When it comes to old-fashioned media moguls who control their empires with an iron fist, Viacom’s Sumner Redstone is right up there with the best of them. But after almost 30 years as controlling shareholder of the media giant, the 92-year-old’s time on the throne is coming to an end, and that has set in motion what promises to be an epic battle for control.
The main players in this drama are Redstone, whose health and mental faculties are currently the subject of an ongoing legal fight, his daughter Shari, two ex-girlfriends--Manuela Herzer and Sydney Holland--and Viacom CEO Philippe Dauman. CBS chairman Les Moonves is also likely to play a role, although he is currently waiting in the wings.
In the latest development, the Wall Street Journal reports that Redstone offered last year to buy his daughter’s 20% stake in the family empire for $1 billion, in order to clear the way for him to do whatever he wanted with his assets.
One of the things that the Viacom chairman has already done with those assets is to give large chunks of them to his former girlfriends. According to the Journal, these gifts are so large that Redstone may have to pay $100 million or more in taxes on them.
The billionaire media mogul’s health has also become an issue in part because of a legal battle triggered by one of those ex-girlfriends, Manuela Herzer. Until recently, she had authority over Redstone’s medical care, but that duty was signed over to Dauman last year. Herzer claims the document that transferred this power should be nullified because Redstone’s cognitive abilities have deteriorated to the extent that he isn’t competent to make those kinds of decisions.
Shari Redstone refused her father’s offer of a buyout, according to the Journal‘s anonymous sources (who it’s probably fair to assume are somehow involved in this jockeying for power). Her brother Brent, who reportedly resented his father’s choice of Shari as heir apparent, accepted a similar but smaller buyout offer in 2007.
The target of all this intrigue is a company called National Amusements Inc., the vehicle through which the Redstones control both Viacom and CBS Corp. It started as a chain of drive-in theaters, founded by Sumner Redstone’s father Michael in 1936, a company that the younger Redstone took control of in 1987 after finishing law school.
Not long afterward, Redstone embarked on a series of acquisitions, guided by his belief that content such as movies and TV shows would always have value, even if the theater business started to decline (the Viacom chairman is said to have coined the phrase “Content is king”). The family’s holdings in Viacom and CBS are estimated to be worth about $5 billion.
At the moment, control over National Amusements is scheduled to pass to a trust whenever Sumner Redstone dies--a trust whose board consists of Shari Redstone, her son, Viacom CEO Dauman and a number of legal advisors appointed by Redstone.
What remains to be seen is who will ultimately control this trust, and with it the disposal of Redstone’s assets. His daughter--whom he has publicly feuded with in the past--seems to have made it clear that she has no intention of stepping aside and allowing others to dictate the future of the company. But in classic Redstone fashion, she may find herself struggling against her father’s iron will even after he has ceased to exist.
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