NY Post: Underlying Conflicts At Viacom
October 23, 2008 at 5:12 AM (PT)
SUMNER REDSTONE's reputation as a stickler for strong corporate governance at VIACOM and CBS is coming under fire as his personal problems grow, reports TODAY's NEW YORK POST. Media watchers and WALL STREET analysts say that a number of key players in REDSTONE's empire -- himself and VIACOM Chief Executive PHILIPPE DAUMAN included -- find themselves potentially conflicted between REDSTONE's personal interests and the interests of VIACOM shareholders.
A source close to VIACOM and CBS said that executives at both companies were in shock because REDSTONE never told them about his financial issues until minutes before NATIONAL AMUSEMENTS put out its press release announcing the stock sale. PALI CAPITAL media analyst RICH GREENFIELD wrote in a note to clients yesterday that "we are frustrated by the current debt troubles of NATIONAL AMUSEMENTS and the lack of disclosure by VIACOM."
REDSTONE has stated that he won't have to sell more VIACOM or CBS stock, but sources dismissed that as posturing. They noted that he wouldn't have sold the initial tranche of shares at the lowest point in the market if his financial situation wasn't "dire."
Regardless of REDSTONE's feelings about the idea of selling VIACOM or LES MOONVES-led CBS, particularly at a fire-sale price, sources said that despite his voting control, the decision is not REDSTONE's. The banks that extended the $1.6 billion in credit to NATIONAL AMUSEMENTS, $800 million of which comes due in DECEMBER, hold all the cards. "The banks are the ones who will decide if they want to handle the situation internally or look for solutions outside of SUMNER," said one banking source.