Unscripted, page 18
Stunned, Dauman picked up the phone. Andelman answered.
“What’s going on, David?” Dauman asked.
Andelman seemed taken aback that it was Dauman calling. As several people in the room listened, Andelman stammered that he was sorry and confirmed he’d sided with Shari. He said he had no choice. He didn’t want any trouble from her.
Those listening in the room took that to mean he was afraid Shari would sue him. Perhaps they should have realized Andelman was vulnerable to a lawsuit given his role in the lavish payments to Holland and Herzer. Even if he ended up winning such a case, the cost of defending it and the bad publicity could prove ruinous.
Dauman said he was disappointed. Andelman seemed eager to end the call. They never spoke again.
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Dropping any pretense of cooperation, Dauman counterattacked. In a press statement, he called the move “a shameful effort by Shari Redstone to seize control by unlawfully using her ailing father Sumner Redstone’s name and signature. As she knows, and as court proceedings and other facts have demonstrated, Sumner Redstone now lacks the capacity to have taken these steps. Sumner Redstone would never have summarily dismissed Philippe Dauman and George Abrams, his trusted friends and advisers for decades.”
The timing of the ouster might have come as a surprise, but having already lined up a team of lawyers, Dauman was ready. On Monday, May 23, he and Abrams filed suit in Massachusetts, where Redstone’s trust had been created and administered, asking that his and Abrams’s termination be nullified and that they be allowed to continue as trustees and directors.
Dauman and Herzer were suddenly, once again, allies. Herzer’s lawyer O’Donnell submitted a declaration supporting Dauman’s complaint that said Sumner was little more than a “wax figure at Madame Tussauds.” Dauman was now in the awkward position of claiming that Sumner was mentally incompetent just weeks after he had described him as engaged and attentive during the Herzer proceeding.
Dauman attempted to argue that he’d “made no observations about Mr. Redstone’s capacity to make significant business decisions,” and that since the meetings on which he based his opinion, which took place the previous October and November, “Mr. Redstone’s health has rapidly declined.” Dauman now said he’d visited Sumner during the first week of March, and he “appeared almost totally non-responsive, and could not meaningfully communicate at all.”
In total, Sumner “is being manipulated by his daughter, Shari. After years of estrangement, she has inserted herself into his home, taken over his life, isolated him from contact with others, and purports to speak for him. In doing so, she is attempting to use his control to dismantle his estate plan to serve her own interests and to assume control of his businesses which he long refused her.”
Sumner’s erstwhile surrogate son and actual daughter were now engaged in open warfare.
EPISODE 8
“No One Likes Drama”
Needless to say, Dauman wasn’t invited to Sumner’s ninety-third birthday party on May 27, 2016, just four days after filing his lawsuit. Nor, for that matter, was Moonves. With Holland and Herzer banished, the party was mostly a family reunion, at least for Shari’s side of the family. She, her mother, Phyllis, Brandon, Kimberlee, and Tyler were all there. Sumner’s two great-grandchildren bounced on a trampoline set up for the occasion. Only Robert Evans came from Sumner’s Hollywood orbit.
Now that the Herzer trial was over and professional health care installed in Sumner’s mansion, he seemed to have rallied somewhat. “Mr. Redstone seems much happier since Sydney and Manuela moved out,” his nurse Jagiello reported. “He is more relaxed and seldom cries. He leaves the house on a regular basis and appears to enjoy spending time with his daughter Shari and grandson Brandon and talking regularly with his other grandchildren back east.”
On Friday, June 10, Sumner and his nurses traveled by minivan to the Paramount lot in Hollywood, where they pulled up to the Redstone building. Brad Grey, the longtime head of Paramount Pictures, emerged and joined them for about fifteen minutes. Afterward he described Sumner as unresponsive.
The following Tuesday they drove over the Hollywood Hills to CBS Studio Center, where Moonves joined them in the van for a visit lasting less than ten minutes. Sumner didn’t seem to know who Moonves was.
Reports of the Paramount visit prompted a letter from Viacom’s lead director, Salerno, addressed to Sumner.
“You and I have worked together for decades to create shareholder value and develop shareholder trust,” Salerno wrote. But “strangely, in the last few months, a host of new advisors and spokespeople say they work for you. They claim that strongly held views you have expressed for decades have, in the past few months, completely reversed. They say you no longer trust your friends, your advisors, or your board. They tell us to believe that you have put your daughter Shari in charge of your trust and your board at National Amusements despite your clearly stated wishes and planning over many years that are to the contrary.”
The letter continued. “Sumner, we sincerely hope you are doing well. But it is alarming that your representatives refuse us the opportunity to talk with you, express our perspectives, share our friendship, or understand directly from you what your wishes might be and why. Bill Schwartz and I have not been permitted to see you, despite repeated requests. Philippe hasn’t been allowed to meet with you since early March. And we are quite concerned that your voice—and views—are not being heard. When your phone is dialed into our board calls from your home, no one says a word. When we ask for your vote, all we hear is silence.
