Sumner Redstone’s National Amusements, the largest shareholder in Viacom, didn’t mince words after the media company reported sluggish fiscal third quarter results Thursday, laying the blame for the poor showing squarely on management’s shoulders.
National Amusements, Redstone and Viacom management and directors are embroiled in a bloody battle for control of Viacom that is making its way through the court system, so the criticism doesn’t come as a particular surprise. Redstone’s NAI has already voted to oust Viacom chairman and CEO Philippe Dauman and a handful of company directors, while Dauman and the board members in question have claimed their largest shareholder is incompetent and unduly influenced by his daughter, National Amusements and Viacom board member Shari Redstone.
While Dauman continues to fight for his professional life in the courts, he has been under increasing pressure to resign. Few analysts believe that he will be able to survive the Redstone/NAI onslaught, particularly since NAI controls 80% of Viacom’s voting stock. Reports earlier this week said that Dauman had held talks with NAI to settle litigation and hammer out an exit that would put chief operating officer Thomas Dooley in the CEO seat temporarily, while Dauman walks away with an $83 million severance package. Those talks apparently broke down before a previously scheduled Viacom board meeting Aug. 3.
Viacom pre-reported its fiscal third quarter results in June – it said that ad sales would dip about 4% -- so the results shouldn’t come as a big surprise. Nevertheless, Redstone and NAI saw the official release of the results as another opportunity to point out that their plans to clean house are warranted.
In a two-page press release, NAI pointed to steep declines in revenue growth, earnings, operating performance and shareholder returns, noting that in the past two years Viacom stock has fallen more than 50%.
“National Amusements believes that it is time for Viacom’s current directors to stop supporting failed management and start representing shareholders, by allowing the new board to take the reins, and return the company to its position as an industry leader,” NAI said in a statement.
Dauman said on a conference call that the litigation with Redstone and National Amusements has been a distraction, but that the company is focused on turning itself around, investing in original programming and trying to move forward with the planned sale of a 49% stake in Paramount Pictures. It was the plan to sell that stake, since put on hold as the various litigation winds its way through the courts, that raised Redstone’s hackles in May, when he launched the first of what would be several bombs aimed at his former friend and board members.
"Viacom continues to execute on its strategic plan, which is supported by a majority of its independent board,” Viacom said in a statement. “As discussed by management on this morning’s earnings call, we are looking to the future and executing on the significant growth opportunities we see around the world. In contrast, It is unfortunate that one of our directors feels the need to try to damage the company in response to losses in the courtroom.”
