SAN FRANCISCO (REUTERS) - Mr Sumner Redstone has resigned as executive chairman of CBS Corp, the television and radio company said on Wednesday (Feb 3), amid heightened questions about the 92-year-old billionaire's physical and mental health.
Shares of CBS were up 4.6 per cent in after-hours market trading, while those of Viacom Inc, where Mr Redstone is also chairman, rose 7.9 per cent.
Viacom's board is scheduled to meet on Thursday, a company spokesman said, most likely to decide a successor to Mr Redstone.
CBS said Mr Redstone would be replaced by Mr Leslie Moonves, its president and chief executive since 2006.
Mr Redstone's health has been the subject of intense debate, partly due to his notable absence from the companies' recent earnings conference calls. His former girlfriend Manuela Herzer challenged his mental competency in a lawsuit in November.
As part of that legal fight, he underwent a mental examination last Friday by a psychiatrist hired by her. The results of that test have not been made public.
Her attorneys could potentially use the psychiatrist's conclusions to argue that her lawsuit should not be dismissed. A Los Angeles judge is set to make a decision on Feb 29.
CBS' move effectively cements Mr Moonves' control of the company, according to one investor. Mr Redstone's "role has been diminished for some time and Les Moonves has been the guy running the company. My initial take would be that net-net there's no change here", said Mr Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco, a hedge fund that does not own CBS or Viacom stock.
Mr Redstone controls about 80 per cent of the voting shares in Viacom and CBS through a holding company.
CBS said that, before electing Mr Moonves, its board offered the position of non-executive chair to Mr Redstone's daughter, Ms Shari Redstone, but she declined.
Ms Redstone confirmed that she had declined the offer and congratulated Mr Moonves on his new role. "It is my firm belief that whoever may succeed my father as chair at each company should be someone who is not a trustee of my father's trust or otherwise intertwined in Redstone family matters, but rather a leader with an independent voice," she said in an e-mailed statement. "I was honoured to nominate Les as the CBS chair and am delighted to congratulate him on his new position."
That statement suggests Ms Redstone does not want Viacom CEO Philippe Dauman to become chairman of that company, given that he is also a member of her father's trust.
Viacom said last month that it cut Mr Redstone's total pay by 85 per cent last year in light of his "reduced responsibilities", without giving further details.
Mr Redstone's resignation as executive chairman was effective on Feb 2, CBS said. He will remain as chairman emeritus.