The fight over Sumner M. Redstone’s $40 billion Viacom (NASDAQ:VIA) media empire is reportedly over. According to people briefed on the matter, the two sides have completed a settlement agreement that ends the legal battles. On Thursday, Viacom’s board met and approved the settlement. Viacom owns the MTV, Comedy Central and Nickelodeon cable television networks, as well as the Paramount Pictures film and television studio.
The battle pitted Mr. Redstone and his daughter, Shari Redstone, against his longtime directors at Viacom. The terms of the settlement reportedly include the dismissal of Philippe P. Dauman as chief executive of Viacom. The resolution provides a path for Mr. Dauman to leave the company while still being well compensated. According to the sources, Mr. Dauman will depart with a total severance package valued at about $72 million.
The fight erupted in May when Mr. Redstone unexpectedly ousted Mr. Dauman and George S. Abrams from the board and trust of his private theater chain company National Amusements. Mr. Redstone controls roughly 80 percent of the voting shares in Viacom and CBS through National Amusements. The trust will gain control of his companies after he dies or is declared incompetent.
Mr. Dauman and Mr. Abrams then filed suit in Massachusetts challenging Mr. Redstone’s mental competency to make business decisions. Mr. Redstone has suffered a series of strokes and has a severe speech impediment. That suit was scheduled to go to trial in September.
When National Amusements moved to replace Mr. Dauman and four other directors on the Viacom board in June, another legal battle emerged. Viacom’s lead independent director filed suit in Delaware seeking to block the changes. That case was scheduled to go to trial in October. The parties made attempts to resolve the dispute out of court over the past three months.
In Viacom’s latest earnings report, the company reported its profits fell 29 percent during the latest fiscal quarter. Weakness across both its television and film groups lead to the decline in profit. Its film “Teenage Mutant Ninja Turtles: Out of the Shadows” had a terrible performance at the box office. The company is also suffering from declines in domestic advertising sales and soft TV ratings at some networks. Mr. Dauman oversaw the loss of $7 billion in market capitalization at Viacom in the previous year.
Mr. Redstone and Ms. Redstone are now completely in charge of Viacom’s future. Thomas E. Dooley, Viacom’s chief operating officer, will become the interim chief executive through the end of the company’s fiscal year, which concludes on Sept. 30.