With a trial about to begin, lurid and alarming details of the billionaire’s condition and the scheming around him continue to emerge. Many questions will arise in the courtroom—and control of CBS and Viacom could ultimately hang in the balance.
A trial looms that will reveal the tawdry twilight years of Sumner Redstone, filled with scheming that conjures nothing so much as Game of Thrones—and it may trigger a corporate fight befitting that bloody epic. But before he was an old man, Redstone was a tenacious and belligerent striver, who made an improbable ascent to media moguldom in his sixties, and established a pattern of family strife and romantic and carnal entanglements that affect him to this day.
If you accepted the public filings—and compensation arrangements—of Viacom viab and CBS Corp. cbs at face value, you’d have reason to believe that 92-year-old billionaire Sumner Redstone, into early 2016, remained one of the most powerful figures in the global media business.
As controlling shareholder, he’d clung to his post as executive chairman of the two companies, valued at $40 billion combined, whose holdings include America’s “most-watched” TV network, CBS; a prominent movie studio, Paramount Pictures; an elite book publisher, Simon & Schuster; and such high-profile cable channels as MTV, Nickelodeon, Comedy Central, and Showtime.
At Viacom, according to the company’s 2015 proxy statement, he “continued to oversee” the board’s activities, while “under his leadership and vision, the company enhanced its financial position and continued to strengthen its overall business.” The CBS filing merely noted that “Mr. Redstone continued in his role as Executive Chairman.”
Combined, the two companies paid Redstone about $24 million in 2014. They paid him $3.8 million for 2015.
What did he do for this money? As it turns out, not much.
Redstone hadn’t been seen or heard at an investor presentation by either company since 2014. At CBS’s annual gathering in Los Angeles that May, a curtain hid Redstone—always too proud to use a wheelchair—as burly men carried him onto the stage, where they deposited him into a seat beside the other directors.
Since a hospitalization for pneumonia that September, Redstone, who has difficulty swallowing his own saliva, has labored to utter a sentence. Inside his Beverly Hills mansion, he requires a nurse to serve as his interpreter. CBS’s Nov. 5 earnings call began with a halting “opening remark” from Redstone: “This is Sumner. Welcome to the CBS Corp. event.” Eight days later, he was heard, barely, on Viacom’s quarterly conference call, weakly slurring eight words introducing CEO Philippe Dauman: “Good morning everyone. Here’s my wise friend, Philippe.”
Redstone attended his last company board meetings in person in 2014, too. According to a witness to one session, he dozed and drooled during the proceedings. At subsequent events, Redstone’s fellow directors were routinely advised that he was listening in by phone from his hilltop mansion in Beverly Hills. But according to medical logs recorded by Redstone’s round-the-clock nurses, sometimes he just slept.
At 8:30 a.m. this Friday, in a windowless, sixth-floor courtroom in downtown Los Angeles, testimony will begin to resolve what would normally remain an exquisitely private matter: Who should make health care decisions for an old man when he’s unable to make them for himself? Redstone is a man who, for decades, dominated those around him. Now diminished, by some accounts a wraith, he is not expected even to be in the courtroom at a trial that centers on what condition he’s in. He will be questioned by each side for 15 minutes at home (the videotaped deposition will be shown only to the judge). Even that small amount of testimony might be too much for him.
At center stage in the trial that begins Friday is Manuela Herzer, 51, Redstone’s Argentine-born housemate-turned-castoff. Herzer instigated this court proceeding after she was ousted from Redstone’s mansion—and from his will. Her lawyers will argue that Redstone was incapacitated and not competent to make such a decision and that, as a result, she should be restored to her place in his life (which would also restore her in his bequests).
There will be testimony that Redstone, while continuing as executive chairman of Viacom and CBS was, in truth “a living ghost”—largely reduced to tears and grunts, and incapable of plotting strategy for two giant public companies.
