.
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Given Redstone’s condition, critical evidence could be lost as Redstone’s “physical and/or mental health changes from the relevant dates at issue, and given his age and health, the possibility of his death,” the letter says.
And uncertainly about Viacom’s leadership could affect the company’s ability to retain top employees, develop business relationships and implement strategies.
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“Viacom continues to pursue a publicly disclosed potential transaction involving, in part, a minority interest in its subsidiary, Paramount Pictures,” the letter says. Redstone’s attempt to change Viacom’s bylaws has put “a cloud” over the transaction.
