Media Analyst: Viacom Shareholders Should Sue Board of Directors

BTIG Research has some advice for the Board too: You should fire Philippe Dauman — like, right now

Last Updated: June 9, 2016 @ 9:03 AM

Viacom shareholders: It might be time to sue.

At least, that’s what BTIG Research’s Rich Greenfield advises, because the Board of Directors “has failed in its fiduciary duty to public shareholders” by authorizing a multi-billion share repurchase, he stated, “squandering liquidity and increasing the company’s leverage.”

“To make matters worse, they now want to sell a minority stake in underinvested/underperforming Paramount to help ‘fix’ the leverage problems created by their misguided share buyback program,” Greenfield wrote in a Thursday morning blog post. “Then layer on the fact that independent Board members now openly admit that Viacom is underperforming, despite having just promoted … Philippe Dauman … along with making him the third highest paid CEO in America.”

That last part might be fine if Viacom’s stock hasn’t been such a disaster lately, the media analyst said.

On top of those “visible failures,” the Board — which boasts 6 independent directors in a group of 11 — is now using company money to finance Dauman and George Abrams’ lawsuit against the Redstone family and its National Amusements, Inc.

Greenfield also gave the Viacom Board some advice: Just fire Dauman already. Greenfield argues that’s probably going to happen anyway, and Board members can possibly save their own gigs with such a preemptive strike.

Here’s how Greenfield concluded this morning’s post:

We believe Viacom’s independent Board of Directors should terminate Chairman and CEO Philippe Dauman immediately and end Viacom’s financing of Dauman/Abrams lawsuits. The current Viacom Board members outside of Sumner Redstone and Shari Redstone are likely to be terminated shortly anyway, but all they are doing now is making matters worse for Viacom by supporting a Chairman and CEO who cannot prevent his own demise. Viacom’s Board is delaying the inevitable and wasting company resources. The best course of action is to act swiftly to enable Viacom to refocus on the operational challenges at hand, bring on new management and pursue a merger with CBS at market.

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