But more than this, too. The falling out with Shari could mean the final unravelling of the Redstone family, once a dynasty-in-waiting that seemed likely to rival the Murdochs or the Packers.
Redstone has fallen out with many people over the years. Trusted business lieutenants have fled and he has bawled out stars as mighty as Tom Cruise, but now his feuds are with his own children. Coming on the heels of a bitter legal battle with his only son, Brent, the rift opening with his only daughter suggests the story is heading toward a tragic, lonely ending.
“It must be remembered that I gave to my children their stock, and it is I, with little or no contribution on their part, who built these great media companies,” Redstone thundered, in a letter faxed for publication in Forbes magazine.
Shari had been put in place as heir-apparent three years ago, taking roles as chief executive of National Amusements, the private family company which owns a chain of cinemas and, most importantly, big stakes in two public companies, Viacom, which owns Paramount, MTV and VH1, amongst other things, and CBS. Already vice-chairman of the two public companies, Shari had been expected to succeed her father as chairman.
The origins of the feud are obscure and probably manifold, but they appear to revolve around issues such as whether she needed the approval of other board members to succeed to the top job, and a row over her attempts to tie her father’s pay to the performance of the companies’ share prices.
What is clear, is that Shari has become furious that she has no areas of responsibility where she cannot be overruled by her father.
He, meanwhile, had become incensed as details of the growing conflict with Shari began to leak last week. The two sides are now talking about a resolution that would involve Redstone buying out his daughter’s 20 per cent stake in National Amusements; she hints she wants US$1.6 billion ($2 billion); he says he will consider only a “reasonable” price - which would lead to her departure from CBS and Viacom. Whatever the outcome, it seems it will be impossible to describe it as amicable.
That the feud has exploded into the public domain is entirely in character. It wasn’t until he was in his 50s that Redstone dedicated himself to turning the national chain of cinemas he had inherited from his father into a multi-billion dollar empire, but when he did so - after a fire that rendered one hand barely usable and severely burned his legs - he pursued the ambition with a drive that excluded all other considerations.
Even people who know him well and respect him say that he is a hard man to like. Arrogant and often crabby, prone to snapping at underlings, he is the archetypal aggressive businessman, a combative deal-doer, who forged the Viacom empire in a string of audacious takeovers in the 80s and 90s. The main difference with Redstone, though, is that he has precisely no discretion, and he is perfectly happy to fight his fights in the full glare of publicity.
It is barely a year since he humiliated Tom Cruise, formerly one of Paramount Pictures’ most bankable stars, telling reporters that the actor had committed “creative suicide” and that his “recent conduct has not been acceptable”. Sumner blamed the disappointing box office take of Mission: Impossible III on Cruise’s increasingly erratic behaviour, including his odd bouncing on Oprah Winfrey’s sofa and a public spat with Brooke Shields, who he criticised for taking anti-depressants after the birth of her baby (Cruise’s religion, Scientology, opposes the use of prescription medicines). Redstone’s view that all this was hurting Paramount’s bottom line was reinforced, it was believed at the time, by his wife Paula, who said she was going to boycott all Cruise’s films.
Redstone’s underlings at Paramount had wanted to organise an honourable-ish exit for Cruise, but his comments undercut them and put the studio on a collision course with the actors union. Redstone seemed delighted.
The Cruise debacle also led to a final falling out between Redstone and one of his trusted lieutenants of more than two decades, Tom Freston, who was chief executive of Paramount’s parent company, Viacom. Redstone made little secret at the time of his frustration with Freston over several issues, not least the disappointing Viacom share price, which Redstone watches incessantly, even going as far as installing a satellite dish on his limo so he can watch business television.
Redstone suffers those he deems fools no more gladly just because they are members of his own family. Brent Redstone, a prosecution lawyer who now lives on a ranch in Colorado, claimed in a lawsuit last year that his father led a campaign to “freeze out” his son from the family business.
Tensions between the two had been high since 1999, when Redstone divorced Brent’s mother Phyllis after 52 years of marriage. Redstone gave his son a public tongue-lashing, saying he was “abusing the court system” to extract money. In the end, Brent got his wish to be bought out of National Amusements, reportedly for US$240 million, in a settlement earlier this year. Since then, another family lawsuit has emerged, this time from Sumner Redstone’s estranged nephew, who is claiming he was robbed of up to US$4 billion because his uncle bought out his stake in the family company at a low valuation in a series of transactions between 1972 and 1984. Michael Redstone alleges his father Edward Redstone and his uncle engaged in “self-dealing” and “breaches of fiduciary duty”. The case may get the green light to proceed in a few weeks.
Shari is clearly angling to get a better deal than her brother if she is bought out of National Amusements, and her father could certainly afford it. With a fortune tallied at US$8 billion at last count, there are only 85 people in the whole world richer than him.
He is resisting, though. Like her brother Brent, Shari followed her father in training as a lawyer, so many observers believe that this feud, too, is doomed to end in the courts. The divorced mother of three has proved herself a feisty operator at National Amusements, inking a string of internet deals, that gave her the edge over her brother, who worked only briefly at the firm.
The battle has been given new piquancy because of widespread reports that Redstone’s health is not what it once was. Last December, he granted Vanity Fair magazine a rare audience at the Beverly Hills mansion he bought from Sylvester Stallone, seemingly with the intention of showing how he was still vigorously exercising control of his empire. The interview was studded with increasingly shrill insistences that he plans to run Viacom and CBS forever.
“There’s no way I leave this job before I die,” he said, adding: “I know what people think, but there was no way I was going to fade into the distance and live a life of luxury in Beverly Hills.”
He boasted how his houseman, Carlos, is made to stand at the poolside with a telephone as he swims. “The whole time I’m panting, which is good, because I want to live,” he said.
Unfortunately, Redstone spoilt the effect somewhat when, rising at the end of the interview to shake the reporter’s hand, he stumbled sideways and had to be held up by his wife.
That wife is Paula, almost 40 years his junior, a former schoolteacher on Manhattan’s Upper East Side, who was introduced to him via a blind date set up by two of Viacom’s bankers. Redstone used to pick her up from school in his limousine every Friday, parking two blocks away so she wouldn’t incur the jealousy of her colleagues or the snickers of her pupils.
She did not even know who he was when she first met him; he sent her some press cuttings the day after their date. Her arrival has only complicated the picture of what might happen to the Viacom/CBS empire after his death or his incapacitation.
On Wall Street, the feud between Shari and her father is being met with undisguised glee. There is nothing the money-men hate so much as a dynasty, with its whiff of nepotism and the likelihood that family managers may put legacy over commercial logic.
If Shari is forced out, so the theory goes, it can only be a matter of time before the house that Redstone built is taken apart again, brick by brick. There may be fat profits - and certainly will be large fees - to be made if Paramount, CBS, MTV and the rest are auctioned off.
No wonder Viacom and CBS shares rose as the feud burst into the open last week. It promises to be a plotline every bit as emotionally wrought as any drama on their networks.
- Independent
