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By Keach Hagey 

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Sumner Redstone doesn't want his heirs to have an easy time selling off his family's controlling stakes in media companies Viacom Inc. and CBS Corp. And he put it in writing in his estate planning documents.

The trust that will control Viacom and CBS when the 95-year-old media mogul dies or is deemed incapacitated places severe restrictions on the trustees' ability to sell the companies, according to a copy of the trust reviewed by The Wall Street Journal.

The confidential trust, details of which haven't been disclosed previously, prohibits the trustees from entering into any merger that would leave National Amusements shareholders with any less than 30% of the voting control of the resulting company, according to the documents.

That could complicate efforts to sell CBS or Viacom, especially to large companies, where coming away with a substantial stakeholding would be challenging.

That and other provisions of the trust may have significant implications for CBS and Viacom investors, particularly at a moment when the media industry is awash in deals and both those companies are considered potential takeover targets.

The Sumner Redstone trust emerged as a flashpoint in the legal battle playing out in Delaware Chancery court between CBS and National Amusements over control of the media company.

CBS is pushing to dilute National Amusements from a nearly 80% voting stakeholder to a roughly 20% stake through a special dividend. National Amusements moved to block a special dividend by changing CBS's bylaws to require a 90% supermajority for such a change. The two sides have been going through procedural proceedings thus far, and a trial in the case is set for October.

At a court hearing Wednesday, CBS lawyer Joseph Allerhand said only a handful of people have laid eyes on the trust document.

"We believe there are terms of the trust that are fairly described as bombshells," Mr. Allerhand told the judge, without specifying what the provisions were. He added that it has "huge consequences to investors of this company."

He pointed to a specific section of the trust document, but didn't spell out in court he contents of that section. That sections deals with the restrictions on selling National Amusements or its assets after Mr. Redstone dies or is deemed incapacitated, according to the documents the Journal reviewed.

The provision also spells out that Mr. Redstone has the "sole and exclusive power" to vote the stock in the trust during his lifetime. Mr. Redstone's trust owns 80% of the voting stock of National Amusements, while Shari Redstone, his daughter, owns 20%. National Amusements, in turn, owns nearly 80% of the voting stock of CBS and Viacom.

National Amusements has said it decides how to vote the holding company's CBS and Viacom controlling stakes through a vote of its seven-member board, on which Mr. Redstone casts a single vote. However, Mr. Redstone has the right to replace all members of the board.

Peg Brickley contributed to this article.

(More to Come)

(END) Dow Jones Newswires

August 09, 2018 13:30 ET (17:30 GMT)

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