BTIG Research’s Rich Greenfield doesn’t see the high-level drama over control of Sumner Redstone’s family trust ending well for either Viacom’s Philippe Dauman or his CBS counterpart, Leslie Moonves.
“We have a strong belief that if Shari Redstone gains control of the SMR Trust (meaning she has at least three other votes to gain majority control of the seven votes), Philippe Dauman’s days are numbered,” Greenfield wrote on a Monday blog post. “On the other hand, if Philippe Dauman has majority control, we wonder what the future looks like for Les Moonves, particularly as he is viewed as an ally of Shari Redstone.”
Should Dauman manage to gain control of the trust, he will attempt to oust Moonves, Greenfield wrote. That feels like the more unlikely scenario, however, as Moonves and CBS are currently almost universally held in higher regard than Dauman and Viacom.
A spokesman for CBS declined to comment.
Plus, on Friday, allies Dauman and George Abrams were both booted from that small group of decision makers on the family trust.
On Monday, the two former SMR Trust members filed a lawsuit in hopes of reversing that shocking call from the top.
Greenfield added that Dauman’s proposal to sell a stake in Paramount Pictures has become a hold-your-horses situation given Sumner Redstone’s public opposition to the move. Investors will likely have to wait for “greater clarity around who is actually running Viacom day-to-day,” Greenfield wrote.
Of course, preaching patience to shareholders of a sagging stock is not an easy sell. It’s been a wild ride for Viacom stockholders — and not an enjoyable one as the share price has slipped to less than half of its level in July 2014, when it traded as high as $89.76. Read about VIAB’s recent stock history here.
“If Dauman is removed, the question becomes will Viacom and CBS be recombined (safest move for Viacom, but not what CBS shareholders want),” Greenfield wrote. “When Viacom was split, there was no minority shareholder vote and it is unclear if a majority of the minority of shareholders would be needed to recombine (nothing in the bylaws speaks to this issue). If not recombined, Viacom could be put up for sale, but that appears unlikely if Sumner does not even want a portion of Paramount sold today.”
The Sumner M. Redstone Trust that Greenfield mentions has control over both Viacom and CBS — much like the Redstone Family’s National Amusements company, which carries the public firms under its umbrella.
Currently, the big question is whether or not Sumner Redstone was mentally well enough to make the call for removing Dauman and Abrams as trutees. Viacom has accused daughter Shari Redstone of playing her 92-year-old dad like a puppet in what could be his final days, an accusation she called “absurd.”
Catch up on some of that familial and company drama here. The way this thing is going, there will be plenty more where that came from.