Dauman and Abrams shot back with their own lawsuit to prevent their removal from the trust, arguing that Redstone was being manipulated by his daughter, Shari. Shari Redstone called the allegation "absurd" and said her father made his own decisions.
Viacom says interim CEO Tom Dooley will leave Nov. 15 and the company is cutting its dividend in half in the first major moves from the company since longtime CEO Philippe Dauman left in August.
Dooley was installed after Dauman was pushed out as part of a settlement the Viacom board approved with National Amusements, a private company owned by the 93-year-old Redstone that holds controlling stakes in both Viacom Inc. and CBS Corp. It was part of a long running legal battle between Dauman and Sumner Redstone’s daughter Shari, now a Viacom director and president of National Amusements, over the fate of Redstone’s media empire.
Viacom, which owns the Paramount Pictures movie studio and pay TV channels such as Comedy Central, MTV, BET and others, has been struggling to improve its profit as Paramount has struggled to produce hits and cable viewership declines.
Dauman had sought to sell a stake in Paramount to improve results. But Viacom said Wednesday that is has dropped plans to seek a minority investor as it considers all options available.
Viacom said Wednesday that it is cutting its quarterly dividend to 20 cents from 40 cents. The dividend will be payable on Oct. 3 to stockholders of record at the close of business on Sept. 26.
The company also expects net income of 65 cents to 70 cents per share in the fourth quarter, excluding an impairment charge for its filmed entertainment segment. Analysts surveyed by FactSet expected earnings of 91 cents per share.
FBR analyst Barton Crockett said the news on Wednesday ”highlights the currently unstable control structure at Viacom and woeful performance of the Paramount movie studio.” He added that it also leaves the door cracked open for a possible acquisition of Viacom itself, depending on how the CEO search pans out.
”If Viacom struggles to find a high-quality CEO to replace Mr. Dooley, the door would be opened for another company to consider a takeover,” he said.
Viacom Class B shares edged down 31 cents to $35.85 in afternoon trading Wednesday. They are down more than 20 percent over the past year.