“Statements from these people suggest you think we intend to sell Paramount lock, stock, and barrel, or that we would do it in the middle of the night and hide it from you. Nothing could be further from the truth. You may remember that in February, Philippe spoke to you at your home about new opportunities that could strengthen Paramount. He reported that you didn’t react, other than to nod when he asked you if you heard him and understood what he said to you.”
Salerno pleaded again for a meeting with Sumner. “They tell us they won’t make you available for fear that such a meeting would become the source of more litigation. In reality, putting up a wall around you ensures more litigation—and that is not what we want. We want to understand what is happening with you. And I can assure you that you can count on us to stick up for you and for the many other Viacom shareholders you have served so well for so many years.”
The Redstone camp was skeptical—when Tu had offered the chance for Viacom directors to meet with Sumner, they hadn’t even responded. Now, with litigation raging, there was no way such a meeting would take place. In response to the letter, the new National Amusements board, which no longer included Dauman and Abrams and was reliably loyal to Sumner and Shari, simply amended Viacom’s bylaws to require a unanimous vote to sell a stake in Paramount. (As the controlling shareholder of Viacom, National Amusements had the power to change Viacom’s and CBS’s bylaws at any time.) The rule change gave both Shari and Sumner veto power over any transaction.
Viacom management was now up against its controlling shareholder. Folta denounced the move as “illegitimate” and “completely at odds with good corporate governance.”
The bylaw change pretty much ended whatever chance Dauman had of selling a Paramount stake, for who would negotiate such a deal knowing that a Redstone would veto it? The likelihood of a deal had already cooled anyway, as the Chinese balked at Dauman’s $10 billion valuation and grew skeptical that Dauman had the authority to enter into a binding transaction. Wanda’s investment bankers had put out feelers on Wall Street and were well aware that the Redstone camp opposed any sale, even a minority stake. No other bidders, assuming they existed, had ever been publicly identified.
Dauman had to disclose that the planned sale announcement by the end of June would be delayed and blamed it on Shari’s machinations. Nonetheless The Wall Street Journal reported Wanda was still “in talks” to buy 49 percent of the studio despite opposition from the Redstone camp.
On June 16 the long-expected axe fell: National Amusements announced that it was exercising its power to replace five Viacom directors including Dauman and Salerno. The five proposed new directors brought a variety of entertainment expertise to the board and were younger and more attuned to the Viacom audience.
Dauman was still chief executive. But in a statement addressing his fate, National Amusements said, “It will be the responsibility of the newly constituted Board to evaluate the current management team and take whatever steps it deems appropriate to ensure that Viacom has in place strong, independent and effective leadership.” Dauman’s days running Viacom were obviously numbered. Investors celebrated the prospect of getting rid of him, driving up Viacom shares 7 percent on the news.
That same day Shari asked chief operating officer Tom Dooley to act as interim chief executive once Dauman was gone. When Dooley broke the news to Dauman, it couldn’t have been much of a surprise. “If that’s her plan, that’s her plan” was all Dauman said.
The next day Dauman defended himself and his record in an interview with Fortune editor Alan Murray. Murray was blunt: Apart from the issues over Sumner’s mental state, given the company’s poor performance in recent years, why should shareholders want Dauman to stay?
Dauman gave a typically vague answer: “A stock price at any given moment is a snapshot. The stock goes up and down. No one likes drama, nor do I.” Viacom had done well until two years ago, he stressed, and “a good investor invests for the long run and sees what’s unfolding.” He continued, “The press loves drama. People are missing the business story. This is a great place to work. We have great values. Creativity is at the center of it. We want to do good while we do well.”
Lofty rhetoric aside, Dauman again articulated no turnaround strategy, long or short term. His only real hope was his Massachusetts court case. But the court hadn’t set a trial date until October—far too late to offer Dauman any immediate protection.
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Shari was nervous about the prospect of that year’s Allen & Company media summit, which was held every year in Sun Valley, Idaho, and informally known as the “billionaires’ summer camp.” With participants Justin Trudeau, Mark Zuckerberg, Tim Cook, and Warren Buffett on the guest list, it would have been intimidating under any circumstances, especially since she was one of just a handful of women who weren’t attending as “significant others.” As usual, she’d be traveling alone. Adding to her anxiety: both Moonves and Dauman were supposed to be there.
It came as something of a relief that Dauman canceled at the last minute. Moonves made the most of his rival’s absence. He turned on his legendary charm, shepherded Shari around the conference, made introductions, and took her to dinner. At a time when she felt she was being shunned by just about everyone, starting with the Viacom board, she was grateful to Moonves for taking her under his wing.
Shari was especially pleased when Moonves gave the Los Angeles Times a statement praising her as “a terrific board member and a strong voice for good corporate governance throughout her tenure here at CBS.” Vanity Fair reported Shari had “taken center stage” at the conference and was “soaking up the spotlight.”
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While his mother was in Sun Valley, Tyler was deep in negotiations with Dauman. Without initially telling Shari, Tyler had opened a back channel to Dauman in early June. Dauman, too, kept the talks a secret and told no one on the Viacom board. They and their lawyers met alone in a Viacom conference room in New York, where Tyler argued, persuasively, that it was in no one’s interest for Dauman’s lawsuit to go to trial.
