Sumner Redstone, billionaire media tycoon, dead at age 97 – CNBC
Sumner Redstone, the media mogul who built his family’s drive-in theater chain into a multibillion-dollar empire encompassing CBS and Viacom and later became the center of a jilted lover’s lawsuit that nearly cost his family his financial legacy, has died. He was 97.
Redstone, who often boasted that he would live forever, died Tuesday, according to a statement from National Amusements released Wednesday morning.
“My father led an extraordinary life that not only shaped entertainment as we know it today, but created an incredible family legacy,” Shari Redstone, Sumner’s daughter and chair of ViacomCBS, said in a statement Wednesday. “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.”
Redstone controlled about 80 percent of the voting stock of Viacom and CBS through his private holding company, National Amusements. In November 2019, his fortune was estimated at $3.9 billion. By Dec. 5, 2019, the first day of trading for the remarried ViacomCBS, it had dropped to a still formidable $2.6 billion. And in the midst of the coronavirus pandemic, it was valued at $3 billion in May 2020.
Under pressure from shareholders because of reports of Redstone’s declining health and mental competency, the CBS board on Feb. 3, 2016, announced his resignation as executive chairman and appointed CEO Les Moonves as his successor. A day later, Viacom named Redstone chairman emeritus and CEO Philippe Dauman as his successor as executive chairman. Redstone gave up his voting position on the Viacom board in February 2017.
“Sumner Redstone was a brilliant visionary, operator and dealmaker, who single-handedly transformed a family-owned drive-in theater company into a global media portfolio,” ViacomCBS CEO Bob Bakish said in a statement Wednesday. “He was a force of nature and fierce competitor, who leaves behind a profound legacy in both business and philanthropy. ViacomCBS will remember Sumner for his unparalleled passion to win, his endless intellectual curiosity, and his complete dedication to the company. We extend our deepest sympathies to the Redstone family today.”
Redstone’s health had been the focus of much speculation in his later years. With CBS and Viacom in merger talks in the spring of 2018, The Wall Street Journal reported that he was unable to speak much. Citing people who had been with him, the newspaper said the notoriously autocratic Redstone had an iPad connected to buttons to activate his recorded voice uttering “yes,” “no” and “f— you.”
A lawsuit filed in November 2015 by an ex-girlfriend 42 years his junior challenged his competency, claiming he had become” a living ghost” and that his conversations had become little more than grunts. Redstone’s lawyers called the claims “preposterous” and a “despicable invasion of his privacy.”
On May 9, 2016, the judge dismissed the lawsuit after the billionaire asserted in videotaped testimony that he didn’t want the former girlfriend, Manuela Herzer, to play any role in his life. He repeatedly referred to her as “f—— b—-.”
Sumner Murray Rothstein was born in Boston on May 27, 1923, to Belle and Michael “Mickey” Rothstein. His father, a nightclub operator, later anglicized the German surname.
Sumner Redstone in 2012
Japanese code breaker
Sumner graduated from Harvard and served in Army intelligence during World War II, helping to break the Japanese code. After the war, he graduated from Harvard Law School and worked for the federal government, first as law secretary with the U.S. Court of Appeals, then as a special assistant to U.S. Attorney General Tom Clark. Meanwhile, his father’s National Amusements bought real estate in the Northeast and built numerous drive-in theaters. Sumner joined the business in 1954 and became CEO 13 years later.
As head of a theater chain, Redstone recognized the importance of content. In fact, he claimed to have coined the phrase “content is king,” often attributed to Bill Gates.
In 1979, Redstone nearly died in a fire at Boston’s Copley Plaza hotel. In his 2001 book, “A Passion to Win,” he recalled waking up after midnight smelling smoke and making “the classic mistake” of opening his door. A man in the room next door did so, too — and died.
“I was enveloped in flames,” Redstone wrote. “The fire shot up my legs. The pain was searing. I was being burned alive.” He described staggering to the window of his third-floor room and climbing onto a tiny ledge, waiting desperately until firefighters finally arrived. Suffering third-degree burns over 45 percent of his body, he underwent surgery after surgery to graft his living skin onto the wounded areas. How did he survive this trauma at age 55?
“Determination,” he wrote, “is the key to survival. If I hadn’t learned that lesson before, I knew it well now.”
‘We bet the ranch’
With Redstone’s determination and his quest for content, National Amusements accumulated shares of Viacom International, the entertainment distribution company. In 1987, taking a huge risk by using debt, he successfully pulled off a hostile takeover of Viacom, which by then included MTV.