We will likely hear about his delusional daily demands for steak and sex, and about scheduled visits to his gated Beverly Hills mansion by a woman paid to pretend to meet his carnal desires while a male nurse stood by watching. There will be testimony about the infidelity of the mogul’s 44-year-old girlfriend, Sydney Holland, who shared Redstone’s mansion; about his bitter estrangement from his daughter Shari; and Herzer’s claim that Viacom CEO Philippe Dauman, Redstone’s intensely loyal protégé, lied to hide his boss’s incapacity.
Herzer, who asserts Redstone was non compos mentis and under undue influence last October when she was ordered out of his house and replaced as his health care agent, will swear that she is motivated purely by her love for him, that she’s merely seeking to fulfill her vow to care for Redstone to his dying day.
Lawyers representing the billionaire will tell a quite different tale. That the two women who lived in his house conspired to cut him off from family and friends. That Herzer is simply a cunning, stylish gold digger, who launched her legal jihad to preserve Redstone’s $70-million bequest to her in his will. And that Redstone, despite his feeble speech, remains mentally competent to make his own decisions.
Indeed, Fortune has learned that Redstone’s lawyers are planning to intensify the legal conflict even more. The lawyers confirm they will soon file a new suit against Herzer and Holland, claiming elder abuse, among other things, and seeking to reclaim nearly $150 million that the billionaire gave these women in recent years. (Lawyers for Holland and Herzer have adamantly denied any misconduct by their clients.)
What’s beyond dispute is that this fight has sent shock waves through Redstone’s vast empire. It was this tawdry case—and not a planned corporate succession or steps taken by either board—that forced his belated departure as chairman of the two companies in February, despite his repeated vows that he’d never step down. (He also claimed he’d never die.) It has focused attention on the business woes at Viacom, where profits are faltering, the creative and digital strategies seem suspect, and the stock has dropped 39% in the past year. And it has prompted CBS chief Leslie Moonves to start quietly maneuvering to get out from under the Redstone family’s thumb altogether, according to a Reuters report. (“We look at everything that is available out there,” Moonves said when asked about the report on a recent earnings call. “We are not going to comment on any rumors that have been floating around.”)
It also triggered the first salvos in a looming battle for control of the companies, where Redstone, despite it all, commands 80% of the voting shares. At CBS, Shari Redstone (who serves as vice chair of both companies) backed the board’s decision in early February to award her father’s executive chairman title to CEO Leslie Moonves. But at Viacom, she cast the lone vote against promoting the embattled Dauman, her father’s anointed CEO, suggesting she wants to oust him.
The trial might seem like a mere detour into the seamy details of a billionaire’s decline. But in fact the corporate stakes are dramatically higher than that. The trial could lead to a change in control at both CBS and Viacom. A finding by the judge in the case that Redstone is not competent could trigger a provision in the trust that holds his 80% of the voting shares of both companies, according to a person familiar with the matter. Control would then pass from Redstone to the trust’s seven trustees. They include Shari Redstone and Dauman—and several trustees whose future votes are uncertain. If she wins, Dauman might swiftly be gone. If Dauman prevails, he’ll extend his influence beyond Viacom, to CBS.
An already bitter conflict born of the maneuvers inside Redstone’s household, it seems, could reshape $40 billion worth of corporations and the lives of thousands of employees.
Sumner Redstone’s personal and business lives have always been deeply—often painfully—intertwined. Redstone is an extraordinary man. He built an empire, changed the media landscape, popularized a business mantra (“Content is king!”), amassed a fortune, and has given generously to charity.
But he’s no storybook victim; he made himself an easy mark. If scheming women decades younger sought to pick his bulging pockets, Redstone—who hungered for their adoring company—virtually invited them to do so. And before anyone isolated the billionaire from family and friends, he drove many of them off himself.
It’s an epic saga. This account is based on interviews with dozens of people, including Herzer, current and former high-ranking executives of Viacom and CBS, people close to Redstone and his family, witnesses to events at his mansion, and lawyers in the case, as well as hundreds of pages of court records and documents. Three of the principals, Redstone, his daughter Shari, and Viacom CEO Philippe Dauman, declined to be interviewed. However, representatives for each of them spoke to Fortune at length. As befits a baroque conflict in which everybody suspects everybody else’s motives, many participants insisted on speaking under cloak of anonymity.
