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August 20, 2016

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Viacom, Redstone seal agreement

VIACOM Inc and controlling shareholder Sumner Redstone have come to an agreement on terms of a settlement that would result in the departure of Chief Executive Philippe Dauman, two sources familiar with the situation told Reuters.

Redstone’s holding company, National Amusements, approved the proposed deal earlier in the week and it was passed by Viacom’s corporate board on Thursday evening. The resolution settles a series of legal proceedings gracing courtrooms in three different states in which Dauman and Viacom were wrestling Redstone for the right to determine the fate of the company that owns MTV, Comedy Central, Nickelodeon and Paramount Pictures, among other properties.

The settlement would end the battle for control over Redstone’s US$40 billion empire that includes Viacom and CBS, and which has been a source of shareholder angst and months of uncertainty.

It would also conclude the legal battle between Dauman and Redstone in Massachusetts over the CEO’s removal from National Amusements Inc, the privately held company that holds Redstone’s Viacom and CBS Corp voting shares, as well as the trust that will determine the fate of both media companies when the 93-year-old dies or is deemed mentally incapacitated.

Under terms of the settlement, if finalized, Dauman, 62, will be replaced by Viacom Chief Operating Officer and his longtime right-hand man, Thomas Dooley, who will be interim CEO until September 30, and then may stay on longer, according to the sources, who wished to remain anonymous because the discussions are confidential.

As part of the agreement, Dauman will stay on as executive chairman until September 13 and be allowed to present his plan to sell a minority stake in Paramount Pictures to the Viacom board, the sources said. Dauman will receive about US$72 million under the agreement, they said.

Spokesmen for Viacom and National Amusements declined to comment.

Redstone in May removed Dauman and Viacom board member George Abrams from the Sumner M. Redstone National Amusements Inc Trust. A spokesman for Redstone said the media mogul had been unhappy with the company’s performance and about Dauman’s plans to sell a stake in Paramount Pictures.

Dauman and Abrams shot back with their own lawsuit to prevent their removal from the trust, arguing that Redstone was being manipulated by his daughter, Shari. Shari Redstone called the allegation “absurd” and said her father made his own decisions.

Redstone also moved to kick Dauman and four other directors off the board in June, sparking litigation in Delaware to block the attempt.

Under the settlement, the board would add the five directors that National Amusements put forward in June. It is unclear when the directors that National Amusements moved to replace will leave the board.

Redstone’s granddaughter, Keryn Redstone, has filed a cross-complaint in connection to that lawsuit, and is planning to proceed with her lawsuit even if there is a settlement, according to a source familiar with the situation. However, that suit is unlikely to affect the removal of Dauman from Viacom and Redstone’s trust.


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