Judge in Redstone hearing urges attorneys to reach agreements

August 26, 2016 1:10 PM EDT

FILE PHOTO: Sumner Redstone, executive chairman of CBS Corp. and Viacom, arrives at the premiere of 'The Guilt Trip' in Los Angeles December 11, 2012. REUTERS/Fred Prouser/File Photo

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By Ross Kerber and Jessica Toonkel

CANTON, Mass. (Reuters) - A Massachusetts judge on Friday told attorneys to see if they could agree to resolve at least parts of a lingering family dispute over the fate of the empire built by Sumner Redstone, the controlling shareholder of Viacom Inc (NASDAQ: VIAB).

Judge George Phelan gave the instruction before declaring a break in a hearing on Friday that is part of the ongoing legal saga over whether Redstone was mentally competent when he removed former Viacom CEO Philippe Dauman and board member George Abrams from a trust that will determine the fate of his media empire.

The proceedings likely will not affect the removal of Dauman and Abrams from Viacom and Redstone's trust, according to people familiar with the situation.

On Saturday, Viacom announced that it had come to an agreement with Redstone, and his privately-held National Amusements Inc, which owns 80 percent of the voting shares of Viacom and CBS Corp (NYSE: CBS).

Dauman has stepped down as CEO and will receive as much as $90 million in cash and stock-based compensation, according to the agreement.

But Keryn Redstone, who is Shari Redstone's niece and was replaced as a trustee in 2012, is challenging the validity of the settlement agreement because she believes her grandfather is being manipulated by his daughter Shari.

Under the settlement, the board of Viacom added the five directors that National Amusements put forward in June, bringing the board to 15 directors after Dauman departs. Three of those directors are expected to step down after Viacom's annual meeting next year, a source familiar with the situation told Reuters last week.

Despite that settlement, Redstone's granddaughter Keryn Redstone has filed a cross-complaint in connection to Dauman's lawsuit. In a filing on Thursday she also questioned if Dauman's side did enough to assure themselves that Redstone had the mental capacity to understand the terms.

At the hearing on Friday in Norfolk County Probate and Family Court in Canton, Massachusetts, Judge Phelan said that he has "some concerns about what information was being given to Sumner."

Phelan urged attorneys for the various sides to see if they could resolve some of Keryn Redstone's concerns, such as by amending trust documents or arranging for her to speak with her grandfather via a video link.

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