“We sold about everything we had,” he recalled in the 2012 CNBC interview. “I had acquired a lot of media stocks. In those days, it meant a great deal, because they weren’t part of conglomerates. We made some money. We borrowed some money. As they say, we bet the ranch. Something like $5-to-700 million, which is now worth about $8 billion.”
In another high-stakes takeover battle, his $10 billion bid outmuscled fellow media moguls Barry Diller and John Malone for Paramount Communications in 1994. In addition to MTV, the Viacom empire later included such TV properties as BET, Comedy Central and Nickelodeon.
Without Viacom, there would have been no Paramount. And there would have been no CBS. So I guess the greatest moment would have to be the very difficult battle with, and acquisition of, Viacom.
2012 interview with CNBC
Redstone added CBS to his Viacom realm in 2000, then spun it off into a separate company five years later. Its holdings included Showtime and publisher Simon & Schuster.
In the 2012 interview with CNBC, he said his acquisition of Viacom was his biggest business achievement.
“Without Viacom, there would have been no Paramount. And there would have been no CBS,” he said. “So I guess the greatest moment would have to be the very difficult battle with, and acquisition of, Viacom.”
‘Remember—I’m in control!’
The $37 billion Viacom-CBS deal, announced in 1999, got off to a rocky start. At a nationally televised news conference, while CBS CEO Mel Karmazin was laying out his vision of the new media giant, Redstone interrupted by declaring: “I’m in control! Remember — I’m in control!”
Still, Karmazin became president and chief operating officer of Viacom, but in June 2004, he resigned — without telling Redstone directly of his decision. In an interview with The New York Times, Karmazin said he got tired of continuing reports about sour relations with the chairman.
Sumner Redstone (left) and CBS CEO Mel Karmazin announce an agreement to merge the two companies during a press conference September 7, 1999 in New York City.
Jon Gordon | Hulton Archive | Getty Images
Redstone immediately named MTV Networks Chairman Tom Freston and CBS Chairman Moonves as Viacom’s co-presidents. When Viacom formally spun off CBS in 2006, Freston became Viacom’s chief and Moonves stayed at the helm of CBS (until he was forced out in September 2018). Nine months after the spinoff, Redstone fired Freston, furious that the latter lost a bidding war for MySpace.com to Rupert Murdoch‘s News Corp., which paid $580 million for the then-dominant social network. Redstone turned to Dauman, his long-time lawyer and confidant, as Viacom CEO.
The same year, Redstone fired Tom Cruise from Paramount after the actor’s run of odd personal behavior, including jumping up and down on Oprah Winfrey’s couch when discussing his relationship with Katie Holmes. (Cruise denied he had been fired, insisting he had quit.) “We don’t think that someone who effectuates creative suicide and costs the company revenue should be on the lot,” Redstone told The Wall Street Journal.
Sumner Redstone and Tom Cruise during “Mission: Impossible III” fan screening – red carpet at Grauman’s Chinese Theatre in Los Angeles.
L. Cohen | WireImage | Getty Images
King Lear syndrome
Redstone was a fierce competitor. “From an early age. I always wanted to be Number One,” he said in the 2012 CNBC interview. “I’ve always wanted to win. That doesn’t mean I always have, or I always will, but it’s been my objective throughout my life, whether in school or in business.”
Redstone married Phyllis Gloria Raphael in 1947, days after he took the bar exam. During their more than half century of marriage, which ended in divorce in 1999, they had two children, son Brent and daughter Shari.
Redstone had difficult relations with other family members. In 1971, his younger brother, Edward, sued him and their father, alleging they had marginalized his position with National Amusements, causing him to abruptly resign. Edward settled for $5 million and resigned from all family business matters.
Three years after Sumner Redstone’s first marriage ended, he married schoolteacher Paula Fortunato, about 40 years his junior. That marriage lasted five years, reportedly making her eligible for at least a $5 million award under terms of a prenuptial agreement, according to the Los Angeles Times.
In 2006, Brent sued his father, alleging breach of fiduciary duties in connection with a buyback plan of National Amusements stock. The suit was settled in 2007 with Brent receiving $240 million while selling back his stake in National Amusements and relinquishing his board seat, according to Forbes.
Redstone also sparred several times with his daughter, then president of National Amusements and vice chairwoman of Viacom and CBS. One dispute arose in 2005 over his suggestion to unload National Amusements, and two years later over his attempt to have the holding company donate $105 million to medical causes, according to Forbes. Shari Redstone reportedly opposed both ideas, the latter on corporate governance grounds. But she retained her positions with Viacom, CBS and National Amusements, although she was said to have been upset by her father’s reluctance to name her chairwoman and make her controlling shareholder of Viacom and CBS upon his death, according to The New York Times.
