What will become of Sumner Redstone?
It’s a measure of the reclusive, 92-year-old media baron’s influence that so few publicly dare to question his grip over a business empire, even amid whispers of failing health. Perhaps that’s part of what made a lawsuit, filed last fall by his ex-girlfriend and former caretaker Manuela Herzer, so shocking.
Last week, Herzer filed a renewed bid to have her own doctors examine the elderly billionaire, arguing that the man who controls $45bn through his company, National Amusements, is “a living ghost”.
“Those who knew the once vibrant, energetic man now describe him as vacant, unable to communicate intelligibly, unaware of his surroundings, lacking affect, prone to spontaneous sobbing, and disinterested in things that used to excite and engage him,” Herzer’s legal team said in a statement. They asked to see Redstone for no more than an hour to determine his mental state.
But in the main suit, contesting her dismissal as Redstone’s caretaker, Herzer went much further. Herzer said the tycoon was in not in control of his own faculties, that he became agitated and sad suddenly, and that he was not in command of himself when he removed her from his advance healthcare directive. He replaced her with Philippe Dauman, CEO of Viacom, and made his second the company’s chief operating officer, Tom Dooley.
Dauman’s attorneys say Redstone is firmly in command of his faculties; Dauman himself will be deposed on 26 January.
The facts not in dispute are few: Dauman and Redstone’s close relationship is universally acknowledged (and often complained about) in the entertainment world. As the head of National Amusements, Redstone is the primary power behind a huge number of major entertainment concerns, including network CBS and cable giant Viacom – itself the parent of MTV, Comedy Central and Paramount Pictures. Redstone is in very poor health, to a degree that has kept him from a deposition.
But according to the mogul himself, Sumner Redstone will never die.
‘I have no intention of dying’
In the prologue to a 2001 memoir, Redstone recalled the horror of surviving a burning hotel in Boston more than two decades earlier: skin searing from his legs as he hung from the third-storey window above the Copley Plaza.
“The sound of the inferno was terrifying,” he and his coauthor wrote. “The heat and flames roaring out of the room burned off my pajamas and peeled away my skin. My legs had been burned to the arteries, now my arm was charring. The pain was excruciating but I refused to let go. That way was death.”
Redstone hung on for “what seemed like forever”. A hook and ladder plucked him off the facade, and he eventually recovered.
“I have no intention of ever retiring, or of dying,” he told Larry King at the Milken Institute Global Conference in April 2009, about a month before his 86th birthday. “The people who fear dying are people who are going to die. I’m not going to die.”
It’s a refrain he has never stopped repeating: in a 2014 interview, he abruptly cut off a reporter for the Hollywood Reporter. “I will not discuss succession,” he told her. “You know why? I’m not gonna die. So why should I discuss succession?”
Pressed on whether the board would decide the issue (Redstone has hinted that he considers Dauman his heir), he continued: “Well, you can say what you want. I say nothing on that subject ’cause I have no intention of dying! So nobody will succeed me!”
Viacom said Redstone was unavailable for this article. “As we and his attorneys in the suit have said, Sumner has a speech impairment that makes an interview impossible,” said a spokesman.
‘For six hours screaming at brokers’
Sumner’s daughter Shari is considered a likely successor , should the seven-member company trust, in which she and Dauman are members, decide the issue. Shari would probably become chair of both CBS and Viacom, and is said to have a private agreement in writing with CBS’s well-regarded Les Moonves to appoint him chairman of the network.
There is reportedly no such agreement with Dauman.
Dauman is an unusual figure in the TV landscape: a former estate lawyer whose management of the company has focused on its stock market performance, a factor of legendary importance to Redstone.
In fact, according to former Viacom executives, stock performance is a major reason Redstone dismissed Tom Freston and gave the job to Dauman in the first place. Freston had failed to move fast enough for Redstone’s taste on MySpace, an asset subsequently bought by Rupert Murdoch, with whom Redstone had long nursed a rivalry.
“Redstone bought [Viacom] when he was essentially a stock speculator running a group of movie theaters,” said one former employee, who recalled Redstone as pugnacious and even capricious, except that nothing shook his focus on share price. “You’d fly with him from coast to coast and for six hours he’d be screaming at Wall Street brokers.”
