By Liana B. Baker and Jessica Toonkel
(Reuters) – Chinese real estate and entertainment conglomerate Dalian Wanda Group has held talks with Viacom Inc about acquiring a minority stake in its Paramount Pictures unit, according to two people familiar with the situation.
Wanda’s interest adds new urgency to deliberations over Paramount’s future, which has become the flashpoint of a bitter row between Viacom Chief Executive Philippe Dauman and the company’s controlling shareholder Sumner Redstone. Wanda, which bought production company Legendary Entertainment in January, has been trying to expand its U.S. movie business.
Redstone has so far opposed the sale, which is not possible without his consent. Other parties besides Wanda have also expressed an interest in Paramount, and there is no certainty any deal will be reached, the people said this week.
The sources asked not to be identified because the matter is not public. Viacom declined to comment, while Wanda did not immediately respond to a request for comment.
Earlier this year, Wanda invested in Paramount’s “Teenage Mutant Ninja Turtles” sequel.
If the two parties did agree to a deal, it would likely become the next flashpoint in the long-running battle for control of Sumner Redstone’s $40 billion media empire. The Paramount deal has been championed by Viacom Chief Executive Philippe Dauman, who is seeking to sell a 49 percent stake in the movie studio but opposed by 93-year-old Redstone, who owns 80 percent of Viacom and CBS Corp.
It is not clear that Redstone and his daughter Shari Redstone would agree to a deal if one was struck. Shari Redstone spokeswoman Nancy Sterling and Sumner Redstone spokesman Mike Lawrence declined to comment. Redstone, supported by his daughter, is waging a two-pronged legal battle with Dauman and other Viacom directors, which originated with a disagreement over the proposed sale of a stake in Paramount.
In May, Redstone removed Dauman and another Viacom board member, George Abrams, from the seven-person Sumner M Redstone National Amusements Inc Trust, which will determine the fate of Redstone’s holdings, and hence the future of Viacom and CBS, after Redstone dies or is incapacitated. Paramount has special resonance for Redstone, who fought long and hard to acquire the movie studio from Barry Diller in 1994.
Redstone’s move to throw Dauman and Abrams off his trust is the subject of a court case in Massachusetts. In June, Redstone moved to take Dauman and four other directors off the board of Viacom, through his privately held movie theatre company National Amusements Inc, which holds 80 percent of voting shares of Viacom as well as CBS. A court in Delaware is considering whether that move was legal.
Dauman is contesting both actions, arguing that Redstone is not mentally competent to make decisions. Throughout the legal face-off, Dauman has said Viacom has been working on the Paramount stake sale, even after National Amusements changed its bylaws to require unanimous approval from Viacom’s board for any deal related to Paramount. At the time, National Amusements said it was “not opposed to a transaction that would unlock value at Paramount.”
Dauman has said the divestiture would unlock value of $10 or more per Viacom share and that he would use the proceeds from a sale to pay off debt and for strategic development, particularly overseas.
(Reporting by Liana Baker in San Francisco and Jessica Toonkel in New York; Editing by Andrew Hay)