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Viacom's board to fight attempt to drop members

Roger Yu
USA TODAY
Sumner Redstone, who is in need of around-the-clock care and has difficulty communicating, stepped down as chairman of Viacom and CBS Corp. in February 2016. He's now chairman emeritus at both media companies.

Viacom Inc.’s board of directors is vowing to fight any attempt to remake it, responding publicly to speculation that former chairman and controlling shareholder Sumner Redstone could remove some board members.

In a letter Monday to "all Viacom's constituents,” Viacom’s lead independent director, Frederic Salerno, repeated his claim that Redstone, 93, is mentally incapable of making his own business decisions and that his daughter, Shari Redstone, is unduly influencing his moves.

“We now find ourselves facing a possible attempt to remove Viacom directors as a result of a chain of actions said to have been legally put in motion by the controlling shareholder of Viacom, Sumner Redstone,” Salerno wrote. “We know that such an attempt, on its face, would be completely inconsistent with Sumner's lifetime commitment to an independent board and professional management for Viacom after his incapacity or death.”

Shari Redstone, who is non-executive vice chair of Viacom's board, has said her father makes his own decisions.

Salerno and Viacom CEO Philippe Dauman have been seeking a face-to-face meeting with Redstone, but say their attempts have been rebuffed. Redstone, who is in need of around-the-clock care and has difficulty communicating, stepped down as chairman of Viacom and CBS Corp. in February. He's now chairman emeritus at both media companies.

Redstone owns and is chairman and CEO of National Amusements Inc., the Boston-based theater company that controls about 80% of the voting stock in Viacom and CBS.

Earlier this month, Redstone removed Dauman and Viacom board member George Abrams from his trust that controls his business interests if he dies or becomes incapacitated, triggering speculation that he wants to overhaul the company's management and replace Dauman.

Abrams and Dauman sued to block the removal. The first hearing in the Massachusetts case is set for June 7.

"We will contest the purported removal if it comes," Salerno wrote. "We can do no less than try to make sure that the fates of Viacom, its majority equity holders and Sumner's legacy are ably represented on their behalf and impartially decided by the courts."

In a statement released last week by his spokesman, Mike Lawrence, Redstone said he will make his decision about Viacom's board and CEO "with the same deliberation and consideration with which" he removed Dauman and Abrams as trustees and "based on the best interests of shareholders."

In its most recent quarter, Viacom, which owns Paramount Pictures, Nickelodeon, Comedy Central, MTV and other cable networks, reported declining revenue across its business lines due to sluggish ratings and falling advertising sales. And the performance of Dauman, one of the highest paid CEOs in the country, has been generally panned by Wall Street analysts.

In his letter, Salerno acknowledged that the board "is not happy with where Viacom's performance stands."

"We know Viacom needs to do better — and we are very focused on that objective and on the need for management to drive it," he wrote.

To raise cash, Viacom plans to sell a minority stake in Paramount Pictures later this year. "We hope that the fight over control does not impair or completely undermine this potential step with Paramount," Salerno wrote. "Our priority agenda is and has been to pursue the critical goal of improving Viacom's performance and now, if needed, a judicial determination of the legality of any removal attempt."

Follow USA TODAY media reporter Roger Yu on Twitter @ByRogerYu.

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