Shari Redstone prepares for battle to control media empire

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Saturday, March 12, 2016 | 12:02 a.m.

Shari Redstone pulls her iPhone out of her purse to show off “just one” picture of her grandchildren. She laughs then apologizes when she sees that the back of the phone is covered with heart-shaped stickers — the result of a craft session with the two youngsters.

Petite, with coifed blond hair, sharp blue eyes and a cautious smile, Redstone is the picture of a doting grandmother. Beneath that cheery exterior, though, is a tenacious woman at the center of a battle over her family’s fortune as well as the fate of two of the world’s largest media companies, Viacom and CBS.

“My life is really good,” Redstone, 61, said during a rare interview recently. “It is a dream life,” she said, “except for the part that is not a dream life.”

Redstone is the intensely private daughter of Sumner Redstone, the pugnacious mogul who ruthlessly assembled a $40 billion entertainment empire, including Viacom’s MTV, Comedy Central and Nickelodeon cable networks, the Paramount film and television studios and the CBS broadcast network.

A Massachusetts native who speaks in a pronounced Boston accent, Redstone shies from public attention with the same alacrity that her father attracted it. Her father and mother divorced after 52 years of marriage. He then remarried and dated women decades younger. He was sued by Shari Redstone’s uncle, brother and cousin. He has feuded publicly with his children and cycled through a series of chief executives at his companies. He famously declared that he would never die.

Now, Sumner Redstone is 92, in poor health and confined to his $20 million Beverly Hills mansion. After he dies, or is deemed incompetent, Shari Redstone is expected to face off against Viacom’s current leadership, including some of her father’s closest confidants, to determine what becomes of his media empire — and by extension her children’s inheritance and family’s legacy.

The relationship between father and daughter is complicated. She was the one he phoned after surviving a hotel fire when he was 55. He persuaded her to join the family business and once told a reporter that life wasn’t complete until people had “met Shari.”

Over the years, however, he has denigrated her in conversations with other executives and chastised her for meddling in his business. He publicly criticized her attempts to position herself to eventually succeed him as chairman of Viacom and CBS. Their feuding often made headlines, such as the time he wrote a letter to Forbes saying his children had done little or nothing to help build the family empire. Sometimes father and daughter communicated exclusively through fax or lawyers, if at all.

Today she’s not in his will. The bulk of the estate goes to charity.

Redstone says that she has patched up her “very public” disagreements with her father. Lately, she has been a frequent presence in his home.

That portrayal of their relationship is being challenged now in a salacious lawsuit, filed in Los Angeles by a former companion and romantic partner of Sumner Redstone. The lawsuit says that he is not mentally competent and that Shari Redstone manipulated him to take control of his life, his companies and his money.

“The rosy picture painted by Shari of her supposed reconciliation with her father is a smoke screen,” Manuela Herzer, the former companion, said in a recent declaration to the court. “Her sudden conversion to the loving, omnipresent daughter coincides with this epic battle” for control of his empire.

Redstone declined to discuss the lawsuit or her father’s health. Her spokeswoman called the claims in the lawsuit “unfounded,” as have lawyers for Sumner Redstone, who declined to comment beyond their court filings.

But even the judge presiding over the case has questioned whether the relationship between the father and daughter is “as ‘patched up’ as claimed,” citing that Sumner Redstone put Viacom executives ahead of his own daughter to make decisions about his health in case he is incapacitated.

That legal brawl, scheduled to go to trial in May, is just one part of a broader struggle for money and power across Sumner Redstone’s empire. The battleground is a uniquely convoluted corporate structure.

Sumner Redstone controls Viacom and CBS through National Amusements, a private theater chain started by his father that holds about 80 percent of the voting stock in the two companies. After he dies, his stake in National Amusements will go to a trust created to benefit his five grandchildren.

The trust wields great power. It could, for instance, endorse the current leadership, install a new board and executive team or even sell the companies. Shari Redstone is one of the seven voting members of that trust.

She declined to discuss board activity, and her exact plans are not clear, beyond that she does not personally want to lead either of the two companies. Also not clear is how many members of the trust will side with her. Several people close to her, who spoke on the condition of anonymity because the deliberations are private, say she has the support of at least two.

While Shari Redstone has supported the executive ranks at CBS, which has delivered fairly strong results, she has opposed the leadership at Viacom, which has struggled as younger viewers abandon traditional television and flock to the Web. Last month, she voted against elevating Viacom’s chief executive, Philippe P. Dauman, to the chairman’s position when her father vacated it. Earlier, she declined the position for herself.

Redstone is known to say that she has 80 percent of her father’s brains, 90 percent of his passion and 100 percent of his obsessive nature. That is likely to be a forceful combination as she prepares for what is certain to be an epic saga.

Redstone was born in 1954, the same year her father left his lucrative job at a Washington law firm to return home to the Boston area and join his father’s movie-theater chain, eventually called National Amusements. He traded his annual pay of about $100,000, or about $880,000 today, for an initial salary of about $5,000, or about $44,000 today.