Few people emerge unscathed from the kind of scorched-earth litigation shaping up in Massachusetts, which promised a far more probing excavation of the lurid goings-on in Beverly Park than had occurred in the brief Herzer trial.
Tyler also had some sympathy for Dauman’s plight. They’d served together for years as National Amusements board members, and Tyler understood that the bond between his grandfather and Dauman went much deeper than the usual ties between chairman and chief executive.
With surprising speed, settlement terms were agreed to by the lawyers. Dauman would withdraw his lawsuit challenging Sumner’s competency and step down as Viacom’s chief executive. Dooley would replace him on an interim basis. In return, Dauman would get a payout of about $72 million—an enormous sum, to be sure, but pretty much what he was already entitled to under his contract. Tyler reached out to Klieger with word of the proposed settlement, and he and other lawyers started drafting the details.
It fell to Dauman to break the news to the Viacom board, which he did on July 27. It came as an unwelcome shock to other directors that Dauman had secretly undertaken settlement talks that lined his own pocket while they were publicly defending him. Salerno, the lead director, was furious and felt betrayed. The board declined to approve the deal, which effectively killed it, since Viacom, not the Redstones, would be making the payments to Dauman.
Dauman hadn’t even told his coplaintiff, George Abrams, about the impending settlement. But without Dauman the suit was doomed. Although Abrams had been shocked and hurt by his replacement as a trustee, in some ways it was a relief to put the dysfunctional Redstone clan behind him and focus on his other clients and his extensive art collection. He never heard from Sumner again.
Dauman gave no hint of the board turmoil when he announced Viacom’s third-quarter earnings a week later. They were another disaster, with profit falling close to 30 percent. The Paramount hits Dauman had promised had all flopped, starting with the Teenage Mutant Ninja Turtles sequel in June. Zoolander 2 and Allied quickly followed, the latter tarnished by Brad Pitt’s much-publicized divorce from Angelina Jolie. Even the latest Star Trek was a disappointment. It brought in $100 million less than the previous installment.
Those were just the most visible failures. Revenue for its media networks, including MTV, Nickelodeon, and Comedy Central, plunged 22 percent.
Wall Street’s reaction was swift. The stock had dropped 50 percent in just a year. In June, Tom Freston, the Viacom chief executive Dauman replaced, had gone on CNBC to blast Dauman’s performance. “Dauman is focused on stocks, lawsuits and leveraging nickels from customers,” Freston said in a withering assessment. What Viacom needed, he said, was someone who was “turned on, attracted to and somewhat knowledgeable about the popular culture and what’s going on there.” In short, everything Dauman was not.
The grim results and growing distrust of Dauman drove Salerno and his fellow Viacom directors back to the bargaining table, this time without Dauman or Tyler present. After a weekend meeting on Long Island with Salerno, one of the proposed new board members, and an investment banker advising Shari, a new agreement was reached. It wasn’t much different from the one Tyler had negotiated: in addition to Dauman’s $72 million payment, Viacom would pay all his legal fees over the preceding three months and provide an office and executive assistant for another three years. One face-saving provision gave Dauman the right to present his plans to sell the Paramount stake in person to the new Viacom board.
Dooley, the newly minted interim chief executive, announced the agreement on August 18, and by then Dauman had retreated to his East Hampton estate. He proceeded to buy a $24 million waterfront mansion in Palm Beach, as well as a private jet. Dauman was never seen at Viacom headquarters again. After negotiating so tenaciously for the opportunity, he never met with the new Viacom board to promote his Paramount sale (he sent a written memo instead), nor did he name the buyer he’d supposedly lined up to purchase the Paramount stake. Despite all the speculation about Dalian Wanda, Shari suspected that such a buyer didn’t exist.
After Sumner canceled their meeting the previous April, Dauman never again saw or spoke to his longtime mentor.
* * *
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By ousting Dauman and his allies, Shari had saved Paramount, as she’d promised her father she would. His empire remained intact and under family control. To do so she’d had to change the trustees of his trust, reconfigure the National Amusements board, replace most of the Viacom directors, and get rid of Dauman, all while fending off Herzer and caring for her father. She kept up appearances, but she was emotionally drained and physically exhausted.
“I can’t say it was a great year, or the most fun year I’ve ever had, but if I look back from last year, the battles are over,” Shari said at a New York Times DealBook conference in November. “It’s been a tough year, but a year ago, to be sitting here today and talk about all we have accomplished, I don’t think I would have believed it.”
EPISODE 9
“An Overwhelming Stench of Greed”
With Dauman gone and the stresses of constant litigation at least temporarily at an end, Sumner seemed more relaxed. Shari continued to spend two weeks a month with him in California. She held her father’s hand, read aloud to him, and watched TV and movies, even when he was at times unresponsive, which was often the case.
At the suggestion of his nurses, Sumner got a Microsoft Surface Pro laptop to help him communicate. It was programmed with his voice. All he had to do was tap, and the computer would respond “yes,” “no,” or—for use specifically with Shari—“I love you,” “I’m proud of you,” or “Would you like some fruit salad?” But Sumner’s favorite was “Fuck you.” It was the option he pressed repeatedly whenever anyone mentioned Donald Trump.
