No bite

Viacom's minority shareholders give up their bark

Viacom's independent shareholders have given up their bark. According to the media company, a "substantial majority" of them voted to re-elect the board, including boss Philippe Dauman, at its annual shareholder meeting on Monday. That's despite the hand-wringing over strategy, poor returns and questions surrounding the health of owner Sumner Redstone. It's a pity: even minority investors can sometimes force changes.

Only a fifth of Viacom's voting shares are in the hands of outsiders. The ailing 92-year-old Redstone controls the rest though an 80 per cent stake officially held by his company National Amusements. Holders of Viacom's B shares, meanwhile, get no vote. Several of its peers, including sister broadcaster CBS, are structured in a similar way, with two classes of stock, that affords extra power to insiders.

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Pretty much all of them are suffering from the same forces wrenching media companies, but Viacom is especially challenged. Its cable networks like MTV and Nickelodeon are crawling out from poor ratings. The stock is down more than 40 per cent over the past year and it's trading at a lower enterprise valuation than CBS, Murdoch's Twenty-First Century Fox and Time Warner.

Adding to Viacom's woes is a highly public lawsuit filed by one of Redstone's former girlfriends claiming the nonagenarian is no longer fit to make decisions. The appointment of Dauman as chairman earlier this year was equally fraught as Redstone's daughter Shari, also a director, publicly opposed the move. The drama included tweets from Mario Gabelli, who owns 10 per cent of voting stock, asking Viacom to disclose more information about Redstone's health.

Investors have long understood that buying Viacom means going along for the Redstone ride. Yet minority voters are capable of sending strong messages of rebuke. In 2014, for example, independent owners voted overwhelming against Rupert Murdoch's sons Lachlan and James as Fox directors. As a result the company invited ValueAct's Jeffrey Ubben to join the board. Murdoch's sons then met with investors and secured their backing the following year.

Perhaps Dauman and his executives are trying to smooth things over as well. Viacom agreed in February to put a minority stake in film studio Paramount Pictures up for sale, after investors including Gabelli pushed for more action. But independent shareholders could and should have sunk their teeth in further.