An Orrick team was instrumental in successfully representing client Sumner Redstone and National Amusements Inc. (NAI) in this week’s settlement of an intensely followed corporate dispute over Viacom Inc., in which the board of directors and management had for months actively resisted actions by Viacom’s controlling shareholder to change the governance of the multi-billion dollar entertainment company. In ending a corporate conflict that attracted international attention, the settlement was widely reported as a complete vindication of Mr. Redstone’s actions, resulting in the resignation of Viacom CEO and President Philippe Dauman, other key changes to Viacom’s board of directors and strategic direction, and the dismissal of four lawsuits over the matter.
Specifically, the settlement provides for the addition of five new independent directors to Viacom’s board, as well as charter and bylaw changes ensuring that Paramount Pictures, one of the company’s most valuable assets, remains wholly owned by Viacom unless the stockholders vote otherwise. The settlement also resolves litigation brought by directors and officers of Viacom in Delaware and Massachusetts courts challenging Mr. Redstone’s and NAI’s actions. NAI, Mr. Redstone’s company, owns 80 percent of the voting power in Viacom.
Led by partners Michael Tu and Richard Vernon Smith, the Orrick team was engaged by Mr. Redstone and NAI earlier this year to develop a coordinated strategy to successfully enact changes to Viacom’s corporate governance. Michael and Richard crafted the blueprint for key actions ultimately taken by Mr. Redstone and NAI, including the removal of Viacom’s directors, changes in the Viacom bylaws and litigation in Delaware.
Orrick acted as Mr. Redstone’s counsel in the Delaware litigation, where Viacom’s lead independent director sued to block Mr. Redstone and NAI’s actions in a challenge to his competency and authority. Orrick also assisted counsel in litigation matters brought elsewhere raising similar issues and challenging Mr. Redstone’s removal of Mr. Dauman and another Viacom director from his personal trust and as NAI directors.
Orrick’s comprehensive approach to advising Mr. Redstone and NAI resulted in a settlement under which Mr. Redstone and NAI prevailed on every key change they sought. The Los Angeles Times summed up the reaction to the outcome by reporting: “The boardroom war for control of Viacom Inc. ended in victory for Sumner Redstone and his family.”
Orrick’s team continues to represent Mr. Redstone in ancillary shareholder class-action and derivative litigation connected to Viacom’s corporate governance.
In addition to Michael and Richard, the Orrick team included partner Bill Molinski, and associates Greg Beaman and Stephanie Albrecht. The Orrick team collaborated with co-counsel from Hueston Hennigan LLP to jointly represent Mr. Redstone.