Viacom Indemnifies CEO, Board in Dispute With Redstone

In an announcement Friday morning, Viacom Inc. (NASDAQ: VIAB) said that it now expects adjusted earnings per share for its third fiscal quarter ending this month to come in at $1.00 to $1.05. Analysts had been expecting $1.38 per share.

The company said that “third quarter results will be impacted by the theatrical underperformance of ‘Teenage Mutant Ninja Turtles: Out of the Shadows’ as well as a delay in completing a significant SVOD [subscription video on-demand] agreement.” Viacom blamed the delay on “the recent and highly public governance controversy” between founder and largest shareholder Sumner Redstone and the company’s board, especially Chairman, CEO and President Philippe Dauman.

The company also expects domestic advertising sales to decline by about 4% in the quarter.

[nativounit]

Redstone filed suit on Thursday to remove Dauman and four other Viacom board members. Viacom’s board filed a notice with the U.S. Securities and Exchange Commission (SEC) Friday spelling out indemnification agreements with Dauman and board member George S. Abrams:

Under the Agreements, Viacom will pay or promptly reimburse Mr. Dauman’s and Mr. Abrams’ costs and expenses (including attorney’s fees, expert witness fees and fees of public relations and other consultants) actually and reasonably incurred in connection with (1) the lawsuit filed by Messrs. Dauman and Abrams on May 23, 2016 … seeking to invalidate their removal as Trustees of the Sumner M. Redstone National Amusements Trust (the “Trust”), as directors of National Amusements, Inc. (“NAI”) and as managers of certain subsidiaries of NAI (the “Purported Removal Action”), as previously reported, and (2) the petition filed on May 23, 2016 by attorneys for Sumner M. Redstone, Chairman Emeritus of Viacom, in the Superior Court of California, Los Angeles County, seeking the court’s confirmation of the validity of the Purported Removal Action, also as previously reported.

Dauman and Abrams agreed to repay Viacom if they acted in breach of their fiduciary duties or not in good faith with respect to Viacom.

[wallst_email_signup]

Viacom’s shares traded down in Friday’s premarket session but were up as much as 2.7% after the opening bell. Shares were last seen at $45.26, in a 52-week trading range of $30.11 to $68.47.