Lawyers acting for the nonagenarian Viacom boss Sumner Redstone have reached a preliminary settlement in a lawsuit brought by an ex-girlfriend claiming the media mogul was mentally incompetent – a “living ghost” too feeble-minded to make decisions.
The terms of the settlement are understood to require that a local, neutral third party oversee the day-to-day care of the 92-year-old. Redstone’s ex-girlfriend, Manuela Herzer, who brought the lawsuit in November after being expelled from the couple’s Beverly Park home, and had been expecting to inherit $50m from Redstone, declined to comment.
The agreement comes after months of public wrangling. Through neither side has confirmed details of the settlement, it is widely expected that Viacom will remain in the hands of its chief executive, Philippe Dauman, and care of Redstone handed over to his daughter Shari.
The media multibillionaire, who turns 93 next month, has not appeared at an annual shareholder meeting or spoken on investor calls for Viacom or CBS, also owned by Redstone, since 2014. In February, he stepped down as executive chair of both CBS and Viacom.
But a settlement denies shareholders clarity over succession plans that a trial, set for May, would have afforded. The settlement also spares Redstone and his family from a trial which ostensibly aimed to determine Redstone’s fitness to assign a caretaker.
Activist investor Eric Jackson told Reuters he was disappointed because it meant more uncertainty over Redstone’s mental competence. If Redstone had been found incompetent by a judge, it could have triggered a seven-person trust, which includes Shari Redstone and Dauman, to take over his controlling stake in Viacom while Leslie Moonves, who was named chairman of CBS in February, would continue to run that company.
“If there had been a trial and he was declared mentally incompetent, that could have at least forced change at the top of Viacom,” Jackson said. “With a settlement, it’s conceivable that we could continue with the status quo even if he is incapacitated and shareholders will never know.”
But a settlement also clears the way, ultimately, for Shari Redstone to gain control as chair of Viacom, while day-to-day running of the company is likely to remain in the hands of Dauman, who succeeded Redstone as chairman over the objections of his daughter.
The feud between Herzer and the Redstone family could be viewed as atypical to the pattern of ageing media moguls unwilling or unable to cede control. Herzer alleged that her partner could do little more than obsess over steak and sex; she accused Dauman of trying to cover up the seriousness of Redstone’s condition. Shareholders grew restive; the company’s stock price sank 35% over two years, including a drop of more than 16% since the lawsuit was filed.
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