It Was Business, It Was Personal: The Redstones’ Father-Daughter Feud

1 BUSINESS

Business News - Opportunities - Reviews

 

 

In more than 50 years as a force in the media industry, Sumner M. Redstone clashed with his only son, his nephew, his wife, his romantic partners, his business rivals and the actor Tom Cruise.

In his most consequential battle, he took on his daughter, Shari E. Redstone.

On the surface, the two seemed unalike. Mr. Redstone, who died on Tuesday at 97, was an old-school, expletive-spraying mogul from a time when bosses asserted their power by screaming in the workplace. Ms. Redstone, 66, keeps a much lower profile.

Beneath the surface, they had a lot in common. Both were lawyers before they embarked on second careers in media, and their fine-print skills served them well as they worked out multibillion-dollar agreements on era-defining mergers and acquisitions. They also shared an iron will that helped Ms. Redstone to succeed her father as the leader of the family empire.

Their main sticking point was one that plagues many family businesses: succession. At the height of the conflict — when the patriarch was well into his 80s and still a Hollywood force — Mr. Redstone tried to buy out his daughter and publicly stated that she was not qualified to lead National Amusements, the parent company of Viacom and CBS, which he had inherited from his father and built into a giant.

The two reconciled in recent years as his health declined. In a statement on Wednesday, Ms. Redstone said, “Through it all, we shared a great love for one another and he was a wonderful father, grandfather and great-grandfather. I am so proud to be his daughter and I will miss him always.”

Image

Before she joined the family business, Ms. Redstone went to law school at Boston University, got married, raised three children, baked cookies and worked as a criminal defense lawyer at a small Boston firm. She also pursued a degree in social work after volunteering at a trauma center for abused children.

For many years, she stayed away from National Amusements, a company that started as a string of drive-in theaters. Even when she was named its president in 1999, Mr. Redstone was unequivocally the boss.

In a prelude to the difficulties to come, the father and daughter had a disagreement over the worth of the company behind Mortal Kombat, a video game that pits opponents against each other in anything-goes combat.

Mr. Redstone had not been incorrect in perceiving, way back in 1983, that video games would be a significant part of the entertainment industry’s future. Over a 25-year period, he poured more than $500 million into Midway. But in the early 2000s, a time when National Amusements was in peril, Ms. Redstone objected to her father’s penchant for plowing money into the company; and she was not thrilled when he installed her on the Midway board in 2004.

Five years later, Midway filed for bankruptcy, leaving the headstrong mogul and his headstrong daughter with one less thing to fight about. By then, though, tensions were mounting.

Mr. Redstone, who once told a reporter that his daughter was “the love of my life,” dangled the possibility of her winning control of his empire — only to pull back when she seemed to be gaining power and influence. The two often clashed over executive compensation and board member selection.

Credit…Bill Cunningham/The New York Times

In 2006, Ms. Redstone became nonexecutive vice chairwoman of both CBS and Viacom. The next year, the succession tussle went public when Mr. Redstone told a reporter that he wanted the CBS and Viacom boards to choose his successor. He called his daughter “a credible candidate,” while also floating the notion of buying her out.

In 2008, Mr. Redstone announced that his daughter would leave the boards of Viacom and CBS. For good measure, he said she “isn’t qualified” to fill his shoes.

Ms. Redstone did not wither. She cast the sole vote against his plan to renegotiate $800 million in debt. She refocused her attention on Advancit Capital, an investment firm she co-founded in 2011.

By then, a new combatant had entered the fray: Brent Redstone, Shari Redstone’s brother, who sued their father in 2006, seeking to break up National Amusements while claiming that he had been cast aside in favor of his sister. The case was eventually settled.

The succession issue simmered in the background during periods of estrangement between father and daughter. During a low point in 2015, Ms. Redstone wrote in an email to her son that “your grandfather says I will be chair over his dead body.”

The ups and downs were complicated by his illness and his tabloid-fodder private life. While the aging lion took his meals through a feeding tube in his Beverly Park mansion, Ms. Redstone battled Manuela Herzer, his former lover and live-in caretaker, for control of his daily care.

In 2015, Vanity Fair published an article on Ms. Herzer and another of Mr. Redstone’s late-life paramours, Sidney Holland. In the article, they both gushed about the gifts and money they had been given. Things got messier when Mr. Redstone took Ms. Herzer and Ms. Holland to court, accusing them of elder abuse, and the two women countered by suing Ms. Redstone, claiming she had turned her father against them.

Around that time, Ms. Redstone and Mr. Redstone made peace. As she cared for him in the mansion, he communicated through an iPad that was configured with three replies: yes, no and an unprintable term he used to express affection.

Credit…Ryan Stone for The New York Times

Mr. Redstone ceded his role as executive chairman at Viacom and CBS in early 2016. Then he gave up his board seats. Those were largely symbolic moves, since his stake in the companies gave him firm command.

Father and daughter also joined forces to fight the Viacom board, which challenged Mr. Redstone’s mental competency in court in 2016.

Mr. Redstone’s death has bolstered his daughter’s influence over National Amusements. His voting stock in the company — an 80 percent share — will transfer to a seven-member trust that includes Ms. Redstone and her son, Tyler Korff, along with Jill Krutick, a longtime family friend, and four lawyers with ties to the Redstones. Ms. Redstone holds the remaining 20 percent of National Amusements through a separate trust.

The main trust owns controlling shares in National Amusements, which in turn controls about 80 percent of the voting rights in ViacomCBS, the company that resulted from a 2019 merger led by Ms. Redstone.

The structure of the empire built by Mr. Redstone is complex — but Ms. Redstone is at the top.

Father-daughter duos are rare in the upper echelons of corporate America, and combative ones even more so, said Rita McGrath, a professor at Columbia Business School and the head of its Women in Leadership program. She noted that Hugh Hefner had a long working relationship with his daughter, Christie Hefner, who was chief executive of Playboy Enterprises for 20 years; and that Abigail Johnson took over Fidelity Investments in 2014, after her father, Edward Johnson III, ran the business for nearly four decades. The Redstones operated more like a wolf pack, Ms. McGrath said.

“You can only have so many alphas in one room,” she said.

Ms. McGrath pointed to Ms. Redstone’s skill in assembling allies under pressure, adding, “She was actually incredibly effective at pulling together a coalition of very smart people who were willing to challenge Sumner, who were basically betting their careers that she’d be able to come out on top. Forty years ago, you wouldn’t be seeing people taking that kind of bet on a woman.”

In May 2019, Ms. Redstone made an appearance at a lavish fete at the Plaza hotel thrown by CBS to court business during its annual presentation to advertisers. A receiving line of network executives and on-air stars lined up to greet her as trays of mini cheeseburgers and pinot noir circulated.

It was her party.

1 BUSINESS

Business News - Opportunities - Reviews

 

 

Leave a Reply