Sunday, June 5, 2016

Poor Sumner Redstone

Having a great fortune definitely has some benefits, but there are downsides.

At this moment, the downsides appear to outweigh the upsides for Sumner Redstone, a self-made man whose fortune is valued somewhere between $5 billion and $7 billion.

Let's put the guy in context.  Here is a bit from a review of Redstone's autobiography, "A Passion to Win," published in 2001.

        ". . . Redstone has a terrific story to tell. He graduated from Boston Latin High School
        with the highest grade-point average in the school’s three-hundred-year history. During
        the war, he was a cryptographer, part of the team that successfully cracked Japanese
        military and diplomatic codes. After the war, he had a brilliant career as a litigator,
        arguing a case before the Supreme Court. The mobster Bugsy Siegel once offered him
        a job. Then Redstone took over his father’s business, and, through a series of breathtaking
        acquisitions–Viacom, Paramount Communications, Blockbuster, and then CBS–turned
        himself, in the space of twenty years, into one of the richest men in the world.

        "What links all these successes, it becomes clear, is a very particular and subtle intelligence."

Malcolm Gladwell,     
Sumner Redstone and the Rules of the Corporate Memoir    
(Good article, by the way) 

The Lion in Winter

Sumner Redstone, now 93 years old, has had a rotten time of it the last 10 years.  There have been legal battles with relatives, girlfriends and people who have worked with him for many years.

After a serious illness in 2014, he has been besieged by people anticipating his death and interested in what happens to his money and his businesses once he does die.  The turmoil has racked up many billable hours for lawyers and has been the grist for many stories in the financial press, but it cannot have been pleasant for Redstone himself.


In 2006, Redstone was sued by his son, who claimed he had been frozen out of the succession plan in favor of Redstone's other child, his daughter Shari.  Redstone bought out the son's equity for several hundred million dollars, and the two have not spoken since.

That same year, Redstone's brother and nephew sued him.  They said Redstone had cheated them out of their interests in the family theater business which, when Redstone took control, consisted of three drive-in movie screens.  No word on how that complaint was resolved.


After the end of Redstone's second marriage in 2009, he took up with a companion about 50 years younger than him.  She moved into his large mansion and, with a former Redstone girlfriend/longtime friend, undertook to take care of him.

The two were not close with Redstone's daughter, and at one point they had Shari and her son removed from the Redstone mansion.  Then Redstone himself became suspicious that Shari was meddling in his business.

When another young woman, the founder of a band called the Electric Barbarellas, somehow became a romantic rival to Redstone's live-in companion, the companion sued, alleging that the musician had stolen the companion's computer in order to gain information to use against the companion.  The Electric Barbarella countersued.


In May 2015, Vanity Fair magazine ran an article titled "Inside the Raging Battle over Sumner Redstone's Final Days."  Many people were happy to talk for the story.

         "The main point the Viacom executives want to make is that, while Redstone may have
         lost a step here and there physically, his mind is as keen as ever. 'He’s sharp as a tack,'
         Dooley says. 'His memory—you talk about remembering stuff? He would remember
         what we said two weeks ago, word for word. That’s one of his most amazing skill sets
         over time is his ability to remember everything.' Folta adds, 'And use it against you
         whenever possible.'”

Then there was the opposite view.

        "Others who have seen Redstone lately are not sure this rosyish picture is accurate.
        Explains one such person, 'Sumner (a) cannot speak and (b) hasn’t had a meal since Labor
        Day other than tubes. I think there’s a big charade going on that Sumner’s doing fine.'
        In this person's telling, Redstone cannot move on his own and spends all day seated in
        a chair watching sports on television. He is said to grunt, rather than to speak coherently. 
            "'I think he’s pretty out of it,' this person continues. 'He can’t speak, and I don’t know
        how much he knows what’s going on.' Worse, the idea that Redstone is 'sharp as a tack,'
        as (Dooley) suggests, is not true, this person claims. 'He’s not. He really is not.
        It’s a sham. It really is. It’s horrible.'"


Later, Vanity Fair ran a glamor photo of Redstone's companion and former girlfriend/longtime friend with the tagline, "Who Controls Sumner Redstone?"

These reports, along with the revelation that the companion had another boyfriend on the side, seemed to catch Redstone's attention.  The billionaire banished her from his mansion.

Shortly afterward, the former girlfriend/longtime friend also was told to leave.  She filed her own lawsuit challenging changes made to legal documents, perhaps including his will and his agreement to name her as a joint tenant (with right of survivorship) in the ownership of an expensive Manhattan apartment. Her claim:  Redstone had lost the mental capacity to rescind earlier commitments made when he was compos mentis.

She also took a slap at Redstone's daughter.

      "'The rosy picture painted by Shari of her supposed reconciliation with her father is a
      smoke screen,' (the former companion) said. 'Her sudden conversion to the loving,
      omnipresent daughter coincides with this epic battle' for control of his empire."

A doctor examined Redstone and concluded that his mind was sharp.


Two weeks ago, Redstone fired the 10-year CEO of Viacom, in which Redstone owns a majority stake.  The CEO had been Redstone's golden-haired boy and paid hundreds of millions of dollars over the years, but Viacom's performance has been lackluster during his tenure.  According to a Redstone statement released at the time:  "He's done a bad job running Viacom."

That man, and another executive, sued to invalidate their removal from the trust designed to oversee Redstone's holdings after he dies or if he is declared incapacitated. (Of the second man, Redstone said, "he doesn't listen to me.") They also sought reinstatement to the board of Redstone’s holding company, National Amusements Inc., which oversees his controlling stakes in Viacom and CBS Corp.

The two men's lawsuit claimed that Redstone is not mentally fit to manage his businesses and that this incapacity threatened the interests of employees and shareholders.  The men also accused Shari Redstone of manipulating her father so she could take control of his empire. 

Then a Redstone grandchild, daughter of the billionaire's estranged son, also chimed in, claiming that her aunt, Sheri Redstone, was double-dealing on her own behalf.

A few days ago, Redstone's doctor of two years examined him and again pronounced that he is mentally fit.


I have no idea what the truth is of Redstone's health or mental capacity, but it seems fair to conclude that he may not be surrounded by people who have his best interests at heart.

We all have read newspaper stories about con artists who have flim-flammed elderly people out of their homes or their life savings.  We all know stories of families squabbling after funerals over who gets Grandma's opal ring or Uncle Jeff's vintage Mustang.

Here the stakes are much higher.  Redstone famously declared once that he had no plan to die, but he seems to have put thought and care into drawing documents for the distribution of his wealth (almost all of it to charity) once he is gone.  Often such action can head off the claims of opportunists.   It may not have done so here.

As an illustration for this article, I looked for a photograph of Redstone when he was a younger and more vigorous fellow, but I had no luck.  All the pictures show a very old, increasingly frail man.  When he dies, these images and the unseemly legal maneuvering over his competence are likely to be what is remembered, obscuring his accomplishments over many productive years.

So, yes, Sumner Redstone is a billionaire.  Still, it sucks to be him at this point.

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