In the end, Redstone’s corporate affairs fell into disarray because he stubbornly refused to put his house in order—scoffing at succession plans, appointing pliant boards, and running his $40 billion enterprise like a family grocery store.
It’s seductive—and fitting—to think about the drama surrounding Redstone and his companies as a real-life Game of Thrones. A mad king, obsessed with irrational lusts, sits at its center, oblivious to the chaos he has set in motion. Ancient feuds motivate scheming rivals, who claim to act in the king’s name. Alliances are transactional and transitory. Spies loom. Betrayals abound. Romantic and personal ties often serve as a path to wealth and power. The sexual imagery is cringe worthy. Winter is finally coming to Sumner Redstone. The wise player in the game trusts no one.
Redstone is a psychiatrist’s field day: a mix of breathtaking self-absorption, brutal drive, and primal wants, steeped in a painful childhood. In 2006, while staying with relatives in New Jersey over the Christmas holidays, he was furious to discover the Dec. 24 TV broadcast of his beloved New England Patriots was to be blacked out in favor of the local New York Giants’ game. Redstone knew there was a satellite dish on Viacom’s jet, parked at the Morristown, N.J., airport. He ordered members of the flight crew out of their homes on the afternoon before Christmas to fire up the plane and have it towed out onto the tarmac, where he could get a strong enough signal to watch his game. And there everyone remained, late into the afternoon on Christmas Eve, until the final whistle on a narrow Patriots victory.
In business, Redstone was relentless. During a fierce bidding war for Paramount, he decided to sue America’s reigning cable-system titan, who was then backing a rival bid. “You don’t want to sue John Malone,” MTV Networks chief Tom Freston, one of his top deputies, advised Redstone. “He’s our biggest distributor.”
Redstone stood up, walked over to Freston, and bellowed at him: “Nobody shits in my mouth!” Viacom sued Malone’s company (claiming antitrust violations), Malone retreated, and Redstone won Paramount.
Christine Peters, a Hollywood producer and onetime Redstone flame, recalls sitting down for dinner at a restaurant in Hawaii with her daughters and the mogul, then about 80, when his steak arrived overdone. Redstone summoned the chef to their table, stuck his fork in the meat, and flung it at him. “Why are you so mean to people?” she recalls asking him. “I don’t care,” Redstone replied. “I’m going to hell anyway.”
Perhaps that was his destiny from the start. In a 2004 deposition, Sumner’s younger brother Edward, then 76, commented on life as a Redstone: “My family, basically, it was a dysfunctional family. It really was. And still is.” Their mother Belle, according to Eddie, was “a crazy tyrant.” Father Mickey was “mean and tough.” And his brother? “Sumner controlled my father until almost the very end.”
Redstones have been battling one another in court for nearly a half-century. Most of it focused on whether Sumner had swindled his relatives in winning control of the family’s movie-theater business, called National Amusements. Eddie sued his brother, Sumner, and father, Mickey. Brent Redstone, Sumner’s son, accused his father and sister Shari of self-dealing and misappropriating millions of dollars. Nephew Michael (Eddie’s son) sued his dad and uncle Sumner.
The bitterness transcended the courtroom. Sumner and his son Brent haven’t spoken in a decade. Eddie died in 2011; Sumner didn’t attend his brother’s funeral. And the conflict has now extended into a fourth generation: Brent’s daughter Keryn has sided with Manuela Herzer, battling against Shari Redstone and her children.
Perhaps the contentiousness shouldn’t have been a surprise: Mickey, the family patriarch, who operated Boston nightclubs he’d started with money from an infamous local mobster, kept a set of brass knuckles in his desk. In 1936 he launched what became National Amusements, then a small chain of drive-ins. This closely held private company would serve as the battleground for the family warfare—and the vehicle for Sumner’s audacious billion-dollar deals. National Amusements holds Redstone’s controlling stakes in Viacom and CBS today.
