By Joe Flint and Keach Hagey
The legal battle over media mogul Sumner Redstone's mental
competence, which finally heads to court this week after
transfixing Hollywood and Wall Street for months, features a cast
of characters befitting a reality TV show.
Besides Mr. Redstone, the 92-year-old chairman emeritus and
controlling shareholder of Viacom Inc. and CBS Corp., there is his
much younger ex-girlfriend-turned-companion, a once-estranged
daughter, an unpredictable granddaughter, an embattled chief
executive and a nurse who wields unusual power in Mr. Redstone's
Beverly Park mansion because he interprets the ailing billionaire's
extremely impaired speech.
The dispute, which centers on Mr. Redstone's former companion
Manuela Herzer's claim that he was mentally incompetent last
October when he removed her as his health-care agent, is heading
toward its final episode. The Herzer versus Redstone trial begins
on Friday in Los Angeles Superior Court, unless a last-minute
settlement is reached. A deal seemed close last month but talks
fell apart. Ms. Herzer's lead counsel, Pierce O'Donnell, said in
late April that "we're going to trial."
In the six months since the suit was filed, court documents have
aired salacious details of Mr. Redstone's alleged mental and
physical state, family disputes, business relationships and wealth.
At the heart of the case are serious questions about an elderly
man's ability to make decisions, a fight over inheritances and the
control over more than $40 billion of media assets.
If the judge rules that Mr. Redstone did indeed lack mental
capacity, it could have implications for the fate of his media
empire, which today spans such household names as MTV, CBS and
Paramount Pictures. Legal experts say such a ruling would put
pressure on Mr. Redstone's associates to trigger the trust that he
set up years ago to take control of his 80% voting stakes in Viacom
and CBS. The stakes are held by his company National Amusements
Inc.
"The question of Redstone's competence is very important to
investors," said Tuna Amobi, an analyst at S&P Global Market
Intelligence. There is already pressure on Viacom to make strategic
moves, he said.
On Thursday, Viacom Chief Executive Philippe Dauman told
analysts the company is continuing to look for ways to "unlock the
value" of the business, including by selling off a piece of
Paramount Pictures and expanding internationally.
Bankers are already knocking on CBS's door to pitch deals in
which the media company could gain control over National
Amusements' voting shares, should Mr. Redstone's status as
controlling shareholder change, a person with knowledge of the
matter said.
Mr. Dauman unsuccessfully fought having to be deposed, and his
role in the trial is "definitely an overhang" for Viacom's stock,
Mr. Amobi said. In a sworn affidavit backing Mr. Redstone's side in
the case, Mr. Dauman said Mr. Redstone was "engaged and attentive"
during an October visit. Ms. Herzer has charged this is false,
saying Mr. Dauman's alleged conversation was actually a "monologue"
with a "living ghost" who can barely follow the thread of
conversations.
Mr. Redstone stepped down as chairman of Viacom and CBS in
February, days after he was examined by a geriatric psychiatrist
retained by Ms. Herzer's legal team.
Besides losing her status as the potential overseer of Mr.
Redstone's health, in favor of Mr. Dauman in October, Ms. Herzer
was booted out of his mansion and removed from his will, in which
she had stood to inherit $70 million in real estate and cash. The
health-care agent role more recently passed from Mr. Dauman to
Shari Redstone, whose own relationship with her father had been
rocky for years before a recent rapprochement.
Mr. Redstone's lawyers, as well as his daughter, charge that Ms.
Herzer is just seeking money.
Ms. Herzer has maintained her concern is only with Mr.
Redstone's well-being. In her lawsuit, she accused Mr. Dauman and
Ms. Redstone, a Viacom and CBS board member, of manipulating Mr.
Redstone for their own financial gain. Ms. Redstone and lawyers for
Mr. Redstone have disputed the claim.
One of the big questions hanging over the trial is whether Mr.
Redstone himself will be compelled to make an appearance, either in
person or through video testimony. His lawyers have been trying to
prevent that and the judge has previously ruled that he doesn't
need to testify, but Ms. Herzer's team has him on their witness
list.
A courtroom appearance by Mr. Redstone, who turns 93 in late
May, is highly unlikely.
Besides Ms. Herzer, Ms. Redstone and Mr. Dauman, the lawyers may
also call other witnesses including Sydney Holland, another former
girlfriend of Mr. Redstone's, and the nurse, Jeremy Jagiello, who
has been coined "The Sumner Whisperer" by people close to the
saga.
Several other nurses have been listed as potential witnesses,
leading Judge David Cowan to ask at a recent hearing, "Do we need
all these nurses?"
Judge Cowan has indicated he's not interested in score-settling
or tawdry gossip.
"I don't want this case to turn into a history of Mr. Redstone's
family, " he said.
Write to Joe Flint at joe.flint@wsj.com and Keach Hagey at
keach.hagey@wsj.com
(END) Dow Jones Newswires
May 01, 2016 16:14 ET (20:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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