A power struggle between Shari Redstone and Philippe Dauman had erupted, and the next front was the trust that would wield Redstone’s voting shares after he died or was deemed incompetent. The voting balance was uncertain. In addition to Shari and Dauman, the trustees included two presumed Shari votes (her son Tyler and Leonard Lewin, her mother’s divorce attorney); two expected Dauman votes (Norman Jacobs, Sumner’s divorce lawyer, and George Abrams, a Viacom director since 1987); and David Andelman, a CBS director who has done legal work for the Redstones since the 1970s. Andelman’s allegiance was unclear.
Shari, who lives in Boston, had begun spending much of her time in L.A. with her father. He began to reverse course on multiple issues. He had previously denied, in writing, barring Shari’s family—only to turn around and say the opposite. A new letter voiced shock at communications, “purportedly at my authority,” which “prevented all of you from visiting me.” Such materials, the letter stated, “should be considered withdrawn, terminated, voided, cancelled, inaccurate and of no effect whatsoever.”
Redstone still had moments when he rallied. His testimony in the Herzer suit, in which he called her a “fucking bitch,” persuaded the judge to dismiss the case. (Never mind that Redstone couldn’t recall his birth name and Herzer’s expert concluded he’s suffering from dementia.) Her lawyers, who plan to appeal, filed a second suit accusing Shari of using a “spy network” to turn Redstone against her.
Redstone, left, with his daughter and Philippe Dauman in 2012.Frederick M. Brown — Getty Images
But the far larger game was Viacom and CBS. The revelations about Redstone’s health increased pressure for action. The trust’s mental-incapacity mechanism requires either the finding of a court or the signature of three doctors who have concluded that Redstone is “unable to manage his affairs in a competent manner.” Launching this process requires a majority vote of the five NAI board members (excluding Redstone), which included both Dauman and Shari Redstone. A finding of incapacity would activate the trust, whose members then couldn’t be removed.
Ironically, a rare action by Dauman against Redstone seemed to trigger the shake-up in the trust. On May 18 the Viacom directors terminated Redstone’s $2 million in pay, the last action available to them. (They can’t fire the person who owns 80% of the voting shares.) Two days later Redstone ejected Dauman and George Abrams from the NAI board and the trust. Redstone had finally turned on his closest ally. Days later, Dauman fired back with the suit alleging that Redstone was incompetent and manipulated by his daughter.
Redstone, he now asserted, was unable to “participate in meaningful conversation,” including “communications concerning his business or personal affairs.” It was precisely the sort of communication Dauman claimed to have engaged in just six months before. In December, Dauman offered a similar message, telling conference attendees, “I talk to Sumner frequently, several times a week.”
In the suit, Dauman explained his past defense as an attempt “to help his longtime friend and colleague maintain his choice of health care agent”; he’d actually made “no observations about Mr. Redstone’s capacity to make significant business decisions.” Besides, the suit added, his health “has rapidly declined since that time.” Dauman stated that when he had visited Redstone in March, he “appeared almost totally nonresponsive.” He was now, Dauman suggested, a helpless prisoner of his daughter, whose power play would violate Redstone’s long-held desire to “empower professionals, rather than family members who did not share his business acumen.”
The replacements tilted the Redstone trust in Shari’s favor. Jill Krutick, a friend of Shari’s and a former Citigroup analyst, was named to both the trust and the holding company board. Tad Jankowski, who reports to Shari as general counsel of NAI, filled the second trust position. Kimberlee Ostheimer, Shari’s daughter, got the second spot on the NAI board.
A flurry of statements ensued. Redstone’s spokesman insisted he’s still competent and making his own decisions. He had turned against Dauman, the spokesman explained, out of anger at the decision to cut off his pay, the plan to sell a piece of Paramount, and the decline in Viacom’s shares. Shari’s rep called it “absurd” to accuse her of “manipulating her father.”
Now the parties are girding for the inevitable: The move to force Dauman out, and the court fights and hyperbolic media wars that will entail. The Redstones will attempt to do that by replacing four board members, according to a source familiar with the matter, with the new members then presumably voting to fire Dauman. Shari recruited former Viacom CEO Tom Freston to join the Viacom board, but he declined. Freston tells Fortune he advised Shari he supports “her efforts to oust Dauman and clean up the mess he will have left behind,” but that, for him, “it’s hard to go backwards.”
Viacom’s six independent directors have vowed a court challenge to any move to oust them, saying it would be undermined by “the inexplicable assertion that Sumner was acting of his own free will and with the mental competency to do so.”
Still, even if Dauman loses, he wins: His expected exit package runs to $75 million. Sources close to the companies speculate that, should she prevail, Shari Redstone might eventually try to reunify CBS and Viacom, with Moonves as CEO.
Nobody can know whether Sumner Redstone will be alive to see that happen. But by the time he passes from the earthly realm, his legacy will consist not so much of assembling a storied media empire—but of spawning a colossal corporate conflict.?
A version of this article appears in the June 15, 2016 issue of Fortune with the headline “The Fractious Battle for Viacom.”