Born in Boston in 1923, Sumner Redstone was preternaturally smart and ruthlessly ambitious, a workaholic bent on winning every fight. Even as he excelled in his studies, driven by a pitiless mother, he remained a discontented outsider. “I had no social life. I had no friends,” Redstone wrote of his high school years in his autobiography.
His college years at Harvard, it seems, were similarly barren. Redstone “probably had an unhappy and rather lonely time at the college,” noted a memo prepared for a 1983 Harvard fundraising drive, based on information from a classics professor who knew Redstone. “He probably still harbors some feelings of insecurity and resentment against Harvard ‘snobs.’”
In 1954, Redstone abandoned a lucrative corporate tax-law practice to join National Amusements. That’s when the family trouble began. Sumner soon became his father’s heir apparent, squeezing out Eddie, who had gone to work there two years earlier after graduating from Harvard Business School.
Eddie grew increasingly bitter about how his father and brother were treating him and finally quit in 1971. Threatening to sell his 40% stake to an outsider, he sued Sumner and their father, prompting his mother to tell Eddie that he had “brought disgrace on you, our family and all of us.” Eddie wrote back, “Under all the laws of God, there is no justification for Sumner’s and Dad’s activities….The immorality….is almost beyond belief.”
The dispute was settled, like most Redstone problems, with cash. Eddie received $5 million (and went on to become a successful banker); Sumner gained control of National Amusements, partly through a provision placing him in charge of trusts holding shares for his and Eddie’s children. In a noteworthy bit of self-dealing that would come under attack in future family litigation, Sumner later had National Amusements purchase most of these shares from the trusts for $21.4 million, boosting his personal stake to 67%. Sumner’s children, Shari and Brent, held the remaining 33%.
National Amusements thrived under Sumner, replacing drive-ins with upscale indoor “multiplex cinemas” (a term it trademarked), eventually growing to more than 1,000 screens across the country and overseas.
Within the industry, Redstone made his mark with litigation that no one else would have dared: He sued the Hollywood studios (his industry’s supplier) to end their practice of making theaters bid to book films sight unseen. Litigation was a treasured business weapon. As he put it decades after leaving the legal profession, “I practice law every day.”
Nothing seemed to slow Sumner. He famously survived a 1979 fire at the Copley Plaza Hotel in Boston that severely burned half his body, requiring months of excruciating skin grafts and transforming his right hand into a purplish claw that he’d gnaw on when lost in thought. (He later resumed playing tennis by strapping a racquet onto his arm.)
With firm control of the family business, Redstone in the 1980s began using National Amusements to make ever-larger investments in publicly traded entertainment companies. But he remained little known outside of the Boston business community.
That changed in 1987, with his $3.4-billion victory in a bidding war for Viacom, then an underperforming media conglomerate that had acquired its most promising assets—MTV, Nickelodeon, and Showtime—just two years earlier. Overnight, Redstone became a man who mattered to Wall Street, Hollywood, and gossip columnists—at the age of 64.
Other improbable deals followed. Viacom snatched up Paramount for $10 billion in 1994 and CBS in 2000, besting moguls like Barry Diller in frenzied bidding wars. Wall Street wisdom held that Redstone routinely overpaid in his obsession to win each new prize. He wanted desperately to overtake Time Warner, and make Viacom the biggest media company on the planet (a goal he never achieved).
Despite Wall Street’s skepticism, Redstone’s acquisitions paid off. Viacom—driven by fast growth at MTV and Nickelodeon and syndication profits (it bought distribution rights to The Cosby Show)—became a cash machine. Focused on younger viewers, its basic-cable programming, including hits like South Park and SpongeBob Squarepants, drew ever-higher ratings, boosting ad sales and distribution. In 2000, Redstone’s personal net worth peaked, by a Forbes estimate, at $14 billion (it’s now about $5.2 billion).
In the early years, Redstone left his operating executives alone. Waking at 4 a.m., he began his day by studying the overnight grosses for his movie theaters. Arriving at the office, he obsessed over just a few things: the gyrations of Viacom’s stock, key strategic moves (especially lawsuits), and the next transaction. Recalls Frank Biondi, who Redstone hired as CEO after buying Viacom: “Sumner said, ‘Look, I don’t know the day-to-day businesses. All I want to do is be involved in the deals. When we do deals, bring them to me—I’m good at it.’”