Back then, Sumner Redstone was a local entrepreneur, intent on expanding his chain of drive-in theaters and trading up to indoor theaters. All that changed in 1987 when he wrested control of Viacom in a hostile takeover, claiming his position as a global media titan.

By then, Shari Redstone was already in her 30s. “My father was always my father — I never really saw him in any other role,” she said in the interview.

She described her childhood as a typical suburban upbringing. The family lived in a modest house in Newton, Massachusetts, just outside Boston. She recalled how, back in the movie-theater days, he would bring home books and Tootsie Rolls from his business trips.

There was a glamorous side. In college at Tufts University, Redstone and a friend wanted to spend a summer in California, so her father set her up with a job at Paramount, where she worked on TV shows like “Love, American Style” and “Mannix” and made her share of coffee runs.

Still, she said, she never saw herself working in show business. “My father was a very strong, powerful presence in the industry, and I think it was really important for me to establish myself in a world that had nothing to do with him,” she explained. Her preference, she said, was a career in social service.

One friend, James Packer, the Australian billionaire and son of the media mogul Kerry Packer, who died in 2005, said in an interview that he understood the pressures. “We’re the children of fathers with big shadows,” he said. “We are all so lucky to have those fathers. Life is complex.”

Redstone went to law school and worked as a criminal defense lawyer at a small Boston firm. She married in 1980, started a family and, when her children were older, decided to pursue a degree in social work after volunteering at a trauma center for abused children.

That’s when her father brought her into the family business. He was spending more time in New York with Viacom and wanted more family oversight over National Amusements in Boston. He persuaded Redstone to run it.

“My grandfather started this business,” she said. “It was our family legacy.”

Redstone, who was going through a divorce at the time, agreed to work at National Amusements two days a week for a year. Six months later she was working full time.

At National Amusements, Redstone focused on two areas where she thought she could carve out her own reputation: expanding internationally into Russia and South America; and upgrading the moviegoing experience beyond popcorn tubs and sticky theater floors.

In some theaters she began adding reserved premium seating, full dining menus and cocktails she helped design, such as the S’mores Martini, a mix of vodka, toasted-marshmallow syrup, cream and a marshmallow garnish. She is particularly proud that Tom Brady, the quarterback for the New England Patriots, and his wife, Gisele Bundchen, have told her that they go to the chain’s Showcase SuperLux theater in Chestnut Hill, Massachusetts, for date night.

“I don’t like to follow in the footsteps,” Redstone said. “I like to learn from the footsteps that came before me, forge a new path.”

National Amusements is a private company, so it is difficult to gauge its business performance over the years. Jawad Hussain, an analyst for Standard & Poor’s, called the company’s management and governance “weak” because National Amusement’s core theater business is operating “below average compared to peers” on measures such as cash flow generated per theater.

As time went on, the harmony between father and daughter got out of sync. There was a series of public squabbles after Sumner Redstone brought her in as vice chairwoman of Viacom in 2005. (The first time he asked, she said no.) She pushed for more authority and stronger corporate governance measures, such as tying compensation to performance. At least once, he threatened to oust her.

She was the only member of the National Amusements board to oppose investing several hundred million dollars in Midway Games, the video game company that eventually filed for bankruptcy. And in 2008 she helped National Amusements refinance debt payments that ultimately forced the sale of Viacom and CBS shares, which he had opposed.

Over the years, some Viacom executives described Shari Redstone as meddlesome and impatient in a quest for power, questioning her business acumen. Mel Karmazin, a former chief executive of Viacom, decided that neither she nor her brother, Brent, who both were on the board at the time, should attend budget meetings.

Some media executives have questioned whether the reaction to Redstone was, in part, because she was a woman in a male-dominated business. Others characterized her as earnest, eager, smart and cognizant of the digital changes transforming the business.

After helping National Amusements negotiate its debts, Redstone decided it was time to set off on her own path. Today, she remains its president, yet her new focus is the venture capital firm Advancit Capital, which she started in 2011 with her son-in-law, Jason Ostheimer. The firm, which invests in media and technology startups, has had some high-profile sales, including a $500 million sale of Maker Studios, which creates online video programming, to the Walt Disney Co.

Advancit recently filed with the Securities and Exchange Commission to raise an additional $40 million for investments. “I am seeing the world as it is going to be,” Redstone said of Advancit’s ambitions. “I am exposed to the future, not just of media, but of the world.”

Redstone also spoke in April at the White House on behalf of a group promoting legal help for people with low incomes, a reflection, she says, of her early career dreams.

Over the years, Redstone has struggled to balance her desire to make her own mark on the Redstone legacy yet live a quiet life and shield herself, her children and her grandchildren from the spotlight.

“It is really hard when your life is scrutinized by people who don’t know you and who don’t really know what the situation is,” Redstone said. “So I avoid the good and the bad and just try to live in a world where I can insulate myself from whatever is out there.”

Recently, Redstone and her family took a vacation to celebrate her mother’s 91st birthday. After a dinner one evening in a room overlooking the ocean, Redstone received a note from the staff telling her that they appeared to be the perfect happy family.

“Oh, God,” she later recalled, with a laugh. “You guys don’t know the half of it.”