When the MySpace deal didn’t happen, Redstone told Charlie Rose, he told the board to get rid of Freston and install Dauman and Dooley, his most trusted advisers. “It really wasn’t about Tom Freston so much as it was about Philippe Dauman and Tom Dooley,” Redstone mused. “It wasn’t so much about Tom; it was about them.”
‘The next Eastman Kodak’
Under Dauman, Viacom stock has soared and become one of the most directly investor-focused options in the media. Viacom spends lavishly on its investors, buying back stock (which improves the share price) and returning dividends to shareholders to the tune of $2.1bn in 2015 and $3.9bn in 2014.
Redstone has approved. “He was really obsessed with the stock price, tracked its movements every day,” said a former executive at Viacom familiar with Redstone.
The health of Viacom itself, however, has been disputed, despite the steady price per share: viewership has decreased markedly at its networks, and all cable operators have begin to feel pressure from Netflix, Hulu and other competitors.
“Audiences decline, causing ad revenue to decline, putting distribution at risk and pressuring content investment, which causes audiences to decline, and so forth,” said Todd Juenger, a Sanford Bernstein analyst who wrote a report last year calling the company “the next Eastman Kodak” – the company best known for producing 35mm film.
Juenger argued that Kodak and Viacom are “two examples of once dominant companies where the product that provides the majority of their profits” – film, linear TV – “is made obsolete by a digital world”. It didn’t have to be that way, he wrote: Viacom has spent $14.5bn since 2011 on share buybacks, while its core businesses have languished from an apparent lack of investment.
Dauman was playing the stock market when he should have been managing Viacom, in Juenger’s view.
Viacom disputes this interpretation vigorously: the company has suspended its buyback program (which caused the stock to fall) and a spokesman pointed out that it has favorable ratings from Jefferies and UBS. But its consensus recommendation is still “hold”, and almost no one is doing well in the current market.
‘Mr Redstone doesn’t want you here’
Dauman has called for “decency” in the wake of the Herzer lawsuit, which ostensibly aims to determine Redstone’s fitness to assign a caretaker. But the suit also contains details of his sex life and bodily functions, and Redstone’s enemies have pounced.
“I would ask those who speak or write about him to look at themselves in the mirror and [ask themselves] whether they’re speaking or acting or writing with a sense of decency,” Dauman told the UBS media and communications conference in December. “I talk to Sumner frequently – several times a week. I meet with him frequently.”
But the lawsuit alleges that Redstone’s memory has failed him, and that he is acting as always but now without it: quickly, decisively and no longer with the full force of his faculties.
Mario Gabelli, whose firm holds the second-largest number of voting shares in the company’s Class A stock (10%, second to Redstone’s company, which holds 80% of voting shares), took to Twitter in December to call for further clarification about Redstone’s health (the company responded by saying he was fine).
This month, Viacom agreed to allow a largely symbolic vote to extend voting rights to common-stock shareholders. The vote is certain to fail – Gabelli has said he is opposed to it – but it may send a message to the board.
In the lawsuit, Herzer says that Redstone told his granddaughter she could use his credit card when she moved to Los Angeles to spend time with him. When he was asked to sign a related form a week later, he didn’t remember and “became irate” and “extremely out of character”, according to Herzer. She alleges, too, that Redstone forgot he had approved video cameras to monitor the nursing staff.
On 12 October, Herzer arrived at the house to see Redstone’s driver between her and his bedroom. “Mr Redstone doesn’t want you here,” the driver told Herzer, according to the suit. Herzer said she ignored him and went into Redstone’s room, where his lawyer, Leah Bishop, also told her to leave.
“I looked at Sumner and asked, ‘Do you want me to leave? Are you mad at me?’ Again, Sumner did not respond,” Herzer wrote in the suit. “I asked again and Sumner made a grunting noise and began crying uncontrollably.”
The aides told her to go – she was told she could return for belongings later. Redstone reassigned his caretakership to Dauman; when Herzer called later to ask why he’d done so, Dauman told her Redstone was upset that she had lied to him about the cameras and the credit card.
“As I left the room, I looked back at Sumner who was still sobbing,” she writes in the complaint. “Despite several requests, I have not been allowed to see Sumner since then.”
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