Redstone reveled in his late-life stature as a mogul. He loved appearing on magazine covers and in gossip columns. He carefully monitored his standing on Hollywood power lists. In 2001, Simon & Schuster, a Viacom subsidiary, published and heavily promoted Redstone’s memoir, A Passion to Win, in which he airbrushed his messy personal history, writing of his “intimate, loving relationship” with family.
Though Viacom was publicly traded and governed by a board of directors, Redstone, through National Amusements, owned most of its Class A voting shares, making it subject to his every whim. It was a fact he never let anyone forget. “Viacom is me. I’m Viacom,” he gleefully declared to Fortune in 1999. “That marriage is eternal, forever.”
Other bonds were not. Redstone’s wife, Phyllis, who he’d wed in 1947, had raised their two children, Shari and Brent, in Newton, a Boston suburb. But at least since the 1970s, Sumner had openly carried on an affair with Delsa Weiner, a doctor’s wife and mother of four who lived down the street. (Weiner, who divorced her husband in 1977, later became a writer and changed her name to Winer.)
In fact—though Redstone never mentioned this detail in his frequent recountings of the Copley Square hotel fire —Winer was in his suite with him that night, escaping with far less severe burns. In 1988 (as a Boston magazine article first reported), a trust administered by Redstone’s personal attorney bought her a four-bedroom home in Lincoln, Mass., on a wooded 17-acre tract, for $1.75 million. A subsequent mortgage amendment listed Redstone as the co-borrower and stated that he was living there.
This was just one element of the awkwardness that Redstone’s odd personal life has always posed for his family—and for Viacom. Winer at times accompanied Redstone at corporate events, including a business trip on the Viacom jet to Thailand, where the couple spent one evening visiting sex clubs. He introduced his mistress to a Viacom executive as “an old friend and a poet.” When Winer died in 2013, at age 86, her children identified her in an obituary as a “dear friend of Sumner Redstone for many years,” and included a snapshot of the two together among the family photos.
Despite this, Phyllis and Sumner—known for bickering nonstop on cross-country flights—clung for a half-century to a marriage that Sumner later said was “rocky from day one.” They sued one another for divorce three times (Phyllis twice, Sumner once). Each time, they somehow patched things up.
Then in 1997, Redstone became smitten with Christine Peters, a striking 44-year-old divorced Paramount producer. Peters was a business partner with Redstone’s old friend Bob Evans, the Hollywood raconteur and ladies man who helped launch the Godfather films and Chinatown. Redstone vacationed with Peters in Sardinia and Hawaii and began staying at her Bel Air estate during his frequent business trips to Los Angeles. Redstone arranged for his most trusted Viacom lieutenants, Philippe Dauman and Tom Dooley, to fly out to L.A. from New York for dinner at Peters’s home, so they could assess her and offer Redstone their views on the relationship. (In later years, he came to care less about his subordinates’ view of his female companions.)
In May 1999, Redstone flew to Paris to join Peters, who was touring the city with her mother and two daughters. There, a private detective hired by Phyllis photographed Redstone and Peters strolling hand-in-hand. Phyllis’ lawyers provided the photo to the New York Post, along with the news that she was suing Sumner for divorce yet again—and meant it this time. With the filing, and leaked warnings that Phyllis wanted half of his then-$6 billion fortune, Wall Street feared the split would imperil the mammoth CBS acquisition, then underway. Redstone rushed to assure everyone: “Nothing that takes place in my personal life will have anything to do with the management and control of Viacom.”
The truth was just the opposite: Redstone’s personal life would determine the control of Viacom, both then and more than a decade into the future. If Phyllis got half her husband’s two-thirds stake in National Amusements, Shari and Brent (who each owned one-sixth) could align with their mother to control the business. Sumner began maneuvering to eliminate that possibility.
