Viacom's Board Names Dauman Chairman, Replacing Aging Redstone

Decision Follows Redstone Stepping Down From CBS

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Viacom Inc. named Philippe Dauman as chairman, marking an end to Sumner Redstone's reign over the media company he's controlled for almost 30 years.

Viacom, the owner of MTV, Nickelodeon and Paramount Pictures, announced the board's decision Thursday amid public opposition from Vice Chairman Shari Redstone, the daughter of the company's 92-year-old founder and a major investor in her own right. The younger Ms. Redstone, 61, had called for an independent chairman.

"Philippe has been instrumental with Sumner in every aspect of Viacom's success for nearly 30 years," William Schwartz, chairman of the board's governance and nominating committee said in a statement. "We believe his becoming executive chairman is in the best interests of the company and all shareholders."

Shari Redstone declined the board's offer to become non-executive chairman, choosing to remain vice chairman, the company said.

In successive days, Mr. Redstone has stepped back from two of the biggest U.S. media companies, CBS Corp. and Viacom. At CBS, longtime Chief Executive Officer Leslie Moonves is taking the chairman's role with the blessing of Shari Redstone. The future for Viacom looks more contentious, with Ms. Redstone saying publicly that Dauman should not become chairman, so long as he also plays a role in the family's affairs.

"It is my firm belief that whoever may succeed my father as chair at each company should be someone who is not a trustee of my father's trust or otherwise intertwined in Redstone family matters, but rather a leader with an independent voice," she said in a statement Wednesday. "I was honored to nominate Les as the CBS chair and am delighted to congratulate him on his new position."

The elder Mr. Redstone is passing the baton at Viacom and CBS at a challenging time for conventional media companies. After years of growth in advertising and pay-TV subscriber fees, both businesses are showing signs of decline.

The TV industry is losing viewers as subscribers drop or scale back their service. Meanwhile, younger audiences are embracing online media, like Netflix Inc. and YouTube, for video and music.

That's hit Viacom especially hard, since its channels target younger age groups. The Class B shares of Viacom fell 45% last year, the worst performance in the Standard & Poor's 500 Media Index, which dropped 5.7%. CBS was down 15% in 2015. Together, the two companies have a market value of about $40 billion.

Shari Redstone's open opposition to Mr. Dauman could lead to trouble beyond Viacom's board.

The younger Mr. Redstone and Mr. Dauman, also 61, are also members of a trust that will oversee Mr. Redstone's family holding company after he dies or is found incompetent. National Amusements Inc., 80% owned by Mr. Redstone and 20% by his daughter, controls both CBS and Viacom. The other trustees include Tyler Korff, Shari Redstone's son, and four attorneys with ties to the family.

Mr. Redstone's decision to step down coincides with questions about his mental condition and fragile health. The aging mogul was sued last year by former girlfriend Manuela Herzer. She claimed he was incompetent when he kicked her out of his house and put Mr. Dauman in charge of his health care if he could no longer make decisions on his own.

Under a judge's order, he was examined last week by Stephen Read, a geriatric psychiatrist retained by Ms. Herzer. The findings haven't been made public.

~~ Bloomberg News

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