In 2014, she rejected her father’s $1 billion buyout offer for her 20 percent stake in National Amusements, the newspaper said. (Five years later, she became chairwoman of the media empire.)
As an octogenarian and in his early 90s, Sumner Redstone was romantically linked to two women more than four decades his junior, Herzer and Sydney Holland. Holland spent five years with Redstone, living at his Beverly Park, California, mansion until he kicked her out in 2015 after finding out she was involved in a relationship with a former actor, according to Vanity Fair.
Sydney Holland, left, and Manuela Herzer at an LA awards luncheon, Oct. 26, 2013.
Richard Shotwell | Invision | AP
Six weeks later, he banished Herzer, whom he had dated in the 1990s and had been running his daily operations, according to the magazine.
Herzer’s lawsuit filed in November 2015 challenged her removal as overseer of his health care. It sought an order that he undergo a brain scan and other tests to determine whether he could still make decisions about himself and his estate. Redstone’s lawyers called it a “baseless … attempt to take discovery in service of building a record for the post-death trust contest she intends to bring.” In a subsequent court filing, Redstone’s lawyers said he had revised his will in October 2015 to cut Herzer out of $70 million of his fortune, including his $20 million mansion.
In videotaped testimony played in court on May 6, 2016, Redstone said he hated Herzer. “I want Manuela out of my life,” he said.
In the next court session, Judge David Cowan abruptly dismissed the case saying: “This testimony does in fact completely alter the case.” The judge appointed Shari Redstone to oversee her father’s health care. Herzer immediately filed a second lawsuit accusing Shari of orchestrating Herzer’s ouster. Shari called the allegations “baseless.”
In December 2016, Holland claimed in court filings in another case that Sumner Redstone had paid millions to other women in return for sexual favors. Her allegations were made in a response to a lawsuit by Redstone accusing her and Herzer of conspiring to manipulate him so that he would give them gifts totaling $150 million over the years.
Redstone’s competency had affected the stock prices of Viacom and CBS. Seeking to reassure Viacom investors, Dauman told a UBS media conference in early December 2015 that Redstone had an “incredible will to live and an enjoyment of life with some physical disabilities,” according to The New York Times. At the same conference, CBS’ Moonves said his company was “very secure.” “I hope Sumner lives to be 150,” he said, according to the Los Angeles Times.
But in late January 2016, Viacom said in a regulatory filing that Redstone’s annual pay had been cut to $2 million in fiscal 2015, from $13 million the previous year. It said he remained executive chairman but dropped language from 2014 saying Redstone “continues to actively participate in the development of the strategic direction of our company.”
Redstone poses with Megan Fox at the 2014 LA premiere of “Teenage Mutant Ninja Turtles.”
At the earlier UBS conference, Dauman said that upon Redstone’s death, Sumner’s stake in National Amusements was to go to a seven-member trust, including Shari and her son Tyler Korff. The trust was created to benefit Redstone’s five grandchildren.
“The group of trustees would have to make fiduciary decisions for the benefit of the trust and the companies it controls,” Dauman told the conference. “No one individual will control the trust. It will operate by a majority vote. There is no individual, and it’s by design.”
Dauman’s appointment as Redstone’s successor as Viacom chairman was opposed by Shari Redstone, who had said in a statement that she wanted “a leader with an independent voice” rather than someone who was a trustee of her father’s trust.
Later, in May 2016, Sumner fired Dauman from the seven-member trust, and in June, he moved to push Dauman off the Viacom board. “I no longer trust Philippe or those who support him,” Redstone said in a statement a day earlier.
“I am being sued by my fellow board members and my wishes are being ignored,” the statement said. “I am determined to act in the best interests of the company and all of its shareholders. I do not trust you or the current board to do the same.”
Two months later, Dauman agreed to step down as Viacom executive chairman as part of a reported $72 million settlement.
Moonves was forced to resign from CBS in September 2018 after being accused of sexual harassment.
Redstone contributed more than $216 million to charities around the world, according to the Sumner M. Redstone Charitable Foundation. Beneficiaries included cancer research, autism, education, the arts and burn victims.
During the financial crisis in October 2008, Redstone had to sell a fifth of his family’s stake in Viacom and CBS — $400 million in nonvoting shares — to cover National Amusements debts.
In the 2012 interview with CNBC, Redstone said there was never a time he was ready to give up.
“I look at everything that may be negative as a challenge to be overcome,” he said. “I expect to live forever. And I do everything possible to bring that result about.”
Survivors include his son and daughter.