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Why the Nasty Redstone Family Squabble Matters to Viacom Shareholders

Sumner Redstone's daughter Shari Redstone leaves a downtown courthouse in Los AngelesSumner Redstone's daughter Shari Redstone leaves a downtown courthouse in Los Angeles
Sumner Redstone's daughter Shari leaves court last week.Kevork Djansezian — Reuters

Sumner Redstone’s court victory Monday morning won’t end the legal battle vs. his ousted companion Manuela Herzer—who vowed to appeal the ruling—and did nothing to quell the long-simmering animosity among the Redstone clan.

You think your family squabbles are nasty? Check out these tweets from Sumner’s granddaughter Keryn about her aunt Shari (Sumner’s daughter):

(Update: Subsequent to Fortune publishing this story, Keryn Redstone deleted the Tweets above which featured a very graphic photoshopped image of Shari Redstone, which can be found here.)

Social media adds a new public twist to the story, but there’s nothing new about vicious infighting inside the Redstone family, as Fortune chronicled in a three-part investigation, The Disturbing Decline of Sumner Redstone:

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.

To be sure, the venomous tweets from Redstone’s 34-year old granddaughter shouldn’t matter much to shareholders of CBS (CBS) and Viacom (VIAB), but Sumner Redstone’s personal and business lives have always been deeply—often painfully—intertwined. If Herzer manages to win her appeal and a judge eventually finds that Redstone is not competent, that could lead to a change in control at Viacom and CBS. Such a ruling 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, as Fortune previously reported here. Control would then pass from Redstone to the trust’s seven trustees. They include Viacom vice-chair Shari Redstone and Viacom president and CEO Philippe 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.

Meanwhile, the WSJ reports Viacom board members are considering further cuts to Redstone’s pay and planning to visit him to investigate his competency for themselves, which some requesting to visit him through his daughter, Shari. If so, it would be yet another belated step for the company’s directors, many of whom Redstone appointed, As Fortune previously put it, “It was this tawdry case [the Herzer suit]—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.”