Sumner Redstone with gal pals Sydney Holland, left, and Manuel Herzer, right.
Lawyers and expert medical witnesses are currently wrangling over the status of billionaire media mogul Sumner Redstone's estate and his position as head of the Viacom/CBS empire, and now there's a shareholder lawsuit in the mix due to worries over his competence. Redstone, 92 years old, has presided over a sprawling media octopus encompassing everything from Comedy Central and MTV to CBS and Paramount Pictures for decades now. Yet his competency - and control over his companies - is now being called into question, with allegations of undue influence at the forefront.
Late last year, Redstone's former girlfriend Manuela Herzer filed a lawsuit against him after he removed her as a designated agent from an advanced health care directive. Herzer alleges that Redstone, who "speaks in grunts," cannot chew and has to eat through a tube, is no longer fit to make such critical decisions. Not only that, but she says that her former employer and love interest has been subject to undue influence by players looking to snatch a controlling share in the company (Redstone retains 80% voting share in both CBS and Viacom). Such a claim puts not only Redstone's own estate plan in doubt, but also the titanic-scale TV and movie business he's overseen all these years. From that time, hearings have been underway in Los Angeles County Superior Court to determine whether the longtime billionaire is still competent and able to independently run his affairs.
In addition to Herzer's claims of Redstone being subject to undue influence, a Viacom investor has entered the fray with a lawsuit of his own. On this Tuesday E.F. Greenberg, a CBS and Viacom shareholder since 2010, filed legal action in Delaware against Redstone and his subordinates Philippe Dauman, Viacom CEO, and Les Moonves, CBS CEO, as well as his daughter Shari Redstone, who's the vice chair for both Viacom and CBS. Greenberg says the two company boards have failed to protect investors, choosing instead to enrich Redstone to the tune of $169 million over a two year period, from 2012 to 2014, when his health was clearly failing. It's also notable that the media kingpin hasn't participated in any public events for his companies for over 18 months, lending further weight to suspicions of incapacity.
Whether Herzer's suit alleging undue influence can go forward will be determined by a judge in February. Greenberg's filing against Redstone, meanwhile, is a clear warning signal - though not an avalanche in itself, its effect could snowball into a larger rebellion by Viacom and CBS shareholders for new leadership.