By then, Brent was 50 and living on a ranch outside Colorado. He’d moved there after 14 years as a prosecutor in Boston, followed by a short, unhappy stint working for his father at Viacom. Also a lawyer, Shari, then 46, had abandoned other career plans to help her father run the Boston-based theater business. She became president of National Amusements in January 2000.
Both Brent and Shari served on the Sumner-friendly boards of National Amusements and Viacom, where they helped set their father’s pay as members of the compensation committee. Redstone, rough on everyone around him, was particularly brutal on his offspring. Still, Brent would later contend, he’d assured them they’d take over the business someday.
With a divorce settlement under discussion with Phyllis, Sumner began pressuring his children to give him voting control over their stakes in National Amusements. After Shari agreed but Brent refused, their father began treating Shari “with extreme favoritism,” while freezing him out of the business and ousting him from the Viacom board, Brent would later claim.
In 2002, Sumner struck a deal with his wife and daughter to assure his grip on the empire, while setting the stage for Shari’s rise. The Redstones’ divorce agreement gave Phyllis half of all distributions from his 80% stake in National Amusements during her lifetime, while allowing him to retain voting control over of all his shares in the holding company—and thus Viacom. Sumner also signed an agreement to let Shari succeed him as nonexecutive chair of his companies. Sumner’s shares were placed in an irrevocable trust to benefit their five grandchildren. Once he died or became incapacitated, the trust—governed by seven trustees, including Shari and one of her sons—would take control of his shares.
In the settlement’s aftermath, Sumner publicly promoted his daughter to the media as his likely successor, calling her “a great businesswoman” with “no major weakness.” He named her nonexecutive vice-chair of Viacom in June 2005. A Wall Street Journal profile portrayed her as “a magnate-in-waiting.”
In February 2006, Brent sued National Amusements, saying he’d been frozen out for defying his father’s “naked attempt” to gain “complete control.” He accused Sumner—and his sister—of misappropriating millions in National Amusements assets for their personal benefit, including transferring a multimillion-dollar suite at the Pierre Hotel to Phyllis as a “payoff” in Sumner’s divorce. (Viacom says Sumner paid for it.) Brent demanded a breakup of the business, citing “the oppressive acts of those in control.”
The suit was settled a year later, with a reported $240-million buyout for Brent’s shares, boosting Sumner’s voting stake in National Amusements to 80%. (Shari has the rest.) In the battle’s aftermath, Sumner stopped speaking to his son. Inside Viacom, recalls one executive, “we weren’t allowed to talk about Brent. He didn’t exist.” Asked later why he’d moved to Denver, Brent replied: “Because there were no direct flights from Boston.”
With his control assured, Sumner, who seemed constitutionally incapable of sticking with any plan that envisioned his departure (much less his demise), retreated from his commitment to Shari. Father and daughter had suffered from a contentious personal relationship for decades. Back in 1984, he’d complained bitterly in a letter about her “lack of regard” and “disdain” for him. “They were like oil and water,” says one longtime Redstone colleague. “He never gave her anything unless he needed to do it. Everything came out of some fight, some threatened lawsuit. It’s a family history that’s more about horse trading than affection.”
Now in business together, they battled over matters large and small, especially the prospects for the movie-theater company, which she continued to run. She wanted to spend heavily to expand internationally; he wanted to sell it. One executive who knew her described Shari as “Sumner in a skirt,” but Redstone had concluded she wasn’t fit to fill his shoes.
He began belittling his daughter’s business acumen in public—and disparaged her more harshly in private. In 2007, Redstone dispatched a dismissive letter about Shari to Forbes: “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….” On multiple occasions, according to witnesses, Redstone called his daughter a “c–t”—in at least one case, at a Viacom board meeting.
Redstone had signed an agreement providing that Shari would succeed him—and publicly noted that his anointed directors had “never gone against my wishes.” Yet in 2007, he began taking a dramatically different position. He now insisted the question was out of his hands, that good corporate governance demanded the directors pick his successor. If that wasn’t satisfactory, he said he would consider buying out his daughter’s 20% interest in National Amusements—for the right price. Shari hired a lawyer, and pondered pursuing the course of so many previous Redstones: suing Sumner.
