Sumner Redstone’s Buyout Offer

Shari Redstone with father Sumner Redstone

Shari Redstone was offered $1 billion in a buyout offer from her father Sumner Redstone, that’s no secret. The two have had a rocky relationship and he was trying to get her out of any involvement with CBS or Viacom.

Sumner offered to buy her 20% stake in National Amusements Company, which is the Redstone family holding company that has control of 80% of CBS and Viacom. She declined this offer. The deal would have got rid of her rights to become chairman of the Viacom and CBS Corp. after Sumner’s death.

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Now — we think that Shari has an off the books agreement with Philippe Dauman, president and CEO of Viacom, to take over the company after his death. Recall that Dauman has been under intense scrutiny as shares of Viacom has fallen off a cliff.

Structuring of Ownership

The structuring of the Redstone family ownership is quite interesting as the shares and power of Viacom and CBS are under the control of National Amusements Inc., the company that Redstone’s father created in 1936. This is a large public company with a vast control of the media empire and still has some holdovers that make them operate like a private company.

Their holdings are worth about $5 billion. When Sumner took over he began to acquire companies under his belief that television and movies would be a great source for value even if theaters were not his main line of business. That lead him to control over the two behemoths in the media landscape.

Mario Gabelli has raised questions over Sumner’s health. I’ve talked about that and his girl troubles here.

Problem for Buyout Prospects

Some, ourselves included, have wondered and pontificated whether the family will restructure the companies after Sumner’s death. It appears it would not be advantageous for the two to re-merge. In an interview Leslie Moonves, CBS CEO, was questioned about this he stated:

I don’t think Viacom and CBS should be reunited,” he said. “There’s no benefit for either company to be joined.” He also stated in regards to buying the company out himself that “It’s not something that’s on my radar,” he said.

The Case for CBS?

Between these two companies, you have to like CBS the best right now. Granted, Moonves hasn’t always done the right thing with the company, for example when he gave up the rights to the Christmas money maker Charlie Brown. But he, at least, has a vision for the company by making “for TV” movies and expanding the company. Viacom is floundering under Dauman and things could get a bit hairy there with a battle for control once Sumner is gone.

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