Sumner Redstone’s firm changes Viacom’s bylaws, creating a big hurdle for Paramount sale

Media mogul Sumner Redstone may have dealt a potential death blow to Viacom Inc.’s plan to sell a stake in movie studio Paramount Pictures.

Redstone’s National Amusements Inc., the controlling shareholder of Viacom, on Monday amended the media giant’s corporate bylaws to effectively make it more difficult for the company to pursue a deal.

Any sale of all or part of Paramount must now have the unanimous approval of Viacom’s board of directors, National Amusements said in a statement. The changes take effect immediately.

A spokesman for Viacom dismissed National Amusements’ moves as “illegitimate” and “invalid.”

“These illegitimate actions stem directly from the invalid changes made to the National Amusements, Inc. board and are completely at odds with good corporate governance,” the spokesman said. “They are clearly intended to impede the ability of the Viacom Board of Directors to fulfill its obligations to all stockholders.”

Viacom Inc. Chief Executive Philippe Dauman in February said the company would consider selling a minority stake in Paramount, which has struggled at the box office in recent years.

Dauman had set an ambitious deadline of June 30 to complete the sale, which could have given Viacom funds to help it pay down debt and boosted its stock price. Analysts had expected the auction to attract interest from deep-pocketed Chinese companies and technology firms.

But Redstone, who is 93 years old and in declining health, has been opposed to the plan. Redstone won a hard-fought battle for control of the legendary studio in 1994, agreeing to pay $10 billion for it.

National Amusements, which operates 950 movie theater screens, owns 80% of Viacom’s voting shares. Redstone and his daughter Shari, 62, are both on Viacom’s board, making unanimous approval of a sale unlikely.

In a statement, National Amusements said that although it is not opposed to a transaction that would “unlock value at Paramount,” such a deal would have to be heavily vetted.

“National Amusements believes that any disposition of a key asset of Viacom must be part of a carefully constructed long-term strategy; it is not an end in and of itself,” the company said.

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