By then, Redstone had already abruptly fired three highly regarded potential successors. In 1996, he canned Viacom CEO Biondi, who had overseen the company’s growth from $1 billion to $12 billion in revenues. Biondi says Redstone told him he now knew the business well enough to run it himself. Redstone also grumbled that Biondi, who took regular family vacations and rarely dined with him, didn’t work hard enough.
Already executive chairman, Redstone took the CEO title for himself for the next nine years. In 2000, upon merging with CBS, he named its hard-nosed chief, Mel Karmazin, as Viacom’s COO. Redstone publicly insisted they could co-exist, and proclaimed him his likely successor. Biondi says he warned Karmazin that if he was taking the job on the assumption that he could outlast the much older Redstone, “you’re in for a rude awakening.” Four years later, after the stock dropped, Karmazin (whom Redstone had taken to calling “Karma-fuck”) was gone.
Redstone next decided to split Viacom and CBS into separate companies, just five years after combining them. He named Freston, the widely admired chief of MTV Networks—he’d helped launch the business in 1981—as Viacom’s CEO (and his latest presumptive heir). Leslie Moonves became CEO of CBS.
The maneuver was a stock play, driven by Redstone’s belief that CBS would appeal to value investors, while Viacom, then far larger, would appeal to the growth crowd. (Analysts dubbed them “Via-Slow” and “Via-Grow.”) But amid a declining market, Viacom’s shares continued to slide, while CBS prospered. Redstone fired Freston in September 2006, just eight months into his tenure, citing his unhappiness about the stock and the company’s failure to make a big Internet acquisition, after archrival Rupert Murdoch outbid Viacom for MySpace.
“The worst part was that Rupert was being [hailed] as some great old-media guy who reinvented himself, and Sumner was not,” recalls Freston. “It was like a stone in his shoe.” Redstone later told an interviewer the loss to Murdoch was “humiliating.” (The MySpace acquisition turned out to be a disaster.) When Freston, who had been at MTV for 25 years, returned to clean out his office, some 2,500 employees mobbed the lobby of Viacom’s Times Square headquarters, shouting his name, to say farewell.
Re-enter Redstone’s closest business confidant: Philippe Pierre Dauman. The two men had met at the outset of the battle for Viacom, when Dauman was a 32-year-old corporate-law associate at Shearman & Sterling. He’d served as Redstone’s consigliere ever since. For his part, Redstone seemed to show more fatherly affection toward Dauman than he did to his actual children.
Dauman joined the Viacom board after the takeover, then became general counsel in 1993. Redstone also named him a director of National Amusements and co-executor of his estate. In 1999, Dauman departed to make room for Karmazin, though he remained a Viacom director and received a $34-million exit package. Dauman launched a private equity firm with executive vice president Tom Dooley, another Redstone intimate who departed. But with Freston’s September 2006 dismissal, both immediately returned—with Dauman as CEO. (Dooley is now chief operating officer.)
Dauman, a natty dresser, is whip smart: He scored a perfect 1600 on his SATs—at age 13—and later complained of being bored with his studies at Yale, after entering the university at 16. Yet from his start as CEO, he came under attack as a creatively challenged suit, miscast atop a youth-focused content company. The hip, culture-savvy Freston declared nothing out of bounds at Viacom “except frontal nudity.” When Dauman, during a management offsite a year after taking over, presented a list of 10 “organizing principles” that included “civility,” everyone snickered.
Dauman defined his early tenure with a Redstone-esque move—filing a $1 billion lawsuit in March 2007 against YouTube and its parent, Google, charging “brazen” copyright infringement. Dauman wanted Viacom to be paid for the clips YouTube regularly posted without permission from popular Viacom programs, such as Jon Stewart’s Daily Show, South Park, and SpongeBob Squarepants. At one point, Google offered $900 million for rights to Viacom clips. But Dauman rejected the deal (a spokesperson asserts the money wasn’t guaranteed and the terms were “unacceptable”). In the meantime, as Dauman demanded, YouTube removed all traces of Viacom programming, depriving its shows of a hot new platform for marketing to young viewers. A federal judge twice threw the case out on summary judgment, and after seven years and millions in legal fees, Viacom ended up with nothing.
Despite his background as an M&A lawyer, Dauman made few moves to broaden Viacom’s meager digital footprint—a failure that would come to plague the company. Instead, he focused on boosting Viacom’s shares through another gambit out of the Redstone playbook: a massive stock-buyback program. By mid-2007, Viacom shares were up 23%. “I don’t think you ask for anything more,” Redstone told a reporter.
For all his irascibility, Redstone seemed desperate for the constant companionship—and adoration—of the opposite sex. Even before his messy divorce from Phyllis became final in July 2002, he had proposed marriage to three different women.
One of them was Peters, whose Paris rendezvous with Redstone had been the flashpoint for his divorce. Peters’s unwillingness to marry Redstone—she thought he was too old and didn’t care enough about her career or family—infuriated the billionaire. In October 2000, he faxed her an angry, intensely personal letter he’d dictated to his secretary. “You ruined my life twice,” Redstone wrote. “You ruined the life that I had before you—not your fault—but you ruined it. You ruined the second life that I had with you…..I rue the day I ever met you….I hate you.”
Even in his vitriolic letter to his lover, Redstone couldn’t stop himself from talking business. He ranted about Karmazin, then his CBS merger partner. Publicly, Redstone had avowed his respect for Karmazin and declared him his heir apparent. To Peters, Redstone wrote that Karmazin had “insulted” and “abused” him, by refusing to show proper deference. “Why go on? I will get rid of him in 2 ½ years. [Karmazin would be gone in four.] I will get rid of you now….”
A week later, a calmer Redstone wrote her again to pledge his friendship, while lamenting her priorities. “Someday, perhaps, you will realize there is more to life than your children and your career and that if there is a man in your life who is important to you, you will protect and defend him—maybe exalt him—but never diminish him…..”
In April 2003, months after his divorce from Phyllis was final, Redstone, then 79, married Paula Fortunato, a 40-year-old New York City elementary school teacher from New Jersey. His stockbroker had set them up. Their lavish wedding reception was held at the New York Public Library, where Tony Bennett sang. (He’d been friendly with Redstone ever since MTV helped resurrect his career.)
“Paula’s a nice girl,” one Viacom executive in attendance recalls Redstone telling his guests. “Not the most beautiful girl. But she knows I love Viacom first and foremost.”
Redstone relocated with his new bride to Los Angeles, where he’d bought a $14.5-million mansion in Beverly Park, a gated celebrity enclave whose residents include Sylvester Stallone, Rod Stewart, and Denzel Washington. Redstone’s 15,355-square-foot home featured five bedrooms, eight baths, indoor and outdoor pools, a tennis court, and fountains. Inside his hilltop enclave, Redstone ran his empire by phone from a lounge chair in his study, lined with giant tanks containing saltwater fish, which fascinated him. (He boasted of owning the world’s largest private collection.)
The marriage seemed to begin well, with friendly media profiles declaring that Redstone had finally achieved domestic bliss. Paula called him “Puppy.”
But life with Redstone soon turned into screaming fights. Christine Peters, who remained friends with Redstone long after their romantic relationship ended, recalls that he periodically would seek refuge on daytime outings, calling to suggest they “go fishing.” He would meet her for lunch at the Bel Air Hotel in Beverly Hills, then have his driver take them to visit the latest arrivals at the exotic-fish wholesalers he patronized in the San Fernando Valley.
In October 2008, Redstone announced his divorce. A prenuptial agreement reportedly limited Paula’s settlement to $1 million for each year of marriage, but Redstone was more generous than required. In late 2008, he bought her a $4-million home in Beverly Hills and a $2.6-million condominium in Florida. For years to come, he would have his driver deliver dinner to Fortunato’s home every night.
At the age of 85, Sumner Redstone